Social media subscriptions and the end of the internet’s grand bargain

As a rebuttal to the “if you don’t pay for the product…” aphorism, I propose that social media platforms engage in something of a grand bargain with their users: in exchange for free and universally-equivalent access to a publishing platform and the content contained therein, users are exposed to ads that are personalized to varying degrees. The notion of a grand bargain stands in contrast with the theory that social media platforms “sell” user data. As I write in Social media platforms don’t sell user data. No one would buy it.:

Facebook doesn’t sell user data. This is not a nuanced syntactical or semantic differentiation; Facebook doesn’t “rent” user data or “time-share” user data, either. What Facebook sells, as a publisher of owned advertising inventory, are impressions that can be targeted by non-individualized parameters. But what’s even more valuable than that inventory — because many companies have inventory to sell, and almost none of those companies are as successful as Facebook — are its algorithms. Access to these algorithms is what an advertiser is buying when it chooses to spend its budget with Facebook instead of anywhere else.

The largest social media platforms grew to globe-spanning scale by removing any economic barrier to adoption with a price point of $0; in its Q4 earnings, Meta revealed that the Facebook app is used by 2 billion people per day. The internet’s grand bargain is responsible for this. It’s hard to imagine that any product gated by a payment could attain such reach. And an important premise of the grand bargain is that these platforms offer all users equal access to distribution; all users have the equivalent opportunity to develop an audience.

The grand bargain allowed the social media economy — and, arguably, the broader internet economy — to flourish without any pecuniary obligation on the part of users, with advertising financing the entirety of the product experience. Note that the rapaciousness of data collection by advertising targeting machinery and the pervasiveness of the collection mechanisms across third-party properties are valid topics of debate. Consumers should have agency over the consequences of their use of a product. But the idea that a social media platform could be utilized by 2 billion people per day with a price gate is difficult if not impossible to defend. The grand bargain facilitated the unprecedented, billion-user scale of social media platforms like Facebook, Instagram, YouTube, and TikTok.

Yesterday, Meta announced that it will introduce Meta Verified, a paid verification service across the company’s Facebook and Instagram products that offers users, “a verified badge that authenticates your account with government ID, proactive account protection, access to account support, and increased visibility and reach.” The post revealing the new feature emphasizes the verification component, which confirms the authenticity of a subscribed account by requiring the owner to submit a government-issued ID, as well as protection against impersonation and prioritized access to customer support resources.

But the post also acknowledges that subscribers to Meta Verified will benefit from increased “visibility and reach with prominence in some areas of the platform – like search, comments and recommendations.” While details are scarce, presumably, subscribers will be given preferential distribution across Meta’s newly-architected open graph.

Meta follows in the footsteps of Snap and Twitter with a subscription offering: Snap introduced Snapchat+ in June of last year at a price point of $3.99/month, and Twitter introduced Twitter Blue in November of last year at a price point of $8/month (or $84/year). Both Snapchat+ and Twitter Blue offer subscribers exclusive product features: custom emojis, multiple expiration timelines for Stories, and customizable notifications for Snapchat+, and Tweet editing, longer tweets, and SMS-based two-factor authentication for Twitter Blue. But both products also provide distribution and reach benefits. Snapchat+ provides subscribers with prioritized replies to celebrities that are displayed more prominently than those from non-subscribers, and Twitter Blue grants “prioritized rankings in conversations” to subscribers. Snapchat very quickly amassed one million subscribers after launching Snapchat+; estimates place the number of Twitter Blue subscribers at around 300,000.

Meta and Snap almost certainly introduced their subscription products as a result of the challenges that Apple’s App Tracking Transparency (ATT) privacy policy has erected for their advertising platforms; both companies effectively acknowledged this in their respective (Meta, Snap) Q4 earnings calls. And while Twitter’s predicament with advertising revenue growth predates ATT, ATT (among other things) precludes a more sophisticated direct response advertising platform from being built by new management. The ATT Recession may have strained or even unwound the economics of the grand bargain. Ads can no longer deliver sufficiently profuse commercial returns to support a wholly free consumer product experience. And impending, additional constraints on the digital advertising business model soon to be delivered through platform policy and legislation will further attenuate that business model.

But, as we’re seeing, the alternative to an ad-supported experience is not necessarily a paywall. In the case of Meta, Snap, and Twitter, payment confers distribution benefits to subscribers: those who pay aren’t merely given access to more functionality and better tools, but they are given a larger and more resounding bullhorn. These users are prioritized in distribution and reach; they’re provided with superior circulation for their content.

There are repercussions from these changes that will span issues related to bias (will these platforms diligently police the speech of their paying customers?) and economic status (should only those willing to pay be given a voice that can penetrate?) that will need to be addressed at some point. But most poignantly, by keeping the core product free but providing superior access to distribution to subscribers, these commercial changes may represent the end of the grand bargain.

Photo by Mediamodifier on Unsplash

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