This is a note I meant to post over a week ago, but didn’t get around to it.
The question is, would you pay $12.99 for 5 hours of Facebook?
The reason I ask is, until a couple weeks ago, I would have assumed the answer was no. Facebook has become the latest in a line of great, free internet products. It flows open and free, like a trillion pages of Niagara Falls, unimpeded by usage charges.
Then I flew Virgin America to JFK & back. 5-6 hours each way. And the flights had Wi-Fi.
(The Wi-Fi was fantastic, by the way. I got a phenomenal amount of work done on the plane, and having live access to email and the web was incredibly useful. Having realtime access to Twitter wasn’t as useful, but certainly was fun. I also saw some funny behavior patterns – like people watching live sports on the laptops while their seat-back television was on CNN or CNBC. Anyway, I digress…)
For $12.99 you got wi-fi… for about 5 hours. Worth the cost most likely to make the flight productive for work, especially compared to an $8 snack pack.
Next to me on the plan was a woman, likely 20-25 years of age. As soon as we were allowed to use our laptops, she flipped hers open, paid the $12.99… and went to Facebook.
I was sitting one seat away from her, so I could see what she was doing. She spent about 3 hours on Facebook, with a small amount of miscellaneous web surfing mixed in. But it was almost all Facebook.
It was interesting to me, because the economics of Facebook have been fodder for discussion in the Valley for a couple of years now. And here I was, watching someone pay $12.99 for Facebook.
It then occurred to me how much money the “dumb pipes” of the internet are really making. How many people upgrade their internet service to broadband because they want to make YouTube faster? How many people are effectively paying the service providers to access content created by others? How many people pay charges for internet service at hotels, airports, coffee shops? To wireless providers, cable providers, satellite providers, phone providers?
It’s an interesting counter-balance to the argument that the service providers give for bandwidth throttling and other pricing power maneuvers. They would still argue they aren’t getting enough of the pie.
Still, I’m pretty sure that Facebook got 0% of that $12.99.
Makes you realize why AOL actually worked back in the day. You know, in simpler times.
Psychohistory 
I don’t disagree with anything you said. A notable point worth mentioning though is that this is no ordinary situation. You’re limited in mobility (essentially can’t leave your crappy seat), comfort (sitting in that, ahem, crappy seat), and options (you can’t talk on the phone, spread out to take notes, knit, etc), so the price you’d pay in such a constrained situation is obviously higher than any other. I would pay $13 on a plane, but likely no where else.
One of the 12 or so random business ideas I have in my head is in line with your AOL-ish point. Email me if you’re interested to hear more.
She didn’t pay $13 for Facebook, she paid herself $4.33 an hour for the extra free time she’ll have after landing.
Lots of people would pay twenty-five cents an hour to use Facebook, especially if it were somehow better than the free version, but if they make everybody pay, their network-effect value evaporates overnight.
To the extent current Facebook has certain limits, those could be the places they’re looking to monetize. They can be “commodity X” in any number of categories and sell on integration and consolidation.