What's going on?

Meta announced over the weekend that it�s joining the social media subscription-service club.

What does this mean?

Advertising revenue is Meta�s bread and butter, but Apple�s new privacy policy threw a wrench in the works back in 2021 by limiting how closely companies could track users� data. That hit Meta�s Facebook and Instagram platforms hard: they�d got used to selling super-targeted ads based on users� activity, and Meta estimated the shake-up would slash its annual ad takings by $10 billion last year. And with today�s global economic slowdown making waves and shrinking firms� advertising budgets, Meta�s had to put on its thinking cap. The brainwave: offer users perks like account verification, enhanced fraud protection, and greater visibility for a set fee.

Why should I care?

Zooming in: Meta�s edge.
Meta�s playing a game of catch-up on this one, with rivals Snap and Twitter having already deployed the whole �turn-your-users-into-subscribers� stratagem. But with Twitter’s offering pretty slow to take off, it�s far from clear that users are actually willing to pay for perks like these. Mind you, Meta does have a trick or two up its sleeve. First, subscribers will have to verify their identity with a government ID, side-stepping the worries about fraudulent �verified� accounts that plagued Twitter last year. And second, the firm has an edge when it comes to user numbers, so if even a few of its content creators sign up, the rest could end up following suit out of fear of � gasp � social media irrelevancy.

For markets: Valuation potential.
This venture could be a dream come true for Meta�s investors: subscriptions can secure a very reliable stream of cash, giving businesses the kind of predictability that often leads to higher valuations. And with Meta still down 15% from a year ago � despite the cost cuts and share buyback announcements that recently boosted shares � that shot in the arm could be just what the doctor ordered.