Key Takeaway: Facebook’s public scrutiny creates a window of opportunity for the new wave of digital companies that are seeking to lure the disenchanted users, promising to move away from the data-driven business model that allows the social media behemoth to precisely target consumers with ads.
When Sacha Baron Cohen blasted Facebook and other social media for being “the greatest propaganda machines in history,” the British comedian known for prank characters like Borat and Ali G struck a somber chord.
“The algorithms these platforms depend on deliberately amplify the type of content that keeps users engaged – stories that appeal to our baser instincts and that trigger outrage and fear,” Cohen said during an acceptance speech at the Anti-Defamation League last month.
Facebook doesn’t fact-check political ads, and if it were around in the 1930s, it would have allowed Adolf Hitler to post 30-second ads on his “solution” to the “Jewish problem,” he said.
Cohen joined the long list of Facebook critics, including politicians, activists, and even tech company founders and investors, who call for tighter regulations of social media to combat fake news and restrict the amount of personal data the company collects.
The latest public scrutiny created a window of opportunity over the past two years for a new wave of digital companies that are seeking to lure the disenchanted users, promising to move away from the data-driven business model that allows Facebook to precisely target consumers with ads. The newcomers have a challenging task: to convince users, who have become complacent in using the free platform, to switch to paid services.
“Facebook was unable to self-regulate, and governments are threatening them for their business model that uses personal data,” Jeremiah Owyang, a technology analyst at Kaleido Insights, told Karma. “The social networking services are exploring market demand for premium business models, where users pay monthly fees, in exchange for data privacy and higher quality content.”
Last month, Wikipedia founder Jimmy Wales rolled out WikiTribune Social, a news-focused platform that relies on donations to allow the network to operate independently. The project, which has already attracted more than 200,000 people, hopes to create smaller, niche communities and enable users to monitor fake news, manipulations and bullying.
“As social networks have grown, they’ve amplified the voices of bad actors across the globe,” WT.Social says on its page. “Fake news has influenced global events, and algorithms care only about ‘engagement’, and keeping people addicted to platforms without substance. WikiTribune wants to be different. We will never sell your data.”
Meanwhile, ex-Facebook employees last week introduced a new ad-free service Cocoon, which bills itself neither social network nor a messaging app, but “a space” for interacting with close friends and family. The company raised $3 million in seed investment in June and plans to add paid subscriptions in the future, as it bets on social media users’ migration to private channels and groups.
“The social networking services are exploring market demand for premium business models, where users pay monthly fees, in exchange for data privacy and higher quality content.”
“People are becoming increasingly comfortable paying for digital goods and services that improve their lives,” Graham Brown of Lerer Hippeau, one of the investors in Cocoon, told Quartz last week. “If Cocoon succeeds as a product, it will make you feel closer to your loved ones.”
American consumers are selecting multiple services from paid to free, ad-supported options to “piece together” their own media and entertainment experience, according to Deloitte’s latest digital media trends survey. Globally, a fifth of adults in developed countries will pay for or have access to at least 10 paid online media subscription by the end of 2020.
‘Surveillance-based Business Models’
WT.Social and Cocoon hope to gain momentum as the social media giant faces multiple privacy and antitrust investigations, including a probe of the Cambridge Analytica scandal. Amnesty International last month said Facebook and Google have “surveillance-based business models” that threaten human rights and undermine privacy. Both presidential candidates Elizabeth Warren and Bernie Sanders support calls to break up Facebook, whose user base spans more than 2.4 billion — more than a third of the world’s population.
The public outcry has helped Vero, an ad-free social sharing platform launched in 2015, which soared in popularity last year following the news that Cambridge Analytica had harvested personal data of millions of Facebook users without their consent. The company, which launched an ad campaign targeting Facebook and Instagram, grew from 3 million to more than 5 million members in the past year and plans to start charging a small subscription fee.
“It all comes back to the business model: when you have your users be your customers, your incentive is going to be very different,” Ayman Hariri, a Lebanese billionaire and Vero’s founder said during the Web Summit in Lisbon last month. “We don’t have advertising what-so-ever, so we don’t have to data-mine.”
Last year, alternative social media Mastodon also saw a large upstick in membership amid privacy concerns about Facebook’s use of personal data. Started in 2016, Its audience reached 2.2 million this year. Another contender, Ello, which was once dubbed “a Facebook killer,” blew up after the social media giant started enforcing mandatory real name policy, alarming the LGBTQ community. Founded in 2015, the site currently has 3 million users, down from its 4.5 million, and focuses on niche artist communities.
To be sure, the majority of social media companies, who tried to challenge Facebook, failed to gain market traction, including Google+ that was launched in 2011 and discontinued earlier this year.
“The two biggest obstacles to launching new social networks in 2019 are Facebook and… Facebook,” Ethan Zuckerman, the director of the Center for Civic Media at the Massachusetts Institute of Technology, writes in the fall’s edition of Columbia Journalism Review. “It’s hard to tear users away from a platform they are already accustomed to; then, if you do gain momentum with a new social network, Facebook will likely purchase it.”
Moreover, the majority of Americans don’t support the idea of paying for social media. While more than 79% want Google and Facebook to collect less personal data, only one in four say they would agree to a monthly subscription fee to protect their personal information, according to a study by the Center for Data Innovation conducted earlier this year.
Social media networks only succeed if they can bring something new in a simple, accessible package, and become a trend that the market wants to explore, says Jono Bacon, author of “People Powered: How communities can supercharge your business, brand, and teams.”
WT.Social, that focuses on news in a culture where news is broken on other social networks, could generate a lot of interest, he says.
“To succeed they will need to get market traction fast, and harness the social elements of the network to offer more insight and understanding of current events,” Bacon told Karma. “This is an enormous opportunity if they can weave in their community to provide objective, balanced moderation of news and provide multiple angles to a story,” Bacon said.“I am excited to see what they come up with.”