Subscription Suffocation: Is Paid-For Social Media the New Norm?

Paid-for social media is the hot topic of the month. Seemingly every corner of the internet is filled with a less than subtle disdain and fear for the future of subscriptions engulfing social media. Is this the start of a bout of subscription suffocation?

Launched into popularity by Elon Musk’s X, paid-for social media is becoming more of a reality every single day. The latest platforms to join in on the trend are Meta and TikTok. 

Meta has announced that it is testing the waters for a monthly, ad-free subscription on its platforms. The charge, currently hypothesised to be $14US a month, would apply to both Facebook and Instagram. 

Yet, the payments don’t end there. 

Users would be charged $14 for their first account. Any account they wish to create or run on top of that would cost them a further $6.30. If users desire the desktop version of Facebook or Instagram, they  have the option of receiving both for $17. 

The move is in response to the European Union’s Digital Services Act. The act, which is set to come into effect in 2024, seeks to protect the privacy and data of social media users; a move that seems prudent, given that Meta faced a €1.2 billion fine in May due to violating privacy laws, and TikTok was charged €390 mil by Ireland’s Data Privacy Commissioner in September for issues with how it handled minor’s data. 

In the new era of EU DSA, users will be able to completely opt out of data usage for in-app personalisation. This process is integral to a social media platform’s algorithm and advertising schemes. Hence, many social media platforms have expressed worries on the impacts this will have on the user experience and ad revenue. Without targeted ads, ad revenue for the platforms involved is sure to decrease starkly. 

Aside from ad revenue decreasing, a lack of targeted ads shoots fear into the heart of platforms due to the high likelihood it will cause a decline in users. If users are unable to engage with their favourite brands on social media, then they are likely to leave these platforms in the hopes of finding the content they desire elsewhere. 

TikTok has declared that it will be following in Meta’s footsteps, albeit at a far different price point. It is currently testing out a $4.99 monthly subscription that would gift its users an ad-free platform. 

WHY SUBSCRIPTIONS?

When questioned on their decision to establish paid-for social media, Meta and TikTok have suggested that it is in favour of the user. It is believed that ad-free, paid-for social media will provide a more enjoyable experience for the user in comparison to the free versions of the platforms. 

Yet, one can’t get too lost in the sweet nothings of Zuckerberg and his followers. While the user experience may be a factor in the decision to bring in paid-for social media, in truth the move is largely an attempt to cover ad revenue losses. 

In Q2 of 2023, Meta reported that it earned $53.53 per United States user and $17.88 per European user. Moreover, over this period Meta earned a revenue of $32bn; $31.5bn of which was from advertising. 

While this data is unique to Meta, the trend that it showcases is not. Advertising breathes life into the overall revenues of social media platforms. 

Evidently, the removal of targeted ads (which bring about more revenue than untargeted) from social media will be a massive blow to these platforms’ revenues. Thus, subscriptions are being brought in as an attempt to replace the revenue platforms were earning from ad exposure intake. 

Furthermore, paid-for social media brings up an interesting conversation on privacy in that it places a paywall around a human right. 

Users must either pay to have their data protected, or submit to data usage. Critics are claiming that this move establishes data privacy as a luxury only rich people can afford. Those who are unable to front the monthly cost have no choice but to have their data trawled through by social media companies. 

Given that this topic is unfolding in real time, a clear stance is yet to be drawn by the majority of users. However, it seems unlikely that consumers would be supportive of having to earn the right to privacy through paid-for social media.

@thomasgermain

Social media companies are about to make the apps worse on purpose #greenscreen #adfree #socialmedia #tech #technews #subscription

♬ original sound – Thomas Germain

WHAT DOES PAID-FOR SOCIAL MEDIA MEAN FOR BRANDS?

How will subscriptions shape the advertising landscape from the perspective of brands? 

Currently, it is difficult to say for sure. 

On one hand, if these proposed subscriptions become not only the norm but a popular choice for users, then advertising on social media will plummet. This is due to the number of non-paying users accessing social media decreasing dramatically, and thus causing viewership of advertisements on social media platforms to severely decrease. In this instance, brands will be forced to pack up their bags and find new ways to get eyes on their ads. 

On the other hand, there is the chance that paid-for social media will force users to leave the platforms they pertain to in droves. This would make advertising on these platforms all but useless. Once again, brands would be forced to find a different avenue for their advertising. 

All in all, the future for brands on social media seems grim. 

In a perfect world, a balance will be struck between users who welcome paid-for social media and those who do not; allowing brands to still fit into the equation. However, this future seems unlikely at best. 

Many users are already claiming that they are not prepared to pay for Meta nor TikTok’s services.  Many feel that the prices set by Meta in particular are far too high for a service that was previously free. 

Furthermore, the average consumer is significantly more likely to wait through ads than pay for a service, and this is no different when it comes to social media. 

So, what should brands be doing? While advertising on social media will never be fully dead – after all, organic reach still remains a strong tactic – taking stock of your social media-based paid advertising is prudent at this point in time. 

Ensure that you have a strong understanding of how important TikTok and Meta platforms are to your business as a whole. Perhaps these platforms do not contribute a large amount to your business model, and thus you need not create an exit strategy. 

However, if your brand relies heavily on advertising on these platforms, then understanding how you will shift your strategy in the worst case scenario, is essential. 

Unfortunately, at present there is no way of knowing for sure how subscriptions will impact social media. Currently, Meta and TikTok are still in the planning stage, and have yet to announce if their plans will become official business strategy. 

Despite this, ensuring that you have an exit strategy ready to go is best practice. Thus, no matter the outcome, your brand is well prepared to power through and succeed.#

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