There is a power law at work in many mass-market internet services. A relatively small proportion of users often account for a disproportionate share of activity, whether that means posting on social networks or selling on eBay.
Finding better ways to align the economics of the service with the interests of those users is a good way to boost profits. But it also risks upsetting the delicate balance that made the services appeal to large numbers in the first place.
That risk is worth bearing in mind as social media companies search for new ways to generate revenue. Meta is the latest to join the hunt, following Twitter and Snap with the announcement this week of new subscription tiers for its Facebook and Instagram services that will cost web users $11.99 a month.
The wide range of features the companies have included in their subscription offerings highlight that this is a period of experimentation. They have yet to work out what they should or shouldn’t charge for, as they try to boost profits while at the same time protecting the overall health of their networks.
One idea is to let paying customers see less advertising, as Twitter has promised. This may have strong appeal for some, but it amounts to an admission that the ad-filled experience delivered to the majority of people is inferior — not a message that will be welcomed by the advertisers who are paying most platforms’ bills.
The existence of an “ad-lite” or even ad-free tier also reduces the incentive to improve the experience of “free” users who don’t get this relief. There is an assumption that if they are unhappy, they can always switch to a subscription.
A second common theme is building a higher level of security into subscription offerings. Meta says it verifies subscribers’ accounts and monitors them to prevent impersonation, while next month Twitter will only allow paying customers to use text messages for two-factor authentication of their accounts.
There is some logic to giving higher protection to power users, since they are most likely to have their accounts hacked or suffer impersonation. But it leaves the impression that only subscribers deserve an adequate level of security, and it again reduces the incentive to improve the experience of “free” users.
The third approach is giving some users special privileges that increase their influence — but this risks detracting from everyone else’s experience. This trade-off is not new: LinkedIn has long let subscribers send direct messages to anyone they want, a privilege not given to everyone to prevent mass solicitations.
Meta’s new algorithms will single out subscribers for special attention, making their profiles appear more prominently in search results and spreading their posts more widely. Twitter, which does something similar, says this will “reduce the visibility of scams, spam and bots” on its network — implying that the output of all its non-paying users has been assigned to the same category of unwanted dross that it hopes to expunge from its network.
Besides creating an us-and-them division within services that always prided themselves on their “democratic” nature, this approach risks eroding the quality of content most users see. Paying users aren’t inherently wiser, wittier or more virtuous than others. The idea echoes the early days of internet search, when some search engines looking for a way to make money mixed paid searches with their “organic” results.
Beyond ideas like these, there is a class of services that wouldn’t give power users an undue level of influence, but that such users would still welcome. The most obvious are analytical tools that help people monitor the reach of their posts and how others are interacting with them, and tools that enhance the user experience or improve the quality of posts. Snap subscribers, for instance, have a variety of ways to customise their experience on the service, while Twitter Blue users can edit tweets within 30 minutes of posting.
Whether any of these measures will have a meaningful effect seems questionable. Before its acquisition by Microsoft, LinkedIn generated only 17 per cent of its revenue from premium subscriptions, even though its status as a professional network put it in a strong position to charge users. There is obvious value, after all, in paying for features that help you build a professional network or generate sales leads. On mass-market consumer networks, subscriptions may bring some extra revenue at the margin — but they are unlikely to make much of a dent in social media’s heavy advertising dependence.