Paid Subscriptions on Social Media: The Beginning of the End or the Future of Connectivity?

Social media has become a ubiquitous part of our lives, with billions of people — approx. 4.6B actually, which is roughly 58% of the total world estimated population — around the world using platforms like Facebook, Twitter, and Instagram to connect with friends, family, and strangers alike. But as these platforms have grown, so too have their problems. From privacy violations to misinformation, social media has been criticized for a wide range of issues.

Adding to these problems are the looming threat of recession.

Social media platforms have historically been reliant on advertising as their primary source of revenue. However, with ad agencies predicting slower advertising growth for 2023, social media companies are exploring alternative revenue streams, including paid subscriptions.

According to a recent article by The Wall Street Journal, ad agencies are forecasting that advertising growth in 2023 will be slower than in 2022, with a projected growth rate of 6.2%, down from 8.1% in 2022. This is due to a variety of factors, including supply chain disruptions, inflation, and increasing competition for ad spend.

In light of these projections, social media companies are looking to diversify their revenue streams and explore new business models.

Recent market research has shown that users may be more willing to pay for social media platforms than previously thought. A survey conducted by the Pew Research Center found that 49% of Facebook users aged 18 and over said they would not be willing to pay for an ad-free version of the platform, while 48% said they would pay between $1 and $10 per month. Furthermore, a study by Digiday found that 63% of US internet users would be willing to pay for ad-free access to social media platforms, and 25% would be willing to pay up to $10 per month. This data suggests that there is a potential market for paid subscription services on social media platforms, and companies like Meta and Twitter are responding to this demand by offering premium features for a fee.

In response, companies like Meta and Twitter have introduced subscription-based services that offer users exclusive features and benefits. For example, Meta Verified for Instagram and Facebook, which was launched in Australia and New Zealand, grants increased visibility via algorithms, added account protection, and direct access to customer-support staff (if you want a badge, that is an additional fee). Similarly, Twitter Blue offers users early access to new features, the ability to edit tweets up to 30 minutes after they publish, longer videos, and longer tweets. Additionally, Snapchat+ costs $3.99 a month and offers users access to a set of features that allows them to customize the app.

These subscription-based services are built on a common benefit hypothesis, which aims to provide users with added value beyond what they get from the free version of the platform. For example, Meta Verified aims to “increase security and authenticity” and offers subscribers access to live chat to help recover their accounts. Twitter Blue offers the ability to retract tweets before they are viewable to followers, which could be helpful for preventing online mistakes or public relations disasters.

As for the overall go-to-market strategy, these platforms are likely to offer bundled options for users who want to subscribe to multiple services at once. Meta, for instance, eventually plans to offer a bundled option for Instagram and Facebook verified subscriptions. Additionally, these platforms may continue to expand their subscription-based services to appeal to a wider range of users.

However, the rise of paid subscriptions on social media platforms may also be the beginning of the end of social media as we know it. With more and more users paying for exclusive features, it is possible that social media platforms will become more exclusive, catering only to users who are willing to pay. This could ultimately lead to a decline in the number of active users on these platforms and a shift in how we consume and share information online.

The rise of paid subscriptions on social media platforms represents a significant shift in the industry. While these services offer exclusive features and benefits, they could ultimately lead to a decline in the number of active users on these platforms and a shift in how we consume and share information online — for better or worse. Only time will tell how these subscription-based services will affect the industry in the long term.

This article was originally written for https://ponderingtheproduct.com.