The Future of Subscriptions, Part One

17 Nov 2021

Will subscription commerce benefit from disgust with Facebook’s business model?

Ad-monetized social media is poorly aligned with users and with society as a whole. This is a clear takeaway from Frances Haugen’s recent testimony before Congress about her former employer, Facebook. The message is not entirely surprising - Netflix produced The Social Dilemma as far back as 2019. Jaron Lanier, Evgeny Morozov, and many other observers have written and warned about such issues for what appears to be eons. But to give a sense for how quickly things have shifted in recent weeks, Meta (Facebook’s new corporate brand) announced that the company will no longer allow advertisers to target users based on thousands of controversial topics on Facebook, Instagram and the company’s other properties. The company is by no means rejecting advertisement per se, but limiting the scope of targeting is itself a concession and defensive move.

At the same time, it stands to reason that ad-financed businesses will broaden their revenues through ancillary subscription products over the coming year. In fact, this is what we have been seeing for some time now - think Youtube’s subscription option, Twitter Blue, and Amazon Prime. We can expect this process to continue gaining depth and momentum. Given the growing consensus that Facebook’s problem is nothing short of its core business model, some interesting modifications in the direction of subscriptions are likely, and not just for Meta’s flagship business.

The reason is simple. Subscription commerce is not plagued with controversy about how data is being collected and used, nor about the techniques used to elicit product engagement, nor about the ownership of data by user/creators. Compared with ad monetization, subscriptions are therefore comparatively innocent. We are living in a world in which people are less susceptible to the idea that social media and other online experiences financed by ads are ever really “free”.

So how will subscription commerce innovate in keeping with this trend? Should we expect an ad-free, privacy-oriented Facebook paid for by user subscriptions? It certainly is possible. But we doubt it. Instead, imagine the advantages of subscriptions - their direct appeal between business and customer - along with the power of ad based models in the realm of personalization. In such a scenario, subscription commerce will look less and less like a specialized form of transactional exchange that we have seen up till now (monthly or yearly commitments for a set price), and more a tacit, fluid experience.

In the next post I will get into some of the details of how and why subscription commerce could and should change to keep up with the times.