You make the world (wide web) go around

Your online presence is what makes investors pay for web-based services.

Farrukh Zafar June 09, 2013
Your online presence is what makes investors pay for web-based services. CREATIVE COMMONS

KARACHI: May 18, 2012 … a giant electronic billboard on the Reuters building in the very heart of Manhattan, New York, welcomes Facebook to the NASDAQ exchange. On the other side of Manhattan, on Wall Street, I am trying to crunch some numbers regarding this initial public offering, after seeing companies like Goldman Sachs trying to sell half their Facebook shareholding on the very eve of Facebook Inc’s listing.

Snap forward three months, and Facebook had lost half its stock value. What is important about the whole experience is the data I gleaned from Facebook’s listing and subsequent failure in wooing investors, which has helped people like me figure out the price tag on each internet user.

It would not be wrong to say that every click on the web, every viewing of a YouTube video, every like you give to a Facebook post, and every tweet you send out on Twitter has a cost attached to it; and that someone, somewhere, is commercially benefiting from it, with the biggest shareholder in this entire exercise being the web service/social network itself.

So how much are you worth as an internet user?

Let’s start our analysis with the Apple iTunes App Store. To get into the top 10 apps on the US Apple App Store, one needs at least 80,000 downloads of that app in 24 hours. Looking at the prices being offered for every download on ClickBank and other affiliate networks specifically for mobile downloads, it is safe to say that the average cost per app downloaded by a US user is $1.20. This also means that one needs to spend $96,000 in 24 hours to get into the top 10 slot. What happens after you get into the top 10 apps?

I call it the organic traffic magic. Once you hit the front page of the App Store, your app automatically gets downloaded more, simply because a massive number of people hit the top grossing apps section on the App Store daily and download anything that’s trending. Normally, non-gaming apps get a 60% push once they hit the top 10 apps, while gaming apps get a full 100% boost in sales, cutting the per download cost to half. In short, a user’s worth on the App Store is $0.60 – slightly more if it is a non-game app.

Now we come to YouTube. I have said in one of my columns before that out of the millions of YouTube views you see on videos of different music bands and celebrities, a sizable number are fake. It takes around 60,000 views in the first 24 hours of a video’s posting to make it to YouTube’s front page. One can buy these 60,000 views with ease for a mere $100-150. What happens after reaching the front page? The same organic traffic magic – once featured on, expect the views on your video to multiply exponentially with time.

And here’s your worth on Facebook: the company’s net worth is around $51 billion, and it has a user base of around 1.11 billion. Dividing that equally, it makes you worth around $50 – one of the best price tags an internet user gets across any social network or web-based service. This is the reason why companies like Microsoft and Yahoo hold Facebook shares.

The days are long gone when clicking on an online ad was the only way a click had monetary value attached to it, because since then we have moved to impression-based ads (which pay for every time the ad gets viewed instead of clicked), pay-per-action ads and so on.

This important monetisation scheme gave rise to the notion of ‘incent’ traffic, where users get incentives for the actions they take on the World Wide Web. Would you be surprised if I told you that services like pay you for what kind of content you share on that social network, just like the stuff you share on Facebook. And that pays you for talking/tweeting about people’s products on Twitter?

As you move away from Asia and towards the West, the cost of your click increases; the US, the UK, Canada and Australia being the top-grossing territories in terms of click value. It is this climbing commercial worth of the user that has allowed that first rough draft of the Internet from the 90s – called Arpatech – to transform into a home to one of the biggest businesses in the world. And this is why today, a mere social network for professionals – LinkedIn – has a stock price which is five times the stock price of once the number one automobile manufacturing company in the world, General Motors. Oh, and did I mention Google, whose stock price will be touching $900 in a few months’ time?

The writer runs a software company in Dubai and a healthcare startup in New York City

Published in The Express Tribune, June 10th, 2013.

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