Facebook Subscription Model: Looking Beyond Ad Dollars?

The increasing uproar against Facebook's advertising policies, data privacy issues, and imbalance in revenue streams have become too much to tackle for Zuckerberg and Team. With Twitter reportedly looking beyond advertising dollars, has it all cooked up a perfect storm for Facebook to start looking to diversify its revenue streams and look for more avenues, including a subscription model?

-

Seldom do job listings create a stir this gripping. However, when the job listing in question is a stealth post from Twitter, with a cool code-name to go with, it is bound to raise eyebrows, and stocks too, as it turns out!

While this move signals what would be a milestone for Twitter, the final form of the offering is still guess work. The ‘Gryphon’ team at Twitter is reportedly set to work with the payments team on seeing the subscription process come to fruition.

Jack Dorsey, CEO – Twitter Inc. (NYSE:TWTR), recently confirmed that Twitter is indeed working on a subscription-based model, albeit it’s in the very early stage. The confirmation inflamed an interesting debate related to the future of Facebook as well.

By any means, this is not the “first” time Twitter has put out its feelers for exploring other channels. On at least two instances – in 2017, it had sought out feedback from its users regarding the potential announcement of a subscription-based service, one which would provide paying customers with access to advanced analytics and alert tools within TweetDeck management. Further back, in 2009, the model proposed was for companies paying for account verification on the platform.

However, with a more concrete and intent offering this time around, even investors and people associated with the company are eager to see how the introduction of a new revenue stream would pan out.

So, is the world of Social Media changing behind the blinds?

Putting The Best Foot Forward

Like Twitter, albeit not as small, the online social behemoth Facebook’s revenue is also significantly ad-based. In 2019, Twitter reported worldwide revenue of $3.45 billion, of which advertising accounted for 86% of it. The ad revenue of Facebook for the same period, was richer by over 20 times.

However, the increasing challenges for Facebook that are tightly bound with its ad-based revenue model are repeatedly putting Zuckerberg and Team in a tough spot.

Facebook’s predicament has been such that it has been rocked with a wave of issues one after another – the protests being held, privacy invasion of billions of users and political allegations are just the tip of the iceberg – some of its own making. With a mammoth 11x lag in trust to its closest competitor Google, 56% of Americans voted Facebook down to be the least trusted. To top it all, Facebook’s own study shows it’s contribution to addictive behavior.

These increasing challenges for Facebook in regards to its advertising business and Twitter’s subscription-model explorations, have brought some glary questions to the forefront:

  • Has all of its earlier challenges cooked up a perfect storm for Facebook to start looking to diversify its revenue streams?
  • With the reach and resources Facebook possesses, could it potentially free itself from its sole dependence on its advertisers?
  • Is the subscription model the way to go forward for Facebook?

It is certainly a matter which merits a closer look.

Backing The Belief

 

Join Now to read this insightful analysis in full.

This is premium content only for registered subscribers. Join the highly responsive community of tech and business leaders who power their decisions and strategies with Dazeinfo’s in-depth analysis, actionable insights and industry movers data.

Already a subscriber? Log in here

Companies having the benefit of owning both models – subscription and advertising – could make significantly more than their existing earnings with a great degree of revenue commitment from brands. Consider putting a retainer on an assumption of 1 billion users and 8 million advertisers, and Facebook could well become The Sheik of the subscription model. 

Jayesh Sharmahttps://dazeinfo.com
Voracious reader. Firm believer of the ideal that the pen is mightier than the sword. Just a kid who wants to do his bit. Ciao.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

You might also likeRELATED
Recommended to you