NEW YORK: What would you pay to stop a social network from bombarding you with targeted ads? In the last few days, users have received a couple of different proposals – neither of which is likely to appeal to most of them.
Meta Platforms thinks it’s €9.99 (US$10.57) a month. Except it doesn’t truly think that. Its subscription plan, announced on Monday (Oct 30), removes targeted advertising from Facebook and Instagram for users in the European Union, Iceland, Liechtenstein, Norway and Switzerland.
As far as Meta’s concerned, it will be a roaring success if it’s a total flop. Its purpose is to provide the necessary proof that users don’t want it and are perfectly willing to receive targeted advertising if it means continuing to use Meta’s services for free.
X, on the other hand, thinks a (mostly) ad-free experience on the former Twitter is worth US$16 a month. If you’re keeping count, that costs more than a monthly subscription to Netflix, Disney+ or Amazon Prime.
For the money, X users get to avoid ads in their main feeds but not elsewhere on the site – such as, an FAQ quietly explains, “ads on profiles, ads in post replies, ads in Immersive Media Viewer, promoted events in Explore, promoted trends, and promoted accounts to follow.”
The company also introduced a slimmed down US$3-a-month basic plan that provides, among other user interface enhancements, a “small” boost to a user’s posts in the algorithm. The two new plans are in addition to the existing X subscription effort, formerly known as Twitter Blue, which falls in the middle at US$8 a month. (All of these prices vary depending on whether you sign up through the app or use a web browser.)
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MARK ZUCKERBERG’S CHESS MOVE
Each of these plans is as unappealing as the others – though Meta’s effort at least looks intentionally so. Its move comes as Europe cracks down on the data gathering required for the precise targeted advertising that marketers have come to expect in the digital age.
In January, Meta was fined €390 million for making personalised advertising a condition of using its services. Then, in July, Europe’s highest court effectively outlawed Meta’s practice of combining data from each of its apps to build a fuller dataset on each user.
On top of this, the European Commission’s new Digital Markets Act demands that sites it has designated as “gatekeepers” – of which Facebook is one – gain effective consent from users before using much of the data gathered for powering ads.
Of course, if enough users refuse to give consent, it would be cataclysmic to Meta’s business model. So, in the face of what Meta called “evolving European regulations”, chief executive officer Mark Zuckerberg played a chess move he’s had stored in the back of his mind for some time. It banks on the likelihood that the overwhelming majority of its European users value Meta’s services enough to keep using them but won’t be willing to pay. Consent, then, is in declining a subscription.
“The option for people to purchase a subscription for no ads balances the requirements of European regulators while giving users choice and allowing Meta to continue serving all people” in the covered countries, the company said. (The European Commission declined to comment when I asked whether it would be satisfied with this arrangement. Gatekeepers have a March 2024 deadline to get it right.)
Already, Meta is being accused of acting in bad faith. Max Schrems, the dogged privacy activist who has been fighting Meta for as long as I can remember, told the New York Times he would challenge the plan in court, citing the EU’s General Data Protection Regulations, or GDPR.
“If we move to a pay-for-your-rights system, it will depend on how deep your pockets are if you have a right to privacy,” Schrems said. “We are very skeptical if this is compliant with the law.” (Meta said the European court’s ruling in July mentioned introducing a subscription as a “valid” mechanism for obtaining consent.)
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WHAT’S IN IT FOR ME?
X has its own problems with Europe, but its most expensive plan, called Premium+, is first and foremost about solving issues closer to home. The company is now worth just US$19 billion, according to its internal valuation – barely a year on from Elon Musk’s US$44 billion takeover.
This is due in part to a crash in advertising revenues as Musk tries to pivot to a hybrid business model in which some revenue is made up through paid subscriptions; the attempt has been underwhelming.
According to one estimate, 950,000 to 1.2 million people pay for X’s US$8-a-month option – less than 1 per cent of its user base. Many of these will be the Musk die-hards for whom a subscription is a statement of politics and support. The Premium+ plan is less about attracting new power users but just extracting more from those already feverishly on board.
That’s not to say that having a hybrid ads-plus-subscriptions business model isn’t possible for online services. They just need to offer value. Netflix recently added an advertising tier to its service, and it seems to have appeal among those desiring a cheaper deal.
YouTube’s US$13.99-a-month membership plan greatly extends the site’s functionality, while its advertising revenue continues to beat Wall Street’s expectations. This shows consumers are willing to pay, but only when there’s something actually in it for them. Meta and X users will struggle to figure out what that is.