The Social Network

In the beginning, there was just Facebook. It was targeted at Millennials, and it had a lot of pictures of nights out. Then came the selfies, the pets, the trending topics, the challenges, and the conspiracy theories. The algorithm became smarter, the ads more and more targeted. Twitter came, then Tumblr, Pinterest, Instagram, and Snapchat.

Social media has been part and parcel of our lives for almost 20 years, and things have changed substantially over this period. Innovation has been the keyword, with new features and new ways to engage users, constantly being introduced. Whenever innovation was lagging, acquisitions came to the rescue, for instance in the case of Instagram being acquired by Facebook in 2012.

The business model of social media remained the same, engaging users, collecting data, and selling that data to advertisers. However, in recent years, this business model is under pressure: the privacy restrictions released by Apple last year, the constant fear of additional regulation to protect user data, especially in Europe, and a weaker ads market in general, mean that social media need new income sources.

Many social media platforms are now offering a paid version of their services. The most famous is probably Twitter Blue, that was launched by Elon Musk after he acquired Twitter last year and gives users the possibility to have a verified account paying USD 8 per month. The feature was paused a few days after being released, as there were many cases of fraudulent accounts that were not checked before being verified.

In a quieter way, also Meta announced the “Meta Verified” program. Both Facebook and Instagram will be offering a USD 12 a month subscription program that gives the users impersonation protection, access to increased visibility and to a real person in customer service. Snapchat introduced its subscription service, Snapchat+, in the middle of last year: subscription users get early access to new features and get to try experimental features. 

These plans are for now a limited source of revenues for social media, and we do not see those revenues increasing that much: social media has always been free (other than paying with user data), and it will be difficult to induce large adoption of a subscription plan.

At the same time, these companies continue to invest in innovation, and are offering new ways to socially interact, but more on that next week.

We thank you for your continued support.

The FAM team


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