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Facebook sells subscription service as ad business slumps

“Iavailable And will always be,” Facebook vowed on its landing page for nearly a decade. Buying a “verified” account buys them better customer service, wider posting, and a blue badge next to their name.

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Subscriptions are the latest example of a growing trend. Last June, Snapchat, the messaging app popular with 20-somethings, launched a $3.99 plan called Snapchat+. In December, Twitter relaunched Twitter Blue, an $8-a-month service. Like Meta’s offering, both offer a variety of benefits, not the least of which is putting users’ posts more prominently in other people’s feeds.

It’s no surprise that ad-supported networks are looking to diversify their revenue streams. After years of uninterrupted growth, the online advertising business has hit a speed bump. The one-time shift of advertising budgets from offline locations like newspapers to the web is largely complete. Since 2021, mobile advertising has been hampered by anti-tracking rules pioneered by Apple, making it harder for apps like Facebook to target ads and measure their effectiveness.

The result was painful. Facebook parent company Meta has reported revenue declines in each of the past three quarters. Despite its recent gains, its stock price is less than half of its 2021 peak. Snapchat’s parent company, Snap, has lost nearly 90% of its value over the same period. Twitter was bought last October by Elon Musk, a mercurial self-styled “technologist,” whose owner tweeted this month that the company was “getting to break even” after previously facing bankruptcy.

Subscriptions are not a substitute for advertising. Snap said on Feb. 17 that 2.5 million people had signed up for Snapchat+, less than 1% of its app’s 375 million daily users. That translates to no more than $120 million in annual subscription sales, less than 3% of Snap’s total revenue last year. While Twitter hasn’t said how many people joined Blue (its entire press office appears to have been fired), recent leaks suggest the number is under 300,000. The product is still in development, and its promised features, such as fewer ads, are still billed as “coming soon.” On Feb. 17, Twitter took a new approach to driving signups, announcing that two-factor authentication via text message (a security feature) would soon be turned off for those who didn’t cough up.

Meta says its product is aimed at “creators” who use its platform for their work and are likely to be most willing to pay for verification and additional coverage.While “Elon plans to get everyone to buy Twitter Blue (but hasn’t given a good reason yet)”, for Meta, it’s a scalable way to prevent impersonation businesses [and] Celebrities,” suggests tech analyst Benedict Evans. Former Facebook executive Rob Leathern dismisses the idea that the plan is a replica of Snap and Twitter’s efforts: Facebook has worked on verification for years, he says, And take its 2018 acquisition of biometrics firm Confirm.io as an example.ID start up.

To the extent that the social network accepts subscriptions, this represents a windfall for the mobile platform that hosts its apps.Google running the Android operating system and Apple running the ioperating system, does not make money from the app’s advertising revenue, but from consumers’ in-app purchases, including recurring subscriptions. After hammering the mobile ad business with new privacy rules, Apple and Google stand to profit from the resulting subscription shift.

There may be a tingling on the tail. Meta’s new service costs $11.99 to sign up online and $14.99 to pay through the app. Likewise, Musk, who calls Apple’s charges a “30% tax on the internet,” charges Twitter Blue $8 online and $11 in the app. This two-tier pricing has proven controversial, with Apple blocking apps like Fortnite, a video game that tells users they can pay less in the browser. But as more and more big companies embrace differentiated pricing, consumers may learn that they can get deep discounts by signing up outside of Apple and Google’s ecosystems.

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