Facebook to sell subscriptions
Facebook and Instagram users will now have the option of paying $11.99 per month for a “verified” account, which will give them better customer service, more widely distributed posts and a blue badge next to their name. This is part of a growing trend of ad-supported networks diversifying their sources of revenue. The online-advertising business has hit a speed bump in recent years, with the shift of ad budgets from offline to online mostly complete and mobile advertising hampered by anti-tracking rules. This has led to falling revenue for companies such as Meta, Snapchat, and Twitter.
While subscriptions are no substitute for ads, companies are hoping that they will provide an additional revenue stream. However, the number of people signing up for subscription services has been relatively low, with only 2.5 million people signing up to Snapchat+ and Twitter Blue’s numbers below 300,000. Subscriptions also come with their own challenges, with Apple and Google taking a cut of in-app purchases, including recurring subscriptions.
Meta’s new service is aimed at “creators” who use its platforms for work and are most willing to pay for verification and extra reach. While some have suggested that this is a copy of Snapchat+ and Twitter Blue’s efforts, Facebook has been working on verification for years, citing its acquisition of Confirm.io in 2018.
The subscription model may mean a windfall for mobile platforms such as Google and Apple that host the apps and get a big cut of those revenues. However, two-tier pricing, with different prices for signing up on the web and via the app, has proved controversial, with Apple blocking apps such as Fortnite that told users they could pay less in a browser. As more companies embrace differential pricing, consumers may learn that they can get a big discount by signing up outside Apple and Google’s ecosystems.
Overall, subscriptions are unlikely to replace advertising as the main revenue source for ad-supported networks. However, they may provide an additional revenue stream, especially for creators who are willing to pay for extra features. The success of these subscription services will depend on their ability to provide value to users and the number of people who are willing to pay for them.
Economist: Facebook sells subscriptions as the ad business stumbles (2023.02.22)