Will social networks ever come up with a business model that doesn't rely on ads? For example, would it ever make sense to incorporate something that looks like Patreon into something that looks like tumblr? Or are we stuck with incoherent ads for mysterious products forever?
This is an interesting question that I’m completely ill-equipped to answer, but I’ll happily speculate on.
I think this is a big are of marketing and advertising research as seemingly competing models begin to take place, but I think it all comes down to the question of what is a more profitable and sustainable model; advertising model or subscription model?
Let’s look at what we have. The main social media powerhouses, facebook, twitter, instagram. All advertising models. Obviously incredibly profitable because there will always be advertisers willing to 1) reach out to not only a wide demographic, but also 2) highly specific demographics, which they are more than willing to pay for because the social media platform is selling. This is reliable income for the social media platform.
But we have seen subscription models that are successful. Netflix and Hulu are the streaming giants and both are exclusively pay based services (Hulu even does ads on top of it, those smarties!), but there are several key differences between streaming platforms and social media. Namely, it would likely be incredibly financially stupid to offer a free streaming service with high quality, in-demand shows and movies because if there is enough demand, users would be willing to put up with ads to watch it.
But is such a model sustainable? Probably not. Lets speculate on the demographics that would pay for a Facebook subscription. Probably millennials or Gen X, and only those that use social media frequently enough and in ways that ads bother them enough to dish out money. Gen Z is still living with their parents (mixture of Gen X and Boomers) for the most part, so they won’t be paying any money, and as job insecurity begins to plague Gen Z, they will remain reliant on their parents just as many millennials are. Boomers and Silent Generation are likely either not using social media in ways that they are even cognizant of ads, not using social media at all, or are simply unbothered by them.
That leaves an incredibly small population of potential subscribers, and not a particularly wealthy one at that. Even if you lean heavily into the marketing toward millennials and the benefits of your paid social media platform, I imagine your subscription fees would have to be relatively high to turn a profit. And it will only become more expensive in the (incredibly) off chance that it gets more popular (see: Netflix constantly increasing their subscription fee.)
The taste of that sweet, sweet steady profit from advertisers is just too hard to pass up, and with users willingly signing their data away to be used as a product, why not?!
