Verified users charging monthly fees could target creators and influencers on Meta’s platforms, given their potential profitability
Meta, which owns Facebook and Instagram, relies on billions of users and advertisers who spend huge amounts to capture their attention to build its social media empire. However, this business model is facing numerous challenges. In this context, Meta has announced on Sunday that it is experimenting with subscriptions for both social media platforms.
Advertisers can tap into a wealth of user data on Facebook and Instagram, with Facebook having 2 billion daily users and Meta’s platforms, including Instagram, WhatsApp, and Messenger, boasting a combined user base of nearly 3 billion. By creating user profiles and matching them with specific interests and backgrounds, Meta generates revenue from advertisers who direct ads at targeted individuals. This advertising-centric approach contributed to 98% of Meta’s $116.6bn in revenues in the past year. However, this model has encountered issues since Apple introduced privacy changes in 2021, requiring apps to seek users’ permission to track their activity across other apps and the internet. As a result, Meta has warned that its 2022 ad revenue could drop by $10bn due to the number of users who have chosen not to be tracked.
Meta’s business model is facing potential regulatory hurdles. In a recent ruling, the EU found that Meta’s legal rationale for personalized ad targeting violated data laws. Meta has acknowledged that the ruling does not prohibit personalized advertising but it does indicate the EU’s stance on the company’s user data-focused business model, which is a significant regulator in the tech industry.
In addition to regulatory issues, there is also a risk of economic weakness that could impact any advertising-dependent social media or search company. Meta reported a 4% decline in revenue in its most recent quarterly results, and other platforms like Snap, Google, and Elon Musk’s Twitter have also warned of a weak advertising environment. Twitter has introduced a new subscription service to offset its reliance on advertising, although the company’s ad business has also been affected by its own actions.
Meta is testing a new subscription-based service called “Meta Verified” that requires users to pay a monthly fee to access exclusive features. The service is being trialed in Australia and New Zealand and will soon be available worldwide. Users of the Facebook or Instagram app on an Apple iPhone or an Android phone will have to pay a monthly fee of $14.99, while web access will cost $11.99 per month. The features offered include a verified badge on the user’s account, monitored service to prevent account impersonation, improved visibility and reach for the account, and personalized support for account-related issues.
The service is expected to appeal to creators and influencers on Meta’s platforms, especially Instagram. Meta believes that the service will benefit emerging creators and help them grow their following, stating that subscribers with a smaller audience may notice a more significant impact on their reach.
Kat Molesworth, co-founder of the Creator Union, plans to recruit members this year and believes that Meta should not be charging creators for features that should be standard. She questions the appropriateness of charging creators, who significantly contribute to Meta’s profits, for basic features. Molesworth cites YouTube, which is owned by Google, as an example of a platform that shares advertising revenues with creators, with a nearly 50/50 split for over a decade. She states that YouTube recognizes the value of creators to its ad business.
Elon Musk commented on Meta’s move, calling it “inevitable.” However, it remains to be seen whether the move will be successful, considering that Zuckerberg’s business has maintained free access for nearly two decades.
