“It free And it always will be,” Facebook vowed on its landing page for nearly a decade. It remains the largest social network in the world. But starting this week, its users and those of its sister app, Instagram, will have the option to pay $11.99 per month for a “verified” account. Better customer service, more viral shares and a blue badge next to their name.
Subscription is the latest example of a growing trend. Last June, Snapchat, a popular messaging app among 20-somethings, launched a $3.99 plan called Snapchat+. In December, Twitter relaunched Twitter Blue, an $8-per-month service. Like Meta View, both offer a variety of perks, the main one being a prominent placement of a user’s posts in other people’s feeds.
It is not surprising that ad-supported networks are looking to diversify their sources of revenue. After years of continuous growth, the online advertising business has reached a leap in speed. The big one-time shift of advertising budgets from offline sites, such as newspapers, to the web is mostly complete. And since 2021, mobile advertising has been hampered by anti-tracking rules that Apple devised, making it difficult for apps like Facebook to target ads and measure their effectiveness.
The results were painful. Meta, Facebook’s parent company, has reported declining revenue in each of the past three quarters. Despite the recent rally, its stock is trading at less than half the value at its peak in 2021. Snap, which owns Snapchat, has lost nearly 90% of its market value in the same period. Twitter, which Elon Musk bought last October and is a mercurial “technique,” is heading for break-even after previously facing bankruptcy, its owner tweeted this month.
Subscriptions are not a substitute for advertising. Snap said on February 17 that 2.5 million people have signed up for Snapchat+, less than 1% of its app’s 375 million daily users. That means annual subscription sales of just $120 million, or less than 3% of Snap’s total revenue last year. Although Twitter hasn’t said how many have joined Blue (its entire press office appears to have been sacked), a recent leak put the number below 300,000. The product is still a work in progress, with promised features like fewer ads still being released. Invoice as “coming soon”. On February 17th, Twitter took a new approach to push sign-ups, announcing that two-factor authentication via text message, a security feature, would soon be retired for those who don’t cough.
Meta says its offering is aimed at “creators,” who use its platforms for work and may be more willing to pay for verification and additional access. While Elon has a plan for everyone to buy Twitter Blue (but hasn’t yet given good reasons for doing so), for Meta it’s about a scalable way to prevent corporate impersonation. [and] celebrity,” suggests Benedict Evans, a tech analyst. Rob Leathern, a former Facebook executive, dismisses the idea that the plan is a copy of Snap and Twitter’s efforts: Facebook has been working on verification for years, he says, citing its 2018 acquisition of Confirm.io, It’s a biometric.Identification card start.
To the extent that social networks embrace subscription, that means a windfall for the mobile platforms that host their apps. Google, which operates the Android operating system, and Apple, which operates the iOS operating systemOS, do not earn any money from in-app advertising revenue, but take a portion of consumers’ in-app purchases, including recurring subscriptions. Having hit the mobile advertising business with the new privacy rules, Apple and Google stand to benefit from the resulting move to subscriptions.
There may be a sting in the tail. While the new Meta service costs $11.99 for web subscribers, the price in the case of in-app payments is $14.99. Similarly, Musk, who has called Apple’s fee a “30% tax on the internet,” charges Twitter Blue $8 online and $11 in the app. Such a two-tier price has proven controversial, as Apple has banned apps like Fortnite, a video game that tells users they can pay less for a browser. But as more large companies embrace differential pricing, consumers may learn that they can get a deep discount by subscribing outside of Apple and Google’s systems. ■
To stay up to date with the most important news in business and technology, sign up for the Bottom Line, our weekly subscribers-only newsletter.
Leave a Reply