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Facebook Subscription & Potential Business Model Changes

Writen by rawal

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With several older social media companies constantly looking to remain relevant, changes in strategy are bound to happen. Despite being the most widely known platform, Facebook has been having somewhat of an identity crisis, especially when it comes to attracting new users. Some factions within the company have begun pushing the idea of a Facebook subscription tier.

Much like Twitter, the potential paywall would have Facebook charging users for the use of certain features. Would such a strategy revive the company’s future prospects or is it a sign of a dying brand? Let’s navigate what this could mean for Meta and what other ideas they’ve tossed in the mix in the past.

Will Facebook Start Charging Users?

Meta’s Facebook, along with Instagram, may begin offering a subscription model in 2024. Starting in November, select regions can continue using Facebook and Instagram for free with ads or subscribe to an ad-free experience. Subscriptions will cost €9.99/month on the web or €12.99/month on iOS and Android, with the subscription applying to all linked accounts in a user’s Accounts Center. From March 1, 2024, an additional fee of €6/month on the web and €8/month on iOS and Android will apply for each additional account listed in a user’s Accounts Center.

This price is far higher than the original rumour of Facebook charging 4.99 Euros. But why would they need to institute such a fee?

Facebook subscription and business model

A subscription allows them to generate revenue in regions like Europe, where policies like the General Data Protection Regulation (GDPR) have hampered the data collection efforts of these platforms. As part of the subscription users in these regions can use an ad-free version of the site.

The traditional model enables users to enjoy services like Facebook and Instagram without any costs for the user. The free version allows for personalized advertising and data collection from the social media giant. According to the company, each Euro spent on Meta’s ads generates an average of 3.37 EUR in revenue for advertisers. This totals over 84 billion EUR in business revenues annually.

The average Facebook revenue per user in Europe was 13.21 USD, compared to 8.21 USD worldwide. Europe is, per capita, a very lucrative market for Facebook. However, this model may have to change in light of recent legislative changes. This option, called ‘Subscription for no ads’, was introduced to comply with a unique combination of EU regulatory requirements and deadlines.

What Would a Facebook Subscription Entail?

So far, Facebook has only revealed that the subscription would provide an ad-free experience. Compared to other subscriptions, this seems like a downgrade. What benefits would Facebook accounts receive from such a subscription?

Subscriptions as an alternative to ads are a well-established and economically viable business model across various industries, including news publishing, gaming, music, and entertainment.  The ‘Subscription for no ads’ aligns with recent regulatory developments, guidance, and judgments from leading European regulators and courts. Notably, in July, the Court of Justice of the European Union (CJEU) endorsed the subscription model as a valid way for users to consent to data processing for personalized advertising.

However, as a business strategy, it may not entice the average user. Other companies have used subscription models and provided better features. Social media subscriptions like Twitter’s (now known as X) allow for enhanced features like more access and longer posts. Even with that, the sign-ups have not enhanced the company’s revenue for it to be a worthwhile investment.

According to Facebook, the change will not affect the free model. Users who choose to see personalized ads can further manage their data through features like ‘Why am I seeing this ad?’ and long-standing ad preferences tools. Many users may just opt for the free model and, if they’re bothered by ads, they can alter their experience with these tools.

Facebook Subscription & Alternative Ideas

Aside from the GDPR, the generational shift in social media usage may also be a factor. The data reveals some of the geographical problems with how Facebook as a platform is fairing in Europe.

Here is a table with the number of Facebook users by country:

Country Facebook users (MM)
India 385.65
United States 188.6
Indonesia 136.35
Brazil 111.75
Philippines 95.65
Mexico 94.8
Vietnam 78.55
Thailand 58.1
Egypt 53.3
Bangladesh 49.3
Pakistan 45.95
Colombia 38.1
United Kingdom 36.8
Nigeria 36.25
Turkey 34.8
France 32.65
Italy 29.75
Argentina 29.6
South Africa 27.45
Algeria 26.65

As you can see, there are no European countries in the top 10. Even accounting for population differences, that’s a revealing stat. The impression of Facebook is one with generational divides, with the term “old people Facebook” being bandied around. This is compounded by the issue of TikTok as a more popular alternative.

Facebook viewers subscription

Since TikTok does not integrate with Facebook, they instituted Facebook shorts and Instagram reels in an effort to ape the functionality of TikTok. This change did not sway younger audiences to shift back to Facebook.

Right now, anyone can be a digital creator on Facebook. They have access to the same tools but the subscription might change that. Subscribers might have access to better interactive Facebook posts. While this is speculative, it’s almost a certainty that Facebook will have to do something to entice users into joining their payment plan.

Facebook Subscription & Legality in Data Collection

In August, Meta announced a shift to the GDPR legal basis of ‘Consent’ for processing data collected on its platforms for advertising in the EU, EEA, and Switzerland, aligning with recent regulatory changes and the Digital Markets Act. The new subscription model balances regulatory requirements with user choice, allowing Meta to continue serving users in these regions. The CJEU’s ruling supports the subscription model as a valid form of consent for an ads-funded service.

Users who continue with the free service will still have access to tools like Ad Preferences and explanations of ad targeting, maintaining control over their ad experience. Advertisers can continue running personalized campaigns for those who choose the free, ad-supported service. Meta will keep investing in tools to enhance the value of personalized advertising while ensuring user control.

Facebook ad preferences

The subscription for no ads is available to users aged 18 and up, with ongoing efforts to provide a responsible ad experience for teens amidst evolving regulations. This new model is included in Meta’s latest business outlook, with forward-looking statements about the company’s future and regulatory environment. For more details on potential risks and uncertainties, refer to Meta’s most recent Form 10-Q. Meta is not obligated to update these statements based on new information or future events.

Older social media platforms are currently struggling to keep the model of constant growth going. Subscriptions are often a sign of declining interest and a final grasp of extraction from exiting users. However, Facebook is still a major advertising platform so we can’t count it out yet.