Why in the world are you talking about Facebook blackmailing users to earn $2/$3 per user? Advertising (and maintaining what's left of their reputation) is clearly fall more lucrative. If each user just clicks on one Facebook ad each year, that's $2/user/year right there.
First, I continue to not trust advertising as a long-term stable business model. If some piece of information is valuable to somebody, they'll tend to want to pay to get it, and they certainly won't want to be denied it simply because its publisher didn't pay a middleman enough. By contrast, if an advertiser is paying a middleman money to shove their advertising in your face, it suggests that you seeing that information has positive value to the advertiser and negative value to you. In the long run, advertising tends to get trapped in an arms race between ever-more-aggressive advertisers and ever-more-jaded advertisees with mute buttons, fast-forward, and AdBlock Plus.
Of course, in real life, we don't live in a perfectly efficient market. There's lots of friction. There are probably any number of mutually beneficial commercial transactions I would like to engage in right now but can't because I don't know about the possibility, and advertisers paying middlemen to tell me about them is a Pareto improvement. And not everybody will install AdBlock Gold 2015 even if it does benefit them.
Anyway, so that's why I continue to be surprised at the continuing viability of internet advertising, and have been every year for the last 14 years. Maybe one of these days I'll finally learn, or reality will finally catch up with my expectations.
So suppose that cost per click falls to US$0.01 or US$0.001 (what are they now?), and click rates fall to substantially less than one click per user per year.
Second, blackmail could in theory extract the entire discretionary income of all of Facebook's users. If you earn US$100 000 per year, Facebook could very likely get US$20 000 per year out of you with blackmail.
"If you earn US$100 000 per year, Facebook could very likely get US$20 000 per year out of you with blackmail."
How exactly would that work? People keep their skeletons in their closets, not on Facebook. No one (aside from journalists writing for old people) cares that you have college party photos of you and your favorite beer bong posted on FB.
