Since the early days of social media on the Internet, nearly all prominent networks have been run on the basis of free access and account membership for all users, with the business model based chiefly on advertising revenue.
Free accounts helped to facilitate the rapid and sustained growth of networks to encompass all people who find the social connectivity useful, with no financial barrier to entry. The more members a site attracts, the greater the potential advertising revenue, and the higher the likelihood that it will be sustained by the quality and quantity of social connections it allows to be established within its platform.
Within the past few years, however, there have been moves by some of the leading social media networks towards monetising their revenue streams by directly charging end-users who opt in to becoming paid members, incentivising this with perks such as advertising-free browsing, and other special privileges such as ticks appearing on your profile.
In this article, we seek to sound out and analyse the moves that each of the major networks has been making in this direction, and consider the prospects for paid social media becoming the new norm.
Part One: Paid X / Twitter Accounts
Since Elon Musk’s controversial take-over of the popular social media network Twitter on October 27th, 2022, the site has lost at least two thirds of the value it had at the time of his purchase. Many advertisers have ceased to support the site out of objection to Musk’s libertarian stand on acceptable content. There is a political slant to this boycott, as the beneficiaries of this policy change appear to have mainly been voices on the right that were previously shadow-banned (or completely banned) under the former owners. Most companies are responsive to the wishes of their customers, and when those customers have objected to what they have seen on Twitter and have advocated an advertising boycott, that request has generally received a sympathetic hearing. Some users have also left in objection to Musk's policies and treatment of staff, or as a result of dissatisfaction over his rebranding of Twitter to X.
Although Musk has laid off a substantial percentage of staff, the sharp reduction in advertising revenue has created a need to shore up the company’s bottom line through other means. This has led to the company turning towards new models of charging. Here is a summary of the multiple approaches to charging members to date.
Before Musk acquired Twitter, there was a system in place allowing well-known public figures and organisations to secure the verification of the identities of their authentic accounts, following the completion of which process all their posts would be accompanied by a blue tick known in the prevailing American lingo as a check-mark. The purpose of this system was to allow users to distinguish between the genuine accounts of these celebrities, influencers and organisations, on the one hand, and fake accounts impersonating them, whether for comedic effect, to damage their reputations or with fraudulent intentions, on the other.
Musk saw an opportunity to replace this trust-enhancing system with a universal scheme which would cleverly play on personal vanity. Instead of the blue ticks being allocated to verified accounts considered by Twitter to be of sufficient importance for there to be an interest in their being distinguished from impersonators, they would thenceforth be given to anyone prepared to pay a regular monthly fee for them. In the interest of boosting the company income, anyone could apply for a verified blue tick in connection with their account. The old system that had also helped to protect the reputations of high-profile public figures (including celebrities, academics and politicians etc.) was replaced with something accessible to everyone, with the prospect of increasing corporate revenue.
As a result, many celebrities and organisations who did not care to pay for their verification check-marks have dropped them, and many ordinary users have acquired them. Whether you regard this as a welcome move away from the previous system, with its value judgements on who merited a tick, or a risk to end users, who are now more likely to end up following the wrong person and talking to someone who is not who they say they are, this marks a major change, and one that has even caused embarrassment for some users. Because of the stigma now associated with paying for what is perceived as a vanity symbol, there has been a backlash against those with the checkmarks, leading to sarcastic comments in Twitter threads. An option has been introduced to hide the check-mark for those who have paid for verification of their accounts, to spare their blushes.
The blue tick change initially led to an influx of fake celebrity and brand accounts, with one impersonating Eli Lilly, an American pharmaceutical company, making a misleading post claiming insulin would be made free, causing their share price to drop by 4%. Twitter Blue’s launch was halted on November 10th 2022; and the plan has been renamed to X Pro.
Since then, new, lower-level paid account options have been planned. It was recently announced that there was a plan in the works to increase the number of premium paid account levels from one to three, to be called Basic (cheapest), Standard (mid-priced) and Plus (highest-priced).
On October 18th, 2023, Musk’s X Corporation further announced its roll-out of a trial in New Zealand and the Philippines codenamed ‘Not a Bot’. It will charge all users $1 per year for the privilege of posting and responding to users. In these territories, from now on, non-paying users will only be allowed to read, and not to post. There seems every likelihood that this trial, if successful, will then be extended to the entire Twitter ecosystem across the world.
The claimed rationale behind the trial is to reduce the number of bots using the site, which does seem legitimate. The true reasoning however may be altogether more focused around sustaining the business and its income. $1 per year may sound minimal, but in the light of X’s own recent estimate of 540 million active X users around the world, even half of those who are not already paid X subscribers agreeing to the charge would lead to a useful $270,000,000 per annum in income. This would then open the door to incremental increases to the charge over the years to follow, with a possible end-goal of increasing it to closer to $1 or $2 per month over a period of time. Getting users’ payment details on file could also prove extremely lucrative for secondary marketing and paid account-level upselling purposes, within the limits of what privacy laws allow for in each national territory.
If both the mooted threefold split in the levels of Premium membership and the new obligatory $1 per annum payment to have the right to use an account for posting at all go ahead, then X will end up with a four-tier paid membership system, and the potential of the pricing of the lowest tiers then being progressively increased as far as analysis suggests it profitably can, without loss of the critical mass of the user base.
Whether the Not-a-Bot experiment will be a success for Musk, or whether so many users balk at handing over payment details to Twitter that it leads to a drastic downsizing of the active network if fully implemented, remains to be determined.
Part Two: The Prospect for Paid Facebook Accounts
From its inception in 2004, Facebook has always been a free-to-use service. Founded by Mark Zuckerberg, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes, it began for the exclusive use of university campus students before being released to the general public in 2006. It then rapidly became a mass-market success, and has since become a place to share experiences connect and socialise that all generations from teens to pensioners have grown accustomed to using. It was the first social platform of its kind to achieve mass adoption on this scale.
Although many other formats for social networking, such as forums and chat rooms, came before it, none managed to capture as many people’s attention so well or for so long. Facebook took off all over the world, and in spite of periodic objections from established users whenever it has significantly changed its interface, it has remained active ever since. Despite the fact that some early adopters have stopped using it as much as they once did or deactivated their accounts, and the fact that to many teens and 20-somethings today, it has become associated with an older demographic, leading them to prefer other platforms where the younger generations tend to predominate, overall the platform shows few signs of slowing down.
According to Statista, Facebook’s user base totalled in around three billion active users as of the second quarter of 2023, with its greatest numbers of users located in India, followed by the USA. Facebook first introduced its ads platform in 2007 as a way of leveraging its vast and growing base of users to start generating an income. The ads platform has got more and more advanced over the years, and now offers the capability for businesses to target users based on very specific user details.
It is this targeting and personalisation of ads by the powerhouse platform that has since been called into question by privacy campaigners and regulators. The recent tightening of online privacy laws in the European Union, as exemplified in Europe’s General Data Protection Regulation (GDPR), which came into effect in May 2016, has posed a challenge to the sustainability of this business model. In July this year (2023), the Luxembourg- based European Court of Justice finally ruled that Facebook must not target users with personalised ads based on their personal details without their prior specific consent.
Rumour has it that, similarly to X, Meta, the parent company of Facebook and Instagram, is now considering implementing a paid version of some of its platforms to enable users who do not consent to personalised advertising to access them ad-free. What this could look like is an £11 monthly charge for ad-free usage of either Instagram or Facebook for users in the EU, or a €19 / just over £16.50 monthly charge to use both platforms ad-free.
And this change could be coming very soon. The ECJ ruled that Meta will need to comply with its interpretation of the GDPR guidelines, and that they only have until the end of November 2023 to do so.
The implications for usage of Facebook and Instagram could be very significant. Anyone sufficiently concerned about online privacy to refuse personalised advertising will simply be barred from these platforms unless they agree to pay. But is someone so concerned about online privacy that they refuse personalised advertising likely to feel confident in handing over payment details to Meta for the purpose of enjoying an ad-free service? The privacy implications inherent in becoming a paid customer of Meta are arguably greater than those inherent in accepting targeted advertising.
What we also need to consider is where users rights lie in this conversation. Does offering some users an ad-free experience at a cost discriminate against those who cannot afford to pay for that same experience? Similarly to the recent moves by Elon Musk towards requiring all users to pay something to use X, the move towards a paid-for premium service is likely to leave a sour taste in the mouths of those loyal users who have consistently used the platform from its launch for free but potentially may now need to pay for the service, if they are minded to refuse personalised advertising. Until the recent EU regulatory moves, Mark Zuckerberg had consistently promised that Facebook would always be free to end-users. This may still be the case for those willing to accept targeted advertising, but not for everyone.
In a time when people are already facing a cost-of-living crisis and having to choose where and what to spend their money on, implementing a cost of use in order to keep your personal information protected could be seen as discriminatory against those who have the need to spend their limited means on essential items and don’t have the luxury to afford a paid subscription. Is the protection of one’s own personal data not a basic right that should be extended to all?
It will be interesting to see how this unfolds for Facebook. Such a major shake-up and change in the terms and conditions for the platform’s usage may well have the most staunchly privacy-concerned users turning on their heels for alternative platforms, rather than willing to pay to continue to use Facebook or else waive their rights to total privacy.
Meta also owns WhatsApp and the Messenger program that emerged as an offshoot of Facebook messaging and is now a separate app on mobile devices. All these platforms will be similarly affected by the ECJ ruling. Collectively, these platforms, together with Facebook and Instagram, have a vast user base. In implementing a paid access model in response to the ruling, will Mark Zuckerberg not risk upsetting a large number of Meta’s biggest platforms’ users and potentially losing them on all these platforms? The stakes for his future plans are very high. The future goal of Meta’s ongoing development of its family of products is to bring together the 2D social media technologies Zuckerberg has mastered together with new immersive experiences that would let you take those more static experiences into another world: the next level in social communications. But for this vision to become a reality, Zuckerberg will still need a loyal user base. He is likely to be hoping that most users will trust their personal data with his targeted advertising software, so that a critical mass of users across Meta’s platforms is sustained. If too many people drop off when faced with the prospect of having to pay a fee for an ad-free service, there is a risk of usage across all Meta’s platforms moving into reverse, threatening the long-term sustainability of the business and its investment in further innovative technologies.
Part Three: Paid YouTube Accounts
Launched in February 2005 by Steve Chen, Chad Hurley and Jawed Karim, YouTube is an online video sharing platform. After showing early signs of success and mass-market promise, it was purchased by Google in October 2006 for $1.65 billion. This seemed to many to be a very high valuation at the time for such a young company; but as of 2023, it is estimated to be worth almost $30 billion, showing that Google’s investment has paid off handsomely over the past 17 years. According to Global Media Insights, YouTube has more that 2.7 billion monthly active users as of 2023, only just missing out to Facebook. Again, the biggest popularity sits with India followed by the United States. The exponential increase in average consumer Internet speeds since 2006 has no doubt helped to realise the potential of the platform, as the real-time watching of high-definition video is now within the reach of vastly more users around the world.
This purchase by Google meant that the search engine giant could earn revenues from offering paid-for content such as movies and exclusive content, as well as ad revenue. YouTube also nowadays generates additional income via YouTube Premium, its relatively recently-introduced paid subscription-based service.
YouTube Premium evolved from a subscription service called Music Key, which was launched in November 2014 to offer ad-free music-video streaming from participating record labels on both YouTube and Google Play Music. Its main selling point was the absence of the unwelcome distraction of advertisements interrupting an otherwise blissful listening experience. In that respect, it was similar to paid versions of the popular music-streaming app Spotify, of which a free version sponsored by advertising has also been available.
In June 2018, Music Key morphed into YouTube Music, which now offers access to a library of over 100 million songs. At the same time, some more overarching ad-free YouTube plans were launched under the collective banner of YouTube Premium. These currently comprise an individual account for £12.99 per month, a Family account for £19.99 per month, and a Student account for £7.99 per month. With all of these plans, the following perks are included, in addition to access to YouTube Music: unlimited ad-free video, offering the ability to watch the content you want without the disruption of ads; offline videos, meaning that you can download videos ahead of time in preparation for when you might not have Wi-Fi or mobile data, so you can watch these anywhere you want; background play, giving you the ability to multitask or look at something else, as videos will continue playing while the screen is off or if you’re using another app; and finally, another themed sub-platform called YouTube Kids.
All these plans are available on a monthly rolling contract, with cancellation possible at any time. Refunds, however, are not be available for partly used billing periods.
With YouTube Premium and Music totalling a combined subscription base of more than 80 million across the world, and YouTube as a whole continuing to thrive, it seems that these paid plans have not put people off the platform as a whole. YouTube remains free to the majority of users prepared to listen through the commercial breaks, although they are nowadays likely to be served up the occasional nudge in the direction of becoming Premium subscribers.
We can see that the offering of paid subscription services for some of the world’s biggest online platforms is not a new phenomenon – it has been practised on YouTube for more than nine years. The difference perhaps lies in what is offered, and the choices remaining to those who decline to pay. The services that the YouTube subscription allow you to access seem at least to be more worthwhile than those that the potential Facebook and Twitter paid services could offer. Although occupying the same digital realm of social media platforms, they are fundamentally different services offering different benefits.
While it has been proven that some of the leading digital platforms, such as YouTube, can make a subscription service successful without impacting negatively on the popularity of the basic service with users, not all paid offerings necessarily have the potential to enjoy the same fortune. The impact of launching a paid service is likely to depend partly on the spirit in which it seems to have been rolled out, which itself determines the degree to which the general user base remains willing and happy to use the platform. The example here of X acting apparently from purely selfish motives to increase its revenue base, and losing a lot of user goodwill in the process, should serve as a salutary lesson to Meta and all other social media companies considering charging for their platforms. If Meta is perceived as charging for an ad-free service purely in order to avoid being penalised by EU regulators, there could be a backlash against this. If, however, the premium service offers tangible extra value to users, there might be more widespread acceptance.
That being said, in today’s digital economy, little comes for free; and perhaps social media platforms, having amassed hundreds of millions or in some cases billions of users, have reached a point at which they feel they can profitably reward investors by starting to charge users. Furthermore, the increasingly tight regulations over privacy may truly have threatened these platforms’ existing revenue models to the point that they in fact feel they have no other choice but to charge some users in order to survive as viable businesses in the long run. Like many other things we accept that we have to pay for to enjoy a higher standard of service, perhaps eventually these online networking services, which allow us to connect and build relationships will be another facility that people are willing to budget for out of their monthly incomes.
There remain contentious open questions around the implications of privacy laws, affordability to people on different incomes, and morality, in terms of how these paid options are put in place and what exactly they offer. We’ll be watching this closely to see how the future pans out for all the social media platforms and what their next moves are. In the meantime, we would love to hear your thoughts on this discussion. Do you believe paid social media usage will become normal? Are you personally willing to pay a fee to avoid receiving targeted, personalised advertising, or do you feel that the concerns over this are a storm in a teacup and actually welcome more personalised advertising as compared with traditional untargeted broadcast advertising? Email us at [email protected].
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