Targeted ads, privacy issues, bots – is it in our best interest to start paying for them?
One of the best decisions I’ve made recently was going premium with my YouTube account. Having to watch one and sometimes two ads per video grew increasingly annoying. Paying $12 per month was a no brainer in avoiding this irritation.
Hold that thought.
From Recode:
If you have a TikTok account and you don’t like getting targeted ads, you soon may not have a choice. Starting April 15, the company’s personalized ads policy is changing — as are users’ options to opt out of them, it seems.
Currently, you can opt out of receiving personalized ads on TikTok. Those ads are based on your “interests,” as inferred by the things you watch and look up on the app itself. According to a notice TikTok users are starting to see on their feeds, however, it appears that this personalization will soon be mandatory.
The two questions with this news I’m curious to ask are:
How long will we want to use apps like TikTok and Instagram for free?
And is it in our best interest to start paying to use them?
The internet for the longest time was based around the ethos that everything was free. It’s what drove the publishing and news business into the ground in the early 2000s as consumers could find all the information they wanted somewhere online. But, as the internet has evolved and companies have realized the value they create should no longer be accessible for free, subscription based models have grown exponentially.
Most major news outlets, whether it be the New York Times, The Atlantic, The Wall Street Journal and countless others are built around a psedo subscription model. In running their platforms this way, versus ones centred solely on advertising and how many “clicks” they receive, the quality of work has risen, which not surprisingly, has increased subscriptions.
From NYT:
The New York Times Company has bet on digital readers as the future engine of its business since 2011, when it started charging for online content — and it has largely been a good gamble. In the three-month period ending in September, for the first time, the revenue from digital subscribers was greater than the money the company brought in from print subscribers, The Times said Thursday as part of its third-quarter financial report.
“Our strategy of making journalism worth paying for continues to prove itself out,” Meredith Kopit Levien, who took over as chief executive in September, said in a statement. Digital subscriptions would not only be the central driver of the publisher’s growth, Ms. Levien added, but eventually become its biggest business.
Now if you were to apply this idea to Facebook, Instagram and TikTok, how much money could they generate if their models were based solely upon subscriptions?
Would users pay $12 per month as I have when I upgraded to YouTube Premium?
How much better would the content be if ads were left out?
To answer, a lot, yes I believe many would, and it would be much better.
Even if free and premium models were offered, those who want to pay, can, and those who do not, won’t have too. Part of the joy of watching Netflix and HBO is that they don’t have commercials. Both business models are based on subscriptions. Ads are not needed, nor are they wanted. Instagram isn’t as an enjoyable experience as it once was because every third or fourth photo or story you pass by is an ad. Nothing is free in this world and the more we accept and use platforms based around this model, the less we control how much of our information they take and sell and the less we control the experience.
The irony of this TikTok news is how it flies in the face of what users actually want.
From Recode: (emphasis mine)
TikTok didn’t tell Recode what motivated the change, but it’s likely no coincidence that this new policy comes as Apple prepares to roll out an update to iOS 14 that will require apps to get users’ permission to track them across other apps. This cross-app tracking, typically done through pieces of code that companies like Facebook and Google plant in seemingly unrelated apps, is a major source of revenue for mobile apps — and a major source of data about their users.
Fearing that few users will choose to be tracked when Apple’s update forces apps to present them with the option, companies are scrambling to figure out how to keep their personalized ad business model going. You may have noticed this pop-up on Instagram, for instance, which strongly urges users to “make ads more personalized” for a “better ads experience.”
Users don’t want to be tracked and they certainly don’t enjoy ads. We just tolerate them. But if the business model of the New York Times suggests anything, it’s that profitability and scale are reachable if the product is worthy of subscription. Billions use Facebook, Instagram and TikTok, their worth and existence is tantamount for so many. Users will pay and the companies probably know this. It’s just uncanny why they don’t explore this option. Or maybe they will. Twitter is mulling the idea now.
From Bloomberg:
Twitter Inc. is building a subscription product as a way to ease its dependence on advertising — a plan the social network has considered for years, and one that has taken on a heightened priority given the pandemic and pressure from activist investors to accelerate growth.
The majority of Twitter’s revenue comes from targeted advertising, which serves up promoted posts aimed at specific groups of users. That business has grown in recent years at a slower pace than competitors like Facebook Inc. and Snap Inc., and Twitter’s slice of the digital ad market globally remains at at a lackluster 0.8%, according to EMarketer.
Twitter, the thinking goes, would benefit from a separate revenue stream that isn’t as reliant on brand advertising. The company’s user base in the U.S., its most valuable market, has also started to plateau, meaning it can’t rely on simply adding users to juice revenue.
Twitter going to subscriptions seems a no brainer to me. It would juice consistency in its revenue model as well as eliminate bots and un-active users, thus making the overall product that much better.
But the key marker in the Bloomberg piece is as follows:
Subscriptions have always offered a tantalizing alternative to advertising, but social networks have traditionally stayed free as a way to encourage user growth and engagement, which is then subsidized with paid marketing posts.
Growth can only get you so far. The experience is what drives engagement. I’m more eager to using YouTube than ever before because it’s a more enjoyable experience. Well worth my $12. Social media apps aren’t there — yet. But they soon will be faced with this dilemma. To maintain and spur future growth, subscriptions should become part of their business models. Ads will only take you so far before users begin to tune out.
Part of me wonders what would happen if consumers were given the choice the next time they went on Instagram or TikTok to accept the following notice and proceed for free, or pay $8 and receive no ads with no invasion of privacy.
As the notice says, you’re giving Instagram permission to track your activity across other apps and websites so the app can build a comprehensive profile of you and your interests, and sell ads based on them.
I have a feeling a lot of people would pay.
