Understanding Willingness to Pay for Social Network Sites

Abstract

The authors investigate how perceived customer value can be translated into economic returns for online social network sites (SNS). The (joint) impact of two value propositions, social capital and entitativity, is assessed. Perceived economic and social customer value are investigated as outcomes of these propositions. Two studies reveal that entitativity and social capital impact members’ willingness to pay (WtP) membership fees, either directly or indirectly. Moreover, the predictive ability of perceived economic and social customer value regarding WtP depends on the type of membership and the type of social network. SNS providers are advised to emphasize the benefits their users actually take advantage of. While for professional SNS, it seems advisable to stress both social and economic value, particularly for premium members, in socially oriented SNS premium members seem to be driven more by social value. Other theoretical and managerial implications are discussed.