Report: Ad-Free Social Media May Not Have Future in US

If Meta offered a paid, ad-free version of Facebook, would consumers use it?

Probably not, according to a Monday (Oct. 16) Bloomberg report.

The company is floating the no-ad offering in Europe to comply with new regulations, the report said. EU users would pay about 13 euros ($14) a month for Facebook and about $6 a month for Instagram.

In the United States, an ad-free option would cost about $240 per year, per the report. That would make a Facebook or Instagram account more expensive than some mobile phone plans or gym memberships.

It could be possible to convince consumers to try a lower priced ad-free service, but it’s unlikely that companies would be willing to reduce their prices enough to find out, Jonathan Zittrain, co-director of the Institute for Rebooting Social Media at Harvard’s Berkman Klein Center for Internet and Society, said in the report.

“The revenues for the targeted-advertising-based online platforms are staggering,” he said, per the report.

Last year, Meta earned about $117 billion in revenue, with the company taking in about $220 per user each year in the U.S. and Canada through ad sales, according to the report.

“It’ll be hard to substitute subscription fees for it, especially when people are used to not paying,” said Zittrain, per the report.

Meta has indicated that the ad-free service is designed more to comply with regulators than bring in new customers, the report said.

Interviewed by Zittrain in 2019, CEO Mark Zuckerberg said, “all the data that I’ve seen suggests the vast, vast, vast majority of people want a free service.” He also said he thought Facebook users don’t mind seeing ads and like being able to get information from local businesses.

Last month, the company updated its WhatsApp messaging platform to comply with new European regulations, reportedly creating a beta version of the service that includes a new screen for third-party chats to comply with an interoperability requirement under the EU’s Digital Markets Act (DMA).

“Under the DMA, the European Commission can designate digital platforms as ‘gatekeepers’ if they provide an important gateway between businesses and consumers in relation to core platform services,” the commission said at the time.

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