“Iit’s free and always will,” Facebook has promised on its landing page for nearly a decade. The largest social network in the world still is. But starting this week, its users and those of its sister app, Instagram, will have the option to pay $11.99 a month for a “verified” account, buying them better customer service, more widely shared posts, 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’s offering, both offer an assortment of benefits, the most important being a more prominent place for the user’s posts in other people’s feeds.
It’s no surprise that ad-supported networks are looking to diversify their revenue streams. After years of uninterrupted growth, the online advertising company hit a speed bump. The one-time big shift in advertising budgets from offline places like newspapers to the web is almost complete. And since 2021, mobile advertising has been hampered by Apple’s anti-tracking rules, which make it harder 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 a recent rally, its stock is trading at less than half its value at its peak in 2021. Snap, which owns Snapchat, has lost nearly 90% of its market value over the same period. Twitter, which was bought out last October by self-proclaimed mercurial ‘technoking’ Elon Musk, is “tending to break even” after facing bankruptcy, its owner tweeted this month.
Subscriptions do not replace advertisements. Snap said on Feb. 17 that 2.5 million people had signed up for Snapchat+, less than 1% of its app’s 375 million daily users. This implies annual subscription sales of no more than $120 million, or less than 3% of Snap’s total revenue last year. Although Twitter hasn’t specified how many people have joined Blue (its entire press office appears to have been fired), a recent leak put the figure below 300,000. The product remains a work in progress, with features promises such as less ads still billed as “coming soon”. On Feb. 17, Twitter took a new approach to generating signups, announcing that SMS two-factor authentication, a security feature, would soon be disabled for those who don’t cough.
Meta says its offering is aimed at “creators,” who use its platforms for work and might be more willing to pay for verification and additional reach. While “Elon has a plan for everyone to buy Twitter Blue (but hasn’t given a good reason yet), for Meta it’s an evolutionary way to prevent spoofing of companies [and] celebrities,” suggests technology analyst Benedict Evans. Rob Leathern, a former Facebook executive, rejects 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, a biometric-IDENTIFIER Begin.
To the extent that social networks adopt subscription, this will represent a boon for the mobile platforms that host their applications. Google, which runs the Android operating system, and Apple, which runs iSE, do not make money from in-app advertising revenue, but take a share of consumers’ in-app purchases, including recurring subscriptions. After hitting the mobile advertising industry with new privacy rules, Apple and Google stand to benefit from the resulting shift to subscriptions.
There may be a sting in the tail. While Meta’s new service costs $11.99 for those signing up on the web, the price when paying through the app is $14.99. Similarly, Mr. Musk, who called Apple’s fee a “30% Internet tax,” charges $8 for Twitter Blue online and $11 for the app. Such two-tier pricing has proven controversial, with Apple blocking apps such as Fortnite, a video game that told users they could pay less in a browser. But as more large companies embrace differential pricing, consumers may learn they can get a deep discount by signing up outside of Apple and Google’s ecosystems. ■