How much would you pay to stop the social network from bombarding you with targeted ads? Over the past few days, users have received several different offers – none of which are likely to appeal to most of them.
Meta Platforms Inc. estimates the cost to be €9.99 ($10.57) per month. But she doesn’t really mean it. Its subscription plan, announced Monday, removes targeted advertising from Facebook and Instagram for users in the European Union, Iceland, Liechtenstein, Norway and Switzerland. As for the Meta, it will be a mild success, if not a total failure. Its purpose is to provide the necessary evidence that users do not need it and are perfectly willing to receive targeted advertising if in practice they continue to use Meta’s services for free.
On the other hand, X Corp. thinks the (mostly) ad-free ex-Twitter experience is worth $16 a month. If you add it up, that’s more than a monthly subscription to Netflix, Disney+, or Amazon Prime. For this money, X users can avoid ads on their main channels, but not elsewhere on the site — such as, as the FAQ quietly explains, “profile ads, post reply ads, Immersive ads Media Viewer, Promoted Explore Events, Promoted Trends and Promoted Follow Accounts”.
The company also introduced a discounted $3 per month basic plan that, among other UI improvements, provides a “small” boost to a user’s posts in the algorithm. The two new plans are in addition to existing subscription efforts X, formerly known as Twitter Blue, which falls in the middle at $8 per month. (All of these prices vary depending on whether you sign up through the app or use a web browser).
Each of these plans is as unappealing as the rest – though Meta’s efforts at least seem intentionally so. Meta’s move comes at a time when Europe is restricting the collection of data needed for precisely targeted advertising that marketers expect in the digital age. In January, Meta was fined €390m for making personalized advertising a condition of using its services. Then, in July, Europe’s highest court effectively banned Meta’s practice of combining data from each of its apps to create a more complete data set for each user. In addition, the European Commission’s new Digital Markets Act requires sites it has designated as “gatekeepers” – which includes Facebook – to obtain effective consent from users before using much of the collected data to power advertisements.
Of course, if enough users refuse to consent, it will be catastrophic for Meta’s business model. So in the face of what Meta called “evolving European regulations,” CEO Mark Zuckerberg played a chess move he’d been keeping in the back of his mind for some time. He’s betting on the likelihood that the vast majority of his European users value Meta’s services enough to keep using them, but aren’t willing to pay. Consent is then expressed in refusal of subscription. “The ability for people to purchase an ad-free subscription balances the requirements of European regulators while giving consumers choice and allowing Meta to continue to serve all people” in the countries covered, the company said. (The European Commission declined to comment in response to my question about whether it would be satisfied with this agreement. The gatekeepers have until March 2024 to act.)
Meta has already been accused of malpractice. Max Schrems, the staunch privacy activist fighting Meta, told the New York Times that he would challenge the plan in court, citing the EU’s General Data Protection Regulation, or GDPR. “If we go to a fee-for-entitlement system, it’s going to depend on how deep your pockets are, whether you have a right to privacy,” Schrems said. “We are very skeptical that this is in accordance with the law.” (Meta said the European Court of Justice’s July ruling referred to the introduction of subscription as a “valid” consent mechanism).
X has its own problems with Europe, but its most expensive plan, called Premium+, is primarily aimed at solving problems closer to home. According to the company’s internal valuation, it is worth only 19 billion dollars – only a year after the takeover by Elon Musk for 44 billion dollars. This is due in part to a collapse in advertising revenue as Musk tries to move to a hybrid business model where some revenue is offset by paid subscriptions; the attempt failed. According to one estimate, 950,000 to 1.2 million people pay for X’s $8-a-month option — less than 1 percent of the user base. Many of them are likely die-hard Musk fans, for whom the subscription is an expression of their political stance and support. The Premium+ plan isn’t so much about attracting new power users, it’s just about getting more out of those already on board.
This does not mean that the hybrid business model “advertisements plus subscriptions” is not possible for online services, reports Bloomberg TV Bulgaria. They just need to offer value. Netflix recently added an advertising tier to its service, and it seems to be appealing to those wanting a cheaper deal. YouTube’s $13.99-a-month membership plan greatly expands the site’s functionality, and its ad revenue continues to beat Wall Street expectations. This shows that consumers are willing to pay, but only when there is something of real benefit to them. Meta and X users will have a hard time figuring out what this is.