[비즈한국] Social media (SNS) platforms, which have grown based on free services, are rushing to introduce subscription models. Moving away from the traditional method of securing revenue through advertising, the current trend is to diversify revenue streams by bundling certain convenience, exposure, and analysis features into paid services. Among users, there are mixed reactions; some welcome the increased options, while others are concerned that communication features previously considered free are gradually becoming subject to charges.
Meta Begins Paid Subscription Service… Around 6,000 Won per Month
Meta began its paid subscription service for Facebook and Instagram on the 28th of last month. This comes two months after a secret pilot run in select countries such as Japan and Mexico. The subscription plan is priced at $3.99 per month (approximately 6,000 KRW), allowing users to access features such as setting public targets, viewership statistics, searching viewer lists, story previews, and extending post expiration dates. Facebook Plus offers similar functionality.
Meta's current core revenue source is advertising. Meta reported revenue of $56.31 billion (approximately 83.6 trillion KRW) for the first quarter of this year. This is a 33% increase compared to the same period last year. Of this, advertising revenue was $55.02 billion, accounting for approximately 98% of total revenue.
Its influence in the advertising market is also growing. Industry experts predict that Meta's global net advertising revenue this year will reach $243.46 billion (approximately 360.6 trillion KRW), surpassing Google ($239.54 billion) for the first time. If this forecast holds, Meta will become the world's No. 1 digital advertising player.
The backdrop for Meta launching a paid subscription package, despite massive advertising revenue, is interpreted as being due to rising artificial intelligence (AI) investment costs. Meta expected capital expenditures this year to reach $123.5 billion (approximately 186 trillion KRW), a 77% increase from the previous year, and has stated that most of it will be invested in AI businesses. The strategy is to increase the average revenue per user while maintaining existing advertising revenue by offering additional features without changing the ads.
Transitioning from 'Free' to 'Paid' Features… Spreading Across Platforms
The monetization strategy is appearing across all SNS platforms. While past paid platform services were centered around side features like removing ads or increasing storage capacity, the scope has recently been expanding to features directly linked to the user experience.
In fact, X (formerly Twitter) introduced 'X Premium' last year, which grants verification badges and offers additional features to paid subscribers. By paying $8 per month (approximately 12,000 KRW), the 280-character limit is lifted, and posts receive priority exposure to other users.
Since 2022, Snapchat has been offering additional features through 'Snapchat+' such as AI chatbots, best friend settings, profile badges, and story view receipts. Telegram is also operating a paid service that allows users to store larger volumes of chat history and send larger files.
Unlike advertising, the subscription model is a structure that generates recurring monthly revenue, allowing for stable cash flow. In essence, the monetization strategy is shifting from increasing the number of users to obtaining more revenue from existing users.
However, opinions on this are divided. There is the view that paid services will establish themselves to some extent because it is not easy for users to abandon platforms where their social networks and content consumption habits are already formed and move to alternatives. Conversely, there is the view that the increase in paid subscribers will be limited because there is little incentive for users to pay for features they have perceived as free.
Paid Monetization vs. Ad Dependency… Platforms at a Crossroads
In reality, platform monetization is not always successful. The case of Freechal in Korea is often cited as a prime example. Freechal, which was a leading internet community platform in Korea in the early 2000s, lost its market dominance as users left following its transition to a paid model.
At the time, Freechal was noted as a promising innovative company in the rapidly growing Korean internet market. However, as the number of users increased faster than expected and server and operating costs rose, Freechal opted for monetization. The method allowed users to manage up to five communities for 3,300 KRW per month.
Freechal judged that users would bear the cost considering the value of the service and community loyalty, but users who had been creating and running communities for free protested the sudden move to a paid model, and a significant portion moved to other platforms. As the platform, which had grown based on user activity, was perceived as shifting its cost burden onto users, it subsequently lost its influence.
Accordingly, experts believe that the key to platform subscription models lies in how the boundary between free and paid features is set. Due to the need to increase AI investment costs and reduce reliance on advertising, there is a strong incentive for platforms to expand subscription models that can generate recurring revenue. However, if free features are reduced or if core functions such as exposure and analysis are moved to paid services, users may perceive this not as expanded choice but as a cost burden. Ultimately, the analysis is that for monetization to take root, users must feel clear utility sufficient to justify the additional cost.
Lee Eun-hee, a professor of Consumer Science at Inha University, said, "Consumers are not just users; they are contributors who have helped grow the value of the platform by uploading content and forming networks. In this sense, monetization needs to be approached with caution, and fundamentally, revenue generation methods through advertising or similar means may be more desirable in terms of consumer acceptance."
She added, "If monetization expands, some users may feel burdened and reduce their activities or leave, so platforms must find a balance that encourages users to continue uploading content and remaining active."