Last November, Meta started offering users in the EU a new version of Facebook and Instagram. In exchange for as much as €12.99 per month, the company promised neither to process data for personalised adverts, nor to show any ads at all. I dislike being hounded to buy stuff, and watched with envy. Could changing the way we pay for social media make it better?
The current model involves us exchanging our time, attention and privacy for cat videos and jealous girlfriend memes. We all pay eventually, as ad spending is ultimately built into prices. Including the likes of Google and Amazon, in 2022, Britain’s average digital ad spend was a little over £900 per household.
This system’s main benefit is that it is accessible to those without much cash. Personalisation should save people from scrolling through irrelevant ads (Car insurance! Package holidays! Zimmer frames!). Some economists have even argued that targeted digital advertising has increased the variety of stuff Americans consume.
Suppose though that regulators woke up one morning feeling meddlesome. Suppose they announced a ban on “free” ad-supported services, no more tracking and no more temptations to buy an avocado slicer late at night in the hope it will transform your life.
Regulators would (of course) still allow platforms to make money. Some would have a head start in the subscriptions business. Alphabet claims that YouTube, for example, squeezes more value from its paying subscribers than the ad-supported sort.
Hard evidence of what might happen is thin. One recent working paper argued that switching to a subscription-based model could mean platforms try harder to give users a good time, rather than maximising eyeballs on ads and short-term engagement. It refers to an experiment in which hiding (user-defined) “toxic” content on Facebook, YouTube and Twitter (now X) reduced the time people spent there. But on Twitter it increased the number of retweets, which they see as a sign of an improved user experience.
It is possible that making people pay upfront would help with the problem of “digital addiction”. Although many people are happy with their social media use, one study estimated that about a third of it is the result of self-control problems. Those less immune to “digital fentanyl” might be grateful for an upfront price to give them pause.
An even more intrusive regulator concerned about people consuming more online content than they really want could mandate a model in which people paid for what they watched. Retailers would never get away with an “all you can smoke” offering. If vendors of viral videos faced similar constraints, perhaps they would be associated with fewer feelings of regret.
I doubt any social media executives are praying that my noodling makes it into the real world. And there are good reasons to be sceptical that a switch to a subscriber model would make much difference. Competition between platforms provides strong incentives to keep users engaged. And Matthew Gentzkow of Stanford University, one of the authors of the digital addiction study, points out that part of the focus on short-term engagement is that longer-term measures of welfare are hard to find.
The recent example of Meta introducing paid-for versions of Facebook and Instagram suggests that incremental change is unlikely to have major effects. There is no evidence of a subscription rush, or of any difference in the surface-level user experience, beyond the lack of ads.
Indeed, everyone seems miffed. Regulators are asking questions about how the “pay or consent” model was implemented, including whether consumers faced “pressure” to accept the ads option. In February, a European consumer protection group complained that the move was a “smokescreen” for problematic data processing. Meta itself has stated its philosophical objections to charging, and that it is simply trying to follow “overlapping EU regulatory obligations with differing compliance deadlines”.
Live discussions include whether the implicit price of the existing advertising model is too high. That comes amid growing chatter about the virtues of “contextual adverts”, based on a web page’s content rather than a viewer’s profile. Another is whether the cost of the alternative is low enough. Meta has offered to lower the price to €6 a month but faces queries from the European Commission about how exactly the new offering works.
Whoever would have thought that a simple economic tweak might not solve a complicated problem? Perhaps if I spent less time glued to my phone, I would have worked it out sooner.
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