"Pay to Survive", a New Paradigm for Social Media
Thoughts on Meta Verified and the Platform Tax
A lot has changed in the almost two decades since social media has been a business. Mobile devices, video content, kids eating Tide pods for views, the list goes on.
But through all these developments, the fundamental economic model of social media has remained the same: creators make content, platforms host it, audiences view it, and advertisers pay for it.
This week, when Instagram announced that they would start charging creators for Meta Verified, that changed forever. We think this will be the major new trend for social networks, and we are calling it Pay to Survive (shout out my partner Caspar for the name).
Today we dive head first into the business of social media, today and in the future. We will cover:
How social media money flows
Meta Verified and Pay to Survive
Why Meta Verified and Twitter Blue Verified are not the same
The future of organic social
This article contains several predictions, and most of them are pretty depressing. So if you want an uplifting read about how social media is a democratising force, equalising our world while empowering creators, I’m afraid that’s not what this is. To scratch that itch, you’re best off reading the internet predictions from 1997 (still waiting for the stabilising effect on global democracy that we were promised).
So with that said, let’s get into it.
How social media money flows
If a venture capitalist with no design skills were to go on Canva and turn the traditional business of social media into a flowchart, it might well end up looking something like this:
How value flows in social media
Creators, platforms, audiences and advertisers all exist in harmony, with money and value flowing (usually) relatively symmetrically between them. Advertisers pay platforms and creators for advertising; audiences pay advertisers and creators for goods and services; and platforms charge advertisers and pay creators.
But what about creators? They get paid by everyone. They charge audiences for merch, drops, and $100 energy drinks. They charge advertisers for brand deals. And they often charge platforms from AdSense and other “creator funds”.
Most importantly, they don’t pay anyone. Not a cent. (Many don’t even realise they need to pay taxes.)
That is what has started to change this year, and I am going to explain why it makes a lot more sense than you think.
Meta Verified and Pay to Survive
This week, starting with a test in Australia and New Zealand, Instagram announced that they will be charging creators to be “Meta Verified”.
📣 Meta Verified 📣
Meta Verified is a new subscription bundle that includes account verification with impersonation protections and access to increased visibility and support.
More info here 👇🏼
— Adam Mosseri (@mosseri)
Feb 21, 2023
In short, this $11.99 (for now) per month subscription will give creators:
Verified badge ✅
Prioritisation in comments
Recommendations in Explore and Reels
These are tremendous advantages for creators. In particular, prioritisation and recommendations in Explore and Reels are major growth levers. Once this gets traction, creators will be left behind without it.
In the gaming world, games that allow players to queue-skip or overpower themselves via paid features are called Pay to Win. Instagram is taking this a step further: Pay to Survive.
So far, the vast majority of reactions to this announcement have been critical, from accusations of copying Elon’s homework (lol), to rejecting the idea of creators paying platforms after already bringing them so much value.
Who in the hell is paying 12 dollars a month to get verified on FACEBOOK.
Verification means nothing anymore. They're going to have to figure out a way to be able to tell fake people from real people once the abuse ramps up. All of this is incredibly dumb.
— 🤌🏾 Imani Gandy 👆🏾 (@AngryBlackLady)
Feb 20, 2023
“Meta’s move to copy Twitter’s subscription model shows a distinct lack of new ideas … Meta has shed staff and is hemorrhaging money in building a metaverse that no one seems all that interested in right now.”
— WIRED (@WIRED)
Feb 21, 2023
Meta Verified is just as cringe as Twitter Blue and I would rather disappear into the abyss never to be known again than spend a dime trying to gain traction by paying for faux popularity on social media.
— Kode Kaldwin 🦇 (@kodekaldwin)
Feb 19, 2023
These takes are all fair, but in my view all they miss Meta Verified for what it really is: a long-overdue (and unfortunate) compensation for platforms for giving creators a series of other revenue streams.
Shock horror: Meta Verified makes business sense
My cofounder Caspar cofounded an influencer marketing platform in 2017. They are one of the largest platforms that brokers brand deals between creators and advertisers, using technology. Instagram is their largest platform partner, followed by TikTok.
In their earliest conversations with investors, one of the key questions they heard was: won’t Facebook do this? Although a tempting risk factor, this has not proven out at all (and the investors who asked it too many times have lived to regret it). Running an influencer marketing platform involves a complex mix of technology, human intervention and campaign management, none of which Facebook is built for. Software margins are not built for “tech-enabled” operating models. YouTube once tried and failed.
But the investors’ underlying logic is valid. Many creators are making seven- and eight-figure incomes per year from brand deals, and the platforms capture none of this. Surely the platforms want to get in on the action?
Enter Meta Verified. Instead of directly taking a piece of creators’ brand deals by setting up a marketplace for influencer brand deals or taking a cut of creators’ merch sales, Instagram will simply charge creators for access to their growth tools. In other words, decades in to the age of social media, finally platforms have found a way to monetise some of the ancillary value they bring to creators.
So we can add another line to our flowchart:
The dotted line is new!
The creator-to-platform subscription payment can be viewed as a platform tax on the other income that creators are getting directly from their audience and advertisers.
Creators will (reasonably) be appalled that they also have to pay platforms, even though they are the ones creating the content that platforms sell ads on. On the other hand platforms will (also reasonably) say that creators wouldn’t even exist without platforms.
And if audience growth relies on it, no matter how much they hate it, most will pay it. It will be an arms race, if all the other creators are paying, each individual creator won’t want to get left behind.
Why Meta Verified is different to Twitter Blue Verified
Elon Musk’s response to the Meta Verified news: “Inevitable”.
— Elon Musk (@elonmusk)
Feb 19, 2023
Not so fast. Twitter and Instagram are very different platforms. They have contrasting cultures, with unequal likelihoods of accepting Pay to Survive.
Twitter is like a competitive sport. Events, ideologies, and discussion fly all around, and it is the job of the creators and the viewers themselves to parse them and take a view. Politicians argue with journalists, anon accounts cancel celebrities, and lurkers sit back and enjoy the show. The best idea is supposed to win, and the “town square” will determines the victor. Champions are cheered, losers are booed. Cheaters are not tolerated.
Instagram, on the other hand, is more like Disneyland. It’s a big party! People are there for a good time, and nobody cares all that much why they are seeing what’s in front of them. So what if the guy posing all day in the Goofy costume bribed his boss to get the role, who cares? Want to buy more expensive tickets to skip the lines? Go ahead! There isn’t a concept of cheating: it’s just capitalism.
Twitter is by its natured constructed to be egalitarian, whereas no such constraint exists for Instagram. That’s why nobody is going to care that much if Instagram prioritises posts by paid accounts, but when Twitter does it there will be an outpouring of rage. Add to that the fact that Twitter is a lot harder for creators to monetise than Instagram, and you have a much less compelling pitch for creators to pay.
Twitter and Instagram are fundamentally different platforms, and Instagram is more optimally constructed for Pay to Survive. Sorry Elon.
The future of organic Social
Meta Verified starts at $11.99 per month.
This is likely just the start. Once it’s widespread, Meta will be well-positioned to set up tiers and charge dramatically more to larger creators. I could imagine a future where the biggest creators are paying $10,000+ per year to Meta. If it generates a few hundred thousand in extra income, why not?
Welcome to the world of Pay to Survive organic social.
Zuckerberg, Musk (and perhaps one day ByteDance and the CCP) will be the taxmen, and creators will be their loyal subjects.
It’s not going to be fun for audiences or creators, but perhaps it was never going to be. Nobody likes paying tax, and based on some of their IRS statements, creators are no exception.