Facebook sells subscriptions as ad business stumbles

“IFree Forever,” Facebook promised on its landing page for nearly a decade. The world’s largest social network is still alive and well. But starting this week, that user, and that of her sister app, Instagram, will be paying $11.99 a month for a “verified” account to get better customer service, more widely distributed posts, and more beside their name. Blue badges will be available for purchase.

Subscriptions are the latest example of a growing trend.last june snapchat, a popular messaging app for teens, has launched a $3.99 plan called Snapchat+. In December, Twitter relaunched Twitter Blue, an $8/month service. As with Meta’s offerings, both offer a range of perks. Most importantly, your posts will appear more prominently in other users’ feeds.

It’s no surprise that ad-supported networks are looking to diversify their revenue streams. After years of non-stop growth, Online advertising business I hit a speed bump. His one-off transition of a large advertising budget from offline locations such as newspapers to the web is nearly complete. Also, since 2021, mobile advertising has been hampered by anti-tracking rules developed by Apple. This makes it difficult for apps like Facebook to target ads and measure their effectiveness.

The results were painful. Facebook’s parent company, Meta, has reported declining revenue every three quarters. Despite the recent rally, the company’s stock is trading less than half of its 2021 peak. Snap, which owns Snapchat, has lost nearly 90% of his market value over the same period. Twitter, which was acquired last October by Elon Musk, the capricious self-proclaimed “techno king,” has previously faced bankruptcy and is “close to breaking even,” its owners tweeted earlier this month. .

Subscriptions are no substitute for advertising. Snap said on Feb. 17 that 2.5 million people had signed up for his Snapchat+, less than 1% of his 375 million daily users on the company’s app. is. This means annual subscription revenue is below his $120 million, or less than 3% of his total Snap sales last year. Twitter doesn’t reveal how many people attended Blue (it looks like the company’s entire press office has been laid off), but a recent leak puts the number below his 300,000. The product is still a work in progress, and promised features like reduced ads are still being billed as “coming soon.” and announced that two-factor authentication via text message (a security feature) will soon be turned off for people who don’t cough.

Meta says its service is aimed at “creators,” who use its platform for work and are likely to be most willing to pay for verification and additional reach. “Elon plans to buy Twitter Blue for everyone (but has yet to give a justification), but for Meta it’s about a scalable way to prevent corporate impersonation. . [and] A celebrity,” suggests tech analyst Benedict Evans. Former Facebook executive Rob Leathern denies the idea that the plan is a copy of efforts by Snap and Twitter: Facebook has been working on verification for years, he said in 2018. He cited the acquisition of biometrics firm Confirm.io in 2016.identification start up.

As long as social networks embrace subscriptions, it will be a windfall for mobile platforms that host apps. Google running Android operating system, Apple running iOSmakes no money from app advertising revenue, but receives a portion of consumers’ in-app purchases, including recurring subscriptions. As a result, they stand to benefit from the move to subscriptions.

There may be cracks in the tail. Meta’s new service costs $11.99 if you sign up on the web, but costs $14.99 if you pay via the app. Similarly, Musk, who calls Apple’s fees “his 30% tax on the internet,” charges $8 on his Twitter Blue online and $11 on the app. His two-tier pricing like this has been so controversial that Apple has blocked apps like his Fortnite. Fortnite is a video game that told its users they could pay less in their browser. However, as more and more large companies adopt discriminatory pricing, consumers may find that they get significant discounts by signing up outside of Apple’s and Google’s ecosystems.

https://www.economist.com/business/2023/02/22/facebook-sells-subscriptions-as-the-ad-business-stumbles Facebook sells subscriptions as ad business stumbles

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