When the internet became popular, the main motivation of many was to download products that cost money for free. The recording and movie industries trembled at the rise of Napster or Torrent files. As the internet consolidated, companies emerged that offered some services for free, such as social networks or search engines. They could afford not to charge because they had hundreds of millions of users, from whom they extracted extremely valuable data to feed the so-called targeted advertising. Financing was pouring in from venture capital funds eager to get in on the party.
That model seems to be coming to an end. Twitter threw the first stone to bring it down. Its new owner, the magnate Elon Musk, landed on the platform with an idea between his eyebrows: the little blue bird, which had cost him 44,000 million dollars, had to start making money. Twitter Blue, the social network’s payment service, had an erratic start, but it’s still going strong. The CEO of Meta, Mark Zuckerberg, has welcomed the extent of his competitor and has decided to do the same with his two major social networks, Facebook and Instagram. “We started rolling out Meta Verified, a subscription service that allows you to verify your account with an official ID, get a blue badge, extra protection against phishing, and direct access to customer service,” the end said. week in the corporate blog. The price: starting at $11.99 (11.3 euros) per month. The one on Twitter costs eight dollars (7.5 euros).
No more free products on the internet? Not necessarily, but each time they will be fewer and of worse quality. “What is happening now is normal, it had to come sooner or later,” says Rodrigo Miranda, general director of the Higher Institute for Internet Development (ISDI). “Massive business models based on technology with very small margins per user are based on having, first, volume, and second, on monetizing it,” he explains. That is the base of the models freemium (contraction of freefree, and premium, of superior quality), in which 95% of users access for free and 5% paying, to later try to expand the second group as much as possible. Or the 100% free platforms, as many social networks have been until now, which suddenly start charging for their services.
If that jump has not occurred before, it has been because capital was flowing. “In recent years, there was so much money in the market that many have lived on large rounds of financing. In the end you lived on what they gave you to do crazy things. Digital businesses were growing so much that there was no need to think of other formulas”, says José Carlos Cortizo, head of marketing at the digital strategy consultancy Product Hackers.
The other key that explains why social networks like Twitter or Instagram have decided to charge for their services is that people are willing to pay. “Users have already gotten used to these platforms solving their day-to-day problems, so the barrier to spending money on these services is relatively low,” adds Miranda.
“The Internet has matured enough to make it viable, and increasingly common, to monetize projects of all kinds,” says Cortizo. Social networks are not the only ones that have jumped on the bandwagon. ChatGPT, the OpenAI conversational tool that has put all the spotlights on generative artificial intelligence thanks to its free beta version, has also announced the launch of a subscription to access improvements. Will we end up seeing paid search engines? It cannot be ruled out, especially if the race to integrate intelligent chatbots prospers, as Microsoft and Google are doing.
Adjustments in technology
The big tech companies have started 2023 the same way they ended 2022: laying off. Staff adjustments number in the tens of thousands after the five giants (Alphabet, Amazon, Apple, Meta and Microsoft) doubled their workforce in the last three years. Increased consumption of digital products, fueled largely by the pandemic, caused excess optimism in Silicon Valley. Its benefits have contracted, and the response has been to touch employment.
Curiously, it was also Elon Musk who opened the ban on layoffs, striking down more than half of the Twitter workers shortly after taking over the controls of the company. A businessman who was enriched and exalted for manufacturing electric cars or space rockets was the one who initiated the employment adjustments among the technology companies and later launched a subscription model on a social network with hardly any income. For now, Meta has seconded him, perhaps seeing there a way to compensate for the unsuccessful investment in the metaverse for now and the fall in his advertising business.
Paying to use a social network is not new. LinkedIn has been offering that option for some time, and it’s doing well. “OnlyFans, too. If you want qualified and segmented content, and get rid of trolls or people you don’t want to see, subscription models are the way”, says Miranda. Demanding money for a service that has been offered for free for years is, at least, daring. As is also offering less security to those who do not pay, as is the case with Twitter. “You have to try to encourage subscriptions because what you get in return is better, not because what you already had gets worse,” says the director of ISDI.
If other social networks decide to follow those that are charging their users, if other services up to now are no longer free, an unprecedented scenario will open up. The entire internet will compete for the out-of-pocket fee, for being part of the monthly expenses of users who already pay to read the newspaper, listen to music or watch series. Will they also do it to show photos of their vacations?
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