Originally posted on wired.
Ad-driven business models continually compete for our time and attention. But Chinese companies such as WeChat show there is an alternative
We all intuitively understand that nothing is ever “free”. With the most popular social platforms thus far, the promise of “free” has been paid for by ad-driven business models which continually compete for our time and attention. These platforms have proven enormously successful at doing this, creating algorithms optimised to recommend the most sensational (and often, the most divisive and vitriolic) content for us to consume. This has led to the increased spread of misinformation, where extremist views flourish and tribalism grows. We witnessed the culmination of this vicious cycle in the US Capitol riots earlier this year, which shocked people the world over.
It’s clear a fix is needed. But where do we start? Some of this has to come from self-restraint, particularly in the western world where regulation and law around the unbridled spread of content are only now evolving, and the large freedoms offered by Section 230 have given social media platforms a wide degree of latitude. But it has also become apparent that there needs to be an alternative model for monetising social platforms. We need to move away from pure ad-driven models that have an insatiable demand for our attention. Currently, two models predominate in the western world: free services funded by advertising, as seen with Google or Facebook, and subscription-based services, such as Dropbox, Spotify or Netflix.
China offers a compelling alternative. The country has a vibrant tech industry with thriving social platforms we can learn from. WeChat, for example, offers a striking contrast to the ads-only business models seen in the west. Its founder, Allen Zhang, is unabashedly pro-user and had an interesting take on why he doesn’t allow for certain kinds of ads on WeChat, saying at a conference, “If WeChat is a person, it must have been your closest friend to deserve so much time you spent on it. So how could I have the heart to plaster an ad on your best friend’s face and ask you to watch the ad before speaking to him?”
Of course, China has different laws and norms to the west, but even so, WeChat’s business model, and hence its algorithms, are not optimised for attention alone. WeChat has become tremendously successful by leveraging its social platform to drive commercial activities – from job searches to applying for a visa.
China has also developed a flourishing podcast/audiobook market, worth several billion dollars through user-paid content alone – not ad-funded. This differs from traditional subscription models in that you pay small amounts for specific podcasts and episodes, not a flat fee. There is even the ability to pay based on how much of the podcast you listen to.
Imagine living in a world where social media delivers on its promise of connecting humanity and bringing more shared understanding of one another. Where we can share opinions and differences, but where algorithms work to bring us together rather than tear us apart. While there is a lot that needs to be done to address the downsides of social media, a change in the business model is a great place to start. Broadening revenue streams built around goods and services that bring added value to consumers, versus viewing the consumer simply as ad value, would significantly reduce the misinformation and the extremism that has proliferated across these platforms.
As discontent with the status quo of social media increases, and new players continue to emerge, I’m confident there’s room and demand for product-driven innovation to address these issues. A great place to start is with the business model.