Social platforms test paid subscriptions

CULTURE MOMENT: Social media has been generally free since its inception, but there’s been a vibe shift over the last 12 months. Meta announced that it would introduce a paid ad-free subscription tier for Instagram and Facebook users in Europe. Snapchat is testing monthly paid subscriptions that block ads, while providing early access to exclusive and experimental features. TikTok is testing an ad-free monthly subscription (in a “single English-speaking market outside the U.S.”). And X, formerly Twitter —?which currently offers two subscription tiers —?may move entirely behind a paywall.

HOW THIS WILL PLAY OUT:

• Smaller, more exclusive social networks may just be more social. One of the biggest complaints we hear from Zs is that social platforms have become less, well, social. By paying to weed out content from brands and influencers, who pay for placement, users may actually be able to deepen digital connections with friends and family.?
• Zs pay the most for subscriptions, but also have the highest churn rate. Zs are disproportionately likely to spring for streaming subscriptions, according to research from PYMNTS, which found that Zs pay on average $377 per month for multiple platforms. But that doesn’t mean they stick around: Zs are also the most likely demo to cancel a subscription, according to one recent study.
• Yet another thing to pay for doesn’t come at a great time for Zs. Inflation and housing costs have put many Zs underwater financially, and they’re more concerned with keeping a roof over their heads than with maintaining their DMs. Nearly two-thirds of millennial and Gen Z consumers have canceled a streaming subscription in the past six months due to finances, one Deloitte survey found. And according to a recent Archrival study, 37% of Zs said that in 2024 they’ll likely have to delay at least one major life decision because of their personal finances (e.g. moving, starting school, starting a family, etc.).?

WHAT IT MEANS FOR MARKETERS:

• Zs may actually become more welcoming to brands in their social spaces. Young consumers don’t always think about how and why digital platforms are free, but the introduction of paid tiers brings that to the fore. Now, with their wallets on the line, Zs are becoming more aware of the benefits they get from engaging with content from brands and influencers.
• Be a part of the right bundle. With subscription fatigue reaching a fever pitch, Zs will be looking for their favorite brands and platforms to band together. Gen Z-focused retailers could tag an exclusive Snapchat+ deal to consumers’ spring hauls. Subscriptions to X could be bundled into college journalism programs. And an ad-free Instagram account could be included with the purchase of new mobile phones.?
• Consider social media’s tipping point from entertainment to essential service. Cash-strapped Zs are choosing between subscriptions and essentials, like gas and groceries — but social media straddles the line in a way Netflix may not. With 73% of Zs reporting feeling alone sometimes or always, it's hard to put a price on the emotional value of digital connections.??

For more on how Zs are reinventing social, check out our ALMANAC article, SubSocial.