A few of you might remember a brief debate a while back about whether it would ever be acceptable for Facebook to charge it's users if it was unable to make a profit from advertising. I was strongly of the opinion that if they couldn't make enough money from advertising – and I didn't believe they could – then it would be reasonable for them to ask users to pay a usage fee.

It looks like my fears may have been groundless. On Tuesday Facebook announced that it had reached 300m users and was now – a year ahead of schedule – cash flow positive. Whilst this isn't quite the same as being in profit – it means they are making more from advertising than it is putting into capital expenditures – it's the main hurdle which has to be passed for a business model like Facebooks to be profitable long term.

In his kindly titled article “Hitting Ben is FREE” Scott, with an eloquence I cannot hope to match, completely misses the point. If you haven't yet read it I suggest you do so now(http://www.moneywhatmoney.co.uk/index.php/Scotts-Articles/Hitting-BEN-is-FREE.html ). He starts off with two good points, firstly that a tax on windows is a silly idea – couldn't agree more – secondly that if Facebook started charging their users, there is a very high chance everybody would simply stop using it and find somewhere else to waste time.

Whilst the story about William the Orange was entertaining, it is hard to see how it bears any relevance to the problem of revenues from social networks. William the Orange imposed a tax on windows purely to get some “money for nothing,” people having windows or looking out of them cost him nothing and so the tax had no real basis, economic or otherwise. Websites are a a little different.

Most things which seem to be free are actually funded by advertising, along side the service we want there will be adverts and the payment for those covers the cost of us getting the product without ourselves paying. The advertisers in turn believe that the sales they will get from the adverts will be sufficient to make a profit on their payment for the advert in the first place. Great in principle and something Google have successfully built an empire on.

Facebook claim to have a similar model, they provide the service entirely for free (the end users don't have to pay anything) and then display adverts along side the content. Similar to Google, but with one crucial difference; when was the last time you clicked on an advert on Facebook? I thought about this for a while and concluded never, I have Facebook open for a fair part of the day, every day and yet not once have I clicked on an advert.

In my last article, written in response to the pirate bay verdict, I suggested that the traditional business models of the music and film industries had passed their best and that if such firms wanted to survive, they would have to come up with something new and better. It's easy to look at their models from outside and point out that they have failed, it's much harder to come up with suggestions for what they should do to fix them.

The below article is written to try and explain why I find the Pirate Bay Verdict so unfair, all comments appreciated, please either use the comment system below or email them to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it . I'll happily post other peoples versions or other opinions as separate articles if you submit them.  

Today the four men responsible for the torrent indexing site The Pirate Bay, were sentenced to 1 year in jail for assisting making available copyrighted content, they were also order to pay around $3.6 million in compensation to various record and film companies including Warner Bros. Entertainment, MGM Pictures, Columbia Pictures Industries, Twentieth Century Fox Film, Sony BMG, Universal and EMI.

This ruling drew a lot of anger from a lot of people, myself included. Some peoples reasoning is very simple, they like being able to download for free content they would normally have to pay for and dislike anything which interferes with that. For other people including myself, our support for the Pirate Bay and outrage at this verdict is a little more complicated.