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3 alternatives to social media’s ad-based business model

Originally posted on uxdesign.

A subscription model would come at a deeper cost.

Ads on social media are no fun. Every few swipes down, there’s a curated ad getting in the way of the content you really want to see. But, of course, ads are how social media companies make their money. On most platforms, advertisers bid against each other for prime slots in your feed. So, when you look at a digital ad you are in a sense “paying” for the service on which you see it.

In recent years, however, this ad-based business model has been criticized not just because ads are annoying digital clutter, but as they become more and more targeted to users’ interests and personalities—data collected from their use of social media—they have the power to influence political opinion like never before in history. Because of this, more than half of American adults state that social media should prohibit political ads entirely.

While most of the concern surrounds political ads, it’s worth considering what social media would look like without any ads at all, for politics or products. How would Instagram, Facebook, and Twitter profit?

As far as I can tell, there are three alternatives to the current ad-based model used by major social media platforms—subscription, tax-funded, and premium models.

The first two choices will never feasibly work for these major platforms for a variety of reasons. The latter, however, offers a promising new business model that, I believe, social media companies will adopt in the near future.

The Subscription Model

Don’t like ads on Facebook? Then you’ll have to pay some other way to use the platform. And that some other way might be via a subscription model.

Subscription models for social media would work just as for Netflix and Spotify. Users would simply pay a monthly or yearly fee to use the service.

But while the subscription model might be attractive to social media companies (they’d still be earning billions of dollars), it is less so for their users.

Broadly speaking, social media can be divided into two categories—social media for creating and social media for connecting. Social media for creating—like YouTube and Medium—can more easily persuade users to a subscription model than can social media for connecting (Instagram, Facebook, and Twitter).

Why? Well, take Medium for example. Why do Medium members pay $5 a month or $50 a year? Yes, to get unlimited access to articles, but also to support the platform’s content creators, the writers. Medium members value the hard work writers put into their stories, and as a result they sign up for a subscription.

This is the same reason why platforms like Patreon and Buy Me a Coffee are so successful. Supporters choose to pay not just for exclusive, ad-free content, but also to help fund their favorite creators.

But, if you paid $5 a month for Instagram, who exactly would you be supporting? I could be wrong, but if Instagram were to adopt this model I can’t see them paying their “content creators” for sharing vacation or cat photos.

If users subscribed to Instagram, they would be supporting no one other than Instagram. This is different from Medium, Patreon, or even streaming services like Netflix and Amazon Prime who give a share of their earnings to the creators of the content they provide. Thus, when you pay for these latter services, you support both the platform and the creators, not just the platform.

This is one reason why social media for connecting can never survive on a subscription model alone. Instagram, Facebook, and Twitter will most likely be unable to convince the majority of their users to pay for these services when all their users will be supporting is Instagram, Facebook, and Twitter.

Even if—somehow—these platforms convinced users to pay for a subscription, they would only be able to convince a subset of users—namely, those of the middle and upper classes who can afford it.

Members of the lower class struggle to get access to computers, smartphones, and WiFi as it is. Paying to use social media would simply not be an option for many.

While these platforms might profit gloriously off a subscription model should they be able to convince users to pay, they would ultimately become platforms strictly for society’s elite. As a result, the ideal of social media being new town squares, where everyone has a voice and is equally represented in the marketplace of ideas, would become a fantasy of the past.

There can’t be true representation of fair democratic discussion when all the discussion is from one subset of people. With a subscription model, many members of the lower class will be unable to afford access to social media. Thus, without this group’s input and participation, social media would cease to be anything close to a fair town square.

This reason, coupled with the unlikelihood that social media companies would even be able to convince users to pay via a subscription model, begs other alternatives to the current ad-based system to be considered.

The Tax-Funded Model

I can hear your cursor whizzing toward that “back” button. But hold on, I agree with you. A tax-funded model would be absurd. But just because it is absurd doesn’t mean it’s not worth thinking about. So, hear me out in this section while I attempt an argument for a tax-funded social media network.

First off, why a tax-funded model? There’s been increasing discussion in recent years that social media serve as our society’s new town squares, platforms for open and equal discussion among users.

But when historical town square gatherings occurred, participants didn’t have to stare at an advertisement every few seconds, nor did they have to pay a monthly or yearly fee to attend.

Instead, attendance to these gatherings was free. However, the actual physical spaces of town squares were built using tax dollars. If social media is to emulate these spaces, why should it be any different?

Adopting this model would mean that the government, using tax dollars, could hire a big tech company such as Facebook or Google to build a digital Town Square.

The benefits of a such a network are that it would be ad-free and subscription-free, thus available to anyone with a device and WiFi. But the benefits really stop there. As I’m sure you can spot numerous flaws in this tax-funded model, I’ll go ahead and address them.

First, how would the government convince citizens who don’t use social media to pay taxes to fund it?

Second, I imagine that funding a network via taxes would create this sense that the platform must be political. In other words, people would assume that the platform is solely designed to be used as a marketplace of ideas.

While this might not appear to be an issue, those vacation and cat photos would seem hilariously out of place in a sea of heated political debates. As a result, many users uninterested in discussing politics would just end up leaving the network to join a different one, probably one funded by advertising.

Third, if such a network were created by the American government and thus funded by American taxes, would citizens of other nations be allowed to join? It doesn’t make sense that they would for free.

So, this Town Square would be strictly American, thereby excluding discussion with citizens of other nations. Just like with the subscription model, a tax-funded social media would become a network only for a certain group of people, thereby constricting the marketplace of ideas.

Again, while a tax-funded social medium may certainly not be the best alternative to the current ad-based model, it’s nevertheless an alternative worth thinking about.

This brings us to the final and best alternative—the premium model.

The Premium Model

How is this different from a subscription? Essentially, it’s just a combination of the subscription model with the ad-based model.

In other words, social media platforms would carry on with their current model and simply introduce a premium option for users if they are willing to pay a monthly or yearly fee. This premium option could include a few other exclusive features, but the main attraction would be no ads.

Obviously, I’m not writing about anything new here. Many platforms have adopted this model already, such as YouTube Premium and Hulu (which has different levels of subscriptions, cheaper options with ads and more expensive ones without ads).

But, these are platforms for creating, not for connecting. By subscribing to YouTube Premium or Hulu’s more expensive options, you not only get ad-free content and support the creators of that content, but you also get access to exclusive content like YouTube and Hulu Originals.

If you signed up for, say, Instagram Premium, there would unlikely be Instagram Originals. I can’t even imagine what such exclusive content would be. However, in addition to an ad-free experience, with Instagram Premium perhaps users could get access to exclusive filters and upgrades for their stories and posts. Or with Twitter+, members could be gifted an extended character count for tweets.

In addition, premium models include both the benefits social media for connecting ought to have—no ads (for those willing to pay) and accessibility to members of all people groups.

For these reasons, I think that a premium model is not only the best alternative to the current ad-based model used by Facebook, Instagram, Twitter, and the like but also one that these platforms will likely adopt within the next few years.

Source: uxdesign

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