Mark Zuckerberg goes where Elon Musk stumbled.
Months after Twitter said it would charge a blue check verification fee, Meta is rolling out a similar system for Facebook and Instagram users. While Meta Verified will generate just $2 billion in its first year, a fraction of the company’s 2022 revenue of $116 billion, it could represent a new source of cash as the advertising market shrinks.
Businesses have long relied on advertising, but charging directly to users is new for both companies. In the season where companies have made big cuts in the number of employees, the search for new sources of revenue is clearly on the minds of executives across the industry. Big tech laid off 160,000 workers last year, and more may be on the way.
Meta is also working on a separate text-based social network similar to Twitter, the BBC reported. “We are exploring a standalone decentralized social network for sharing text updates,” a BBC spokesperson said..
It’s too early to tell if Meta will succeed in finding a new source of revenue, which now comes almost entirely from advertising. Its net income fell about 40% last year, a drop of about $16 billion, and it is cutting workers to cut costs. Meta said on Tuesday it would cut about 10,000 jobs a second round of layoffs took place over the next few months after the company cut 13% of its workforce, about 11,000 jobs.
Meanwhile, under new owner Elon Musk, Twitter’s revenue is down 40%More than 500 of Twitter’s top advertisers have suspended spending, according to Twitter insiders on the platform.
Key things
- The social media giants are struggling to find new profits in the headwinds of an expected looming recession and advertising cuts.
- Elon Musk’s Twitter began charging users for verification and other added features amid a 40% drop in revenue.
- Meta, the owner of Facebook and Instagram, is following Twitter’s lead with a paid verification service.
- Tech industry profits are in the spotlight amid waves of layoffs and other struggles across the industry.
Meta verified
Zuckerberg’s Meta Verified product for Instagram and Facebook gives users access to exclusive features and enhanced customer support. Paid users get a verified badge and increased visibility.
Meta shares are down roughly 8% year-to-date and are almost flat over a five-year period. The S&P 500 has performed similarly over the past year, but has returned about 45% over five years.
Meta also said it would make changes designed by an outside group related to its VIP service using a tool called “cross-check”. It will not implement all the proposed changes regarding transparency of content moderation and measures to prevent political favoritism.
Twitter’s new paid service, Twitter Blue, costs US users $8 a month or $84 a year when they sign up on the site. It’s slightly more expensive if users sign up using the iOS or Android mobile apps. It comes with ticking indistinguishable from the old program, the ability to edit tweets, upload longer videos and create longer tweets, and appear at the top of search results, among other benefits.
Twitter has long offered blue ticks to indicate verified users, generally reserved for well-known politicians, celebrities and journalists. Now anyone can pay a monthly fee for this verified brand. However, the rollout was far from smooth: Many longtime users left the service immediately.
Twitter hopes to generate $732 million in revenue in the first quarter, global sales and marketing chief Chris Riedy said.. That would be a 39% drop from last year’s first quarter.
While Musk’s takeover is partly to blame, the expected economic downturn and other concerns about the platform are forcing advertisers to use cash for purposes other than Twitter ads. Already operating at a loss, Twitter has made deep staff cuts, shuttered offices and introduced other measures in an effort to cope. Twitter’s quarterly operating loss in the second quarter, its last as a public company, it was $344 million.
