Episode 11 of Localogy’s “This Week in Local” takes on another big issue on the minds of Localogy analysts Mike Boland and Charles Laughlin. This episode’s sole topic involves BigTech’s quest for revenue diversification via new subscription products.
A key subtext of this discussion is that having a single source of revenue, however lucrative, is an underlying weakness.
Mike cites Meta Verified as the latest example of BigTech (and BigSocial) seeking new income streams via subscriptions. However, he thinks Snapchat+ is among the best of the recent subscription rollouts by the major social media platforms, e.g., Meta and Twitter.
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Shiny ‘New’ Thing
In the episode, Mike acknowledges that subscriptions themselves are not new in tech and online media. Still, he does frame it as, “subscription revenue seems to be a shiny new thing in the tech and media worlds.”
The impetus for this topic of conversation was of course the rollout of Meta Verified. And Mike describes this as “following in the footsteps of Twitter Blue in creating a paid tier” for users of Meta’s social platforms (Facebook, Instagram).
And the main driver of these services is the ability to authenticate an account. After all, verified identity is becoming increasingly important to many social media users.
Yet among social media players at least, Mike notes that the subscription plan to beat is Snapchat+, which is running at about 2 million paid subscribers. And as Mike points out, Snapchat+ is more about user features than verifications.
But looking at all of the subscription services out there, offering different feature sets and price points, the one common thread, as Mike notes is “revenue diversification.”
And not just revenue diversification, Mike notes. Subscription revenues are attractive because of their unique properties. Namely, subscriptions mean recurring revenue. And every business wants recurring revenue on its books, from Apple to Snap.
Yet the motivations for chasing new recurring revenues can vary from player to player. More mature tech companies like Apple and Amazon may be driven to chase new high-growth revenue streams by the “law of large numbers” which makes it hard to grow organically at scale, for example. For Apple, this might be subscriptions. While for Amazon, it’s ad revenue.
Episode 11 of This Week in Local is sponsored by Localogy’s L23 Conference, April 17-19 in Coronado Bay, California. If your organization would like to sponsor an upcoming episode of this podcast, please reach out to us at Charles@Localogy.com.
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