Are subscriptions the future of social apps?

When Elon Musk took over Twitter, he was publicly faced with a seemingly impossible ask: make the iconic, culture-defining, long-standing social app (consistently) profitable.

At the time of acquisition, Twitter did not have the same thriving ad business as Meta, and so Musk was forced to look at alternatives. Thus, after several false starts, the ‘blue tick’ subscription was born. Much as gamers commonly pay to customise their characters and user experiences in the games they prefer, now aficionado Twitter users could pay to have a premium experience.

After several iterations, this amounts to a handful of details. Twitter Blue users can change the app icon on their home screen and the colour scheme on-app. They can set NFTs as their profile photos with a hexagonal frame, instead of a circle. They can edit their tweets after posting, post longer tweets, and edit those longer tweets. They can also ‘undo’ tweets, which means the tweet remains private for a designated period of time before becoming available to the public, allowing the user to back out and delete it before it is seen (so essentially like a draft, but with the dopamine kick of being able to hit ‘post’ first). There are also a set of bookmark features, in case users want to collect / curate their favourite hot takes from around the app.

Exciting stuff, for $7.99 per month (more than an ad-supported Netflix subscription; notably, Twitter Blue does not get rid of ads). The premise is, presumably, that if gamers will happily pay for customisation of their profiles, characters, and broader gaming experiences, so too will social platform users enjoy the ability to customise their app experiences in a more mainstream social space. Nearly three months after launch, however, there are under 300,000 global subscribers, of which US users make up 62%.

Despite the fact that Twitter Blue is 184.1 million subscribers short of being able to just cover Twitter’s annual interest payments on the debt incurred during Musk’s purchase of the platform, subscriptions seem to be the new ‘it’ thing: Meta has just announced that it, too, will be rolling out a ‘blue badge’ verification subscription on Facebook and Instagram as well.

In theory, the turning point from ad-supported to subscription makes sense as social platforms have shifted increasingly from platforms to socialise, to platforms for content largely (but not exclusively) generated by users. Audiences pay for subscriptions to Spotify, Netflix, and Amazon Prime – why not a premium experience on the ‘social’ apps they use every day, too?

Never mind that subscribing to these other entertainment platforms generally give you an ad-free or offline experience, or free overnight shipping – some kind of tangible upgrade that affects the function of the experience of use, rather than just the aesthetics of it. Even in games, certain skins or upgrades will come with special abilities or tricks that are fun to use as part of the game, and they are not purely aesthetic.

Meta’s new blue badge verification service (Meta Verified), for $11.99 per month online or $14.99 on Apple iOS and Google Android, will allow users to verify their identity using a government-issued ID and get a blue tick next to their name. It will also offer “increased visibility and reach,” additional protection against impersonation attacks, and direct access to customer support (perhaps more useful considering the 11,000 layoffs already announced, with more to come), according to Zuckerberg, who did not elaborate on the rollout timeline beyond the current experimental markets of Australia and New Zealand.

While the announcement emphasized that the new subscription tier would be introducing greater reliability, authenticity, and security to its services, the high price point would indicate that some kind of search for profitability is at play. Given that Apple’s privacy-centric iOS upgrades cost Meta an estimated $10 billion in ad revenue in 2022, and that Meta lost $13.7 billion on its as-yet-unfruitful Reality Labs division in the same year (an increase on the $10.2 billion reported losses in 2021), perhaps Musk is not the only one trying to make up a deficit in the coming months. Poor timing, with a cost-of-living crisis to exacerbate competition among the established subscription players in entertainment – none of which bodes well for newcomers into the subscription space.

Yet this does not spell the end for social subscriptions. Snap Inc. quietly rolled out Snapchat+ in June last year, priced at a moderate $3.99 per month, giving subscribers access to a collection of exclusive, experimental, and pre-release features. By August, it had already converted 1 million users into subscribers. However, Snapchat has a leg up on the other platforms: it already has in-app purchasing, meaning users are more accustomed to paying for things withing the app (reducing conversion friction), and many of the features and upgrades it offers users to pay for are already existing behaviours, with affordable, smaller transactions offering value in the existing social currency on the app. For example: expanded Bitmoji packs, and user emoji ‘signatures’. For users already using Bitmoji packs and emojis on the regular free service, upgrading for expansion packs is straightforward. However, opting to pay twice as much for an NFT profile photo, on Twitter – an app where profile photos have almost zero social currency, is an uphill battle. So, is paying three times that amount for better customer service on Meta apps (what does the average user even use Facebook customer service for?).

Social subscriptions will have a role to play – but it is safe to assume that simply rolling out expensive paid tiers for relatively minor changes will only appeal to niche, high-frequency users on the apps, especially given current market conditions.