$100 a month to NOT use Facebook: 75% would do it

• How much is Facebook worth to its users?
• Utility of large social platforms and services determined.
• $5 or $100 a month to stop using Instagram?

A mainstay of any product or service for sale today is its value to the end-user, considered as a key component of its offered price. If product X brings value Y to the lives of the K people who buy it, then we have an immediate idea of its price at the point of sale (Z), where Z is affected by the cost of production and distribution over the product’s lifetime.

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But, if goods or services are distributed for free, that is, a series of zeroes on the price tag to the consumers, what value does the item or service provided actually have? That’s the question asked in a working paper titled The digital welfare of nations: new measures of welfare gains and inequality, authored by Erik Brynjolfsson, Avinash Collis, and Asad Liaqat, among others, and published by the National Bureau of Economic Research [pdf download]. The paper attempts to measure the welfare gains from 10 digital platforms in 13 countries. It asked over 40,000 Facebook users what they would need to be paid monthly to abstain from using a range of digital platforms. With these figures collated, the authors surmised that the perceived value from digital goods globally was worth more than $2.5 trillion each year.

That’s around 6% of total world GDP.

The experiment showed that those living in more developed countries placed less value on the likes of Snapchat, X, and Facebook than those in the developing world and that X was ranked lowest in perceived value overall (despite its recent growth into a live news source above and beyond many traditional outfits). Facebook ranks somewhere in the middle of the list of values, while Google Search, it turns out, is given a higher worth than ‘meeting friends.’

How much is Facebook worth in terms of value gained?

The survey group was drawn from active Facebook users; those who had used the social media platform in the last 30 days, and measured the relative willingness to stop using the ten digital services or goods, in addition to “not meeting friends in person.”

The chosen platforms (or pastime) were, in order of perceived value, Google Search, Meeting Friends in Real Life, YouTube, Google Maps, WhatsApp, Amazon Shopping, Facebook, TikTok, Instagram, and X. The least valued option was Snapchat, and other activities were measured against that platform’s low popularity taken as a baseline.

The survey found a “highly significant negative relationship” between the value of the digital services as a percentage of the participants’ per capita GDP. Those in Mexico, for example, valued Facebook higher as a percentage of their country’s GDP than those in the US. Yet relatively wealthy individuals in their respective countries (well-off Mexicans and well-off US citizens, for example) considered Facebook to have lower value overall than their poorer fellow nationals.

Despite the huge accrued wealth of social media operators and other digital platforms, the working paper shows that end-users quantify their gains from using the platforms in monetary terms as much higher than the companies’ incomes. In short, users get more value from Google Search than Alphabet (Google’s ownership vehicle) earns from those users.

The paper’s authors admit that compared to the fairly concrete GDP figures available for each country, the survey’s methods produced “relatively noisy” results, yet the authors were “confident” that digital goods create trillions of dollars-worth of value to users. The paper also states that some estimates of value placed on using services are skewed due to “digital addiction,” but it also points out that estimates of GDP are likewise subject to “irrational […] externalities” – that is, the concepts of worth or value in the opinion of individual consumers.

Now solve for X

For the survey, respondents were asked: ‘Would you be willing to stop using [service] for one month in exchange for [N]?” where N was chosen randomly from a range of nine values from $5 to $100, using localized currencies of equivalent value, relative to GDP of the nation of the citizen. In the case of Facebook, three-quarters of respondents would forswear the platform for the top stipend of $100 a month (or local equivalent), and fewer than 20% would go Facebook-cold-turkey for a mere $5. The question of how much is Facebook worth to users, therefore, had a statistically sound monetary value.

The survey’s findings suggest that current GDP estimates do not consider the value gained by end-users of the goods and services provided by the selected platforms for ‘free.’ Additionally, they quantify the relative amount of money users feel they would need to not give Meta, X, and Google data about themselves and their online activities. On that issue, the revenues from digital platforms, while huge, are not indicative of the true value of that data. Those in developing countries gain the most utility and presumably offer the least monetary reward to the like of Meta, as data from users with less disposable income is not valued as highly on the open data market as that of US citizens, for example.

The key takeaway though is that the utility users feel they gain from using digital platforms dwarfs the platforms owners’ incomes.