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Meta's subscription push to counter EU ad regulations is the latest of many social media subs

The news: Meta is advancing plans for ad-free subscriptions, targeting especially its European user base, as big online platforms prepare to meet a crucial deadline under the EU's Digital Services Act (DSA).

  • Under its tentative plan, European users would be charged approximately €10 ($10.51) a month for an ad-free experience on Instagram or Facebook’s desktop versions, with mobile subscriptions potentially costing €13 a month.
  • The core proposal hinges on the notion that European users would have the choice to either pay a fee or agree to receive personalized ads.

It's worth noting this service would stand apart from Meta Verified, which offers identity verification and some other perks to creators (and businesses) for a fee.

Why it matters: While the specifics remain hazy, the implications of this pitch to regulators cannot be overstated.

  • The DSA, effective from January 1, 2024, will mandate platforms to obtain explicit user consent before rolling out personalized ads, posing a challenge for giants like Meta, which get most of their revenues from monetizing ads.
  • Given this backdrop, the shift toward subscription models emerges as a strategic move to maintain quality user experience and stabilize revenue streams.

Beyond Meta: It’s not just Meta looking to diversify its business model a tad.

  • TikTok is trialing an ad-free subscription in one unnamed non-US market.
  • Snapchat+, which gives app loyalists access to exclusive features and perks, hit 5 million subscribers recently.
  • X (formerly Twitter) already has X Premium, which offers perks but still contains ads. Bloomberg reports that CEO Linda Yaccarino told the platform's financial backers that it is testing three premium tiers that show less ads.
  • YouTube Premium, which allows users to remove most ads, costs $13.99 per month in the US after a July price hike. The platform recently nixed its European Premium Lite tier in an attempt to get users to upgrade.

Our take: The industry's tilt toward ad-free versions emphasizes the importance of user experience and data privacy in today's digital era—and could also herald an evolution in social media monetization.

  • For users, the proposition of paying for previously free services may be a hard pill to swallow. The success of these subscription models, therefore, hinges not just on eliminating ads but on offering added value as Snapchat+ has done.
  • Meta's long-standing belief is that personalized ads have higher efficacy. Removing this element could weaken ad performance and the premium charged for ad spaces.
  • For a platform known for its high degree of personalization, displaying generic ads could dilute its brand equity.
  • Meta has long championed its ads as enhancing user experience. However, the introduction of a paid ad-free model implies a shift, suggesting users might not view these ads as beneficial.

Go further: We covered the implications for advertisers when this news was initially rumored in September; read that here.