Meta Verified: The Start of the Paid Subscription Era?


by 5paisa Research Team Last Updated: Feb 28, 2023 - 04:27 pm 1k Views

Mark Zuckerberg, following the footsteps of Elon Musk, has announced the launch of Meta Verified, a paid subscription service for Facebook and Instagram. For a monthly fee of $11.99 and $14.99 on web browsers and iOS, users can enjoy exclusive features, including a blue badge and extra impersonation protection. This new service aims to enhance authenticity and security on their platforms.

“This new feature is about increasing authenticity and security across our services,” Zuckerberg said.

But why is Meta, the parent company of Facebook, suddenly introducing a paid subscription service after almost a decade of claiming that their platform would always be free? Well, it seems that things have not been going so well for the social media giant lately.

Meta reported its first year-on-year decline in quarterly revenues in July of 2022, and then another decline just three months later. Ouch! This has resulted in Meta's stock trading at less than half of its peak value in 2021.

The main issue? 

Well, like many big social media companies, Meta's revenue is heavily dependent on advertising, with a whopping 97.5% of its revenue coming from ads. 

However, due to Apple's stricter privacy guidelines, advertisers are spending less on ads, resulting in the decline of ad revenue for Meta.

Now what are these guidelines and how do they affect the revenue of Meta?

Have you ever been scrolling through your social media feed and noticed that every ad seems to be tailored specifically to you? Maybe you were thinking about buying a new piece of furniture and suddenly every ad is for furniture stores or home decor websites. It's not just a coincidence, it's all thanks to targeted advertising.

Targeted advertising is when companies use your online behavior to show you ads that they think will interest you. For example, if you search for a new pair of running shoes, you might start seeing ads for other workout gear. This type of advertising is highly valuable to companies because they know they are reaching potential customers who are already interested in their product.

But what happens when users start opting out of this type of data tracking? That's exactly what has happened with Apple's new privacy guidelines, which require users to actively choose to share their data with advertisers. This has made it much harder for companies like Facebook (now called Meta) to sell highly targeted advertising, which is not as valuable to advertisers. As a result, Meta's ad revenue has taken a hit.

To make matters worse, the economy is weakening and many companies are cutting costs, including advertising budgets. This means less money for Meta's advertising revenue, which drives the operation of all of its properties. In fact, Meta generated a whopping $114.9 billion from advertising in 2021 alone.

But advertising revenue isn't the only problem Meta is facing. The company is also spending big on its metaverse project, which aims to create a virtual world for users to explore. In the first nine months of 2022, Meta's Reality Labs division (which focuses on virtual and augmented reality) lost $9.4 billion compared to a loss of $6.8 billion for the same period in 2021. And Meta expects those losses to grow in 2023.

To diversify its revenue and reduce its reliance on advertisements, Meta is offering paid subscriptions. And it's not just Meta, as many other ad-supported networks are also seeking to diversify their revenue streams.

Last June, Snapchat, a messaging app widely popular among millennials and Gen Z, launched a subscription plan called Snapchat+. For just $3.99 per month, users can access exclusive features, such as lenses and filters, without any ads interrupting their experience.

In December, Twitter joined the subscription bandwagon by relaunching Twitter Blue, a premium service that offers perks such as undoing tweets and customizable app icons for $8 per month. This move is a significant departure from Twitter's traditional reliance on advertising, showing their willingness to explore alternative sources of income.

But can subscriptions really replace ads? Well, according to recent reports, Snapchat+ has only managed to attract 2.5 million subscribers out of their 375 million daily users, and Twitter Blue's numbers are reportedly below 300,000. So, it seems like subscriptions are not yet a viable replacement for ads.

But what does this mean for content creators? Well, according to Meta, some of the top requests they get from creators are for broader access to verification and account support, in addition to more features to increase visibility and reach. And that's exactly what Meta's subscription offering aims to provide.

Content creators who subscribe to Meta's service will have access to a range of perks, including broader access to verification and account support, as well as more features to increase visibility and reach. This could be a game-changer for content creators who are looking to grow their online presence and reach a wider audience.

However, some concerns have been raised about the new subscription offering. For example, the verified status was an effort to establish Facebook as a legitimate and safe space for creators. Giving up on verification for notable users and turning it into a premium product could lead to scammers getting verified and legitimate users losing their verified status.

All in all, it's an interesting time for social media platforms as they explore new ways to generate revenue and keep their users engaged. We'll have to wait and see how Meta's subscription offering plays out and whether it will be successful in attracting content creators and generating revenue. Stay tuned!


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