The Era of Free Social Media Is Over
The Era of Free Social Media Is Over
Cost of entry is no longer just your attention
If the product is free, you are the product.
It’s the defining phrase of the current era of social media. It’s the idea that because we aren’t paying to use the service, we, the users, are the product. The cost of entry is not monetary; it’s our eyeballs and our attention. As we scroll, tap and swipe, we give away thousands of data points, which the platform stitches together to create sophisticated models that enable brands to target users with unprecedented accuracy.
In reality, you are the one being sold as a product to advertisers.
For the longest time, we were naive about the true cost of giving away our data. We happily complied to access the ‘benefits’; unrealistic standards, lowered productivity, fake news and damage to our mental health. And while we did, the top brass of these social media companies laughed themselves into untold riches. Meta earned $113 billion in ad revenue in 2022, which made its overlord, Zuckerberg, filthy rich.
But, in the last few years, cracks have appeared in this once impenetrable model. User growth is stagnating. Many of the platforms are struggling to remain relevant. Users — especially in younger age brackets — are pushing back against the harm platforms cause, recognizing that spending too much time on them has serious downsides. Due to endless misinformation that is widely promoted on platforms, distrust in the platforms has never been higher. Short-form video platforms have become the new kid on the block, altering the social media landscape.
One by one, the conditions that made the ad-model effective are falling apart.
An Apple a day keeps the ad spend away
But the most significant strain the model faces is the broader ad-spend pullback.
It’s partly down to the current economic conditions.
It’s partly down to erratic leadership on certain platforms.
It’s hugely down to Apple’s industry-shaking app tracking changes.
Economic conditions is self-explanatory; it’s rough out there, and that means penny-pinching. Regards unstable leaders, we need only look to Elon Musk. After Musk bought Twitter and rattled off a host of questionable changes — unblocking right-wing extremists, firing anyone in sight and opening the door to fake accounts — advertisers got cold feet. The pullback was swift and damaging. A month after his takeover, reports indicated that 50 of the 100 top advertisers’ accounts had stopped paying for ads.
But even platforms with stable(ish) leadership have felt the repercussions of Apple’s privacy changes, which have reduced the effectiveness of platforms — most notably Facebook — to siphon the data it needs to make its ad-targeting so effective. It has already dented Meta’s revenue by ~$12 billion in 2022 alone. The impact of Apple’s wrecking ball shouldn’t be a surprise. When you ask users “do you want to give this shady company your information,” most people say, oh hell no. Data shows only 25% of users opt in, meaning that 75% of the one-billion-plus people owning an iPhone device shut off the free-personal-data tap. Meta tried to serve the roadblock by baking “I agree to be tracked” into the platform’s small print. They were fined €400 million for breaking the EU’s general data protection regulation (GDPR).
When ad revenue is the lifeblood of these platforms, any decrease in ad spending by brands is a serious problem — especially when shareholders start to get panicky. In his latest newsletter, Ed Zitron dropped this zinger: “If (or, rather, when) the swindle of behavioral targeting begins to crumble, they will find themselves desperate to find short-term solutions to long-term problems. And the users will be the ones to suffer.”
The first signs of desperation have already arrived.
And it shows itself in the form of subscriptions.
Verified desperation
It started with Twitter Blue, allowing users to pay $8 a month to verify their account. Well, aside from the fact the service doesn’t require any documents or proof to gain verification and led to a host of “verified” fake accounts. It was a verified mess, but at least we got to see Mario flipping the bird on the not-Nintendo account. The subscription also offers access to features like editing tweets, higher-quality video uploads, and early access to whatever Musk dreams up next.
Then, Silicon’s favorite copy-cat artist, Meta, joined the party last week. For $12 a month, Meta Verified included perks like account verification, a blue badge (sound familiar?) and exclusive stickers for stories and reels.
It might be sold under the guise of better security, or fighting against bots, but what Twitter and Meta are doing is hiding desired features behind a paywall, and hoping that enough users will pay to make up for the shortfall in ad spend. The bigger concern is that the list of paywalled features isn’t just glossy extras; many are features that should be free. Musk has paywalled SMS authentication, meaning that your account got a little less secure unless you pay up. Meta was more brazen, putting customer service support behind its subscription. Locked out of your account and don’t have a blue badge? Back of the queue, buddy.
The move to paid subscriptions is the last hurrah. It’s a desperate attempt to remain relevant and consolidate power. And it’s likely to fail. Making the same money from subscriptions as advertising is going to be an impossible task. For context, Twitter is generating $28 million a year from its Twitter Blue service; in 2021, it made over $4.5 billion in advertising revenue. Encouraging (read: forcing) users to sign up by hiding features that should be free — or that users have become accustomed to being free — will only push them away, either to competitors or off social media entirely. As more users leave, advertising becomes less and less effective, which will cause more and more attempts to claw back money.
What do social media platforms turn to next if subscriptions fail to fill the void? The answer is nothing. That’s why Zuckerberg is throwing billions into making his Metaverse nightmare a reality. It’s not that it was the natural evolution; Zuck has seen the writing on the wall for the ad-driven era of social media. It’s dying.
Slowly but surely, it’s dying.