Meta, Facebook's parent company, has begun testing Instagram's paid subscription service "Instagram Plus" in some markets, including Japan. Because Instagram is a "cash cow platform" that drives ad sales, the core revenue source for Meta, attention is focused on the background for introducing a subscription model. The company says it will offer exclusive features that free users cannot access to paid subscribers who pay $1–$2 a month, but the question is whether it will be valuable enough to justify the expense.
According to the tech industry on the 1st, Meta is piloting the paid subscription service in Japan, the Philippines and Mexico. The subscription benefits known so far are concentrated on Stories, one of Instagram's most popular features, which are photo and video posts that disappear after 24 hours.
In Japan, "Instagram Plus" subscribers who pay 319 yen a month (about $2) will not have their views displayed when they check other users' Stories, and they can see who watched their own Stories and how many times. They can extend a Story's posting period by 24 hours, and they can use the "Spotlight" feature once a week to pin a specific Story to the top of followers' Story lists.
The visibility of Stories can also be set freely. Beyond making Stories public or sharing them only with followers set as "Close Friends," users can split followers into multiple groups and customize and share Stories by group. Sending a "Superlike" animation to another user's Story is also one of the paid perks.
Instagram said the pilot is "a stage to identify which features users prefer," according to the tech outlet TechCrunch. Meta is reportedly planning to expand "Instagram Plus" to other countries in the future.
Instagram is a social media (SNS) platform with more than 3 billion users worldwide and, along with Facebook and WhatsApp, one of the three flagship apps (Family of Apps) driving Meta's results. Instagram's ad revenue is estimated to account for about 100 trillion won, or 30% of Meta's annual revenue of $200.966 billion (about 303 trillion won) last year.
Why is Meta, which is generating massive ad revenue with Instagram's free service alone, pushing to introduce a paid subscription model? The market interprets this move as related to Meta's artificial intelligence (AI) strategy. Considered to be lagging behind Google and OpenAI in the AI race, Meta is pouring astronomical funds into strengthening its AI capabilities under the direction of Chief Executive Mark Zuckerberg by recruiting top AI talent, building data centers and acquiring promising corporations.
Meta projected this year's capital expenditures (CAPEX) at $123.5 billion (about 186 trillion won), up 77% from a year earlier, and said most of it will go to AI. To secure the firepower needed for large-scale AI investments, the company appears to have determined it needs income sources beyond advertising and decided to apply paid subscription models to its popular platforms starting this year. The plan is to add subscription fee income on top of existing ad revenue.
In fact, Meta is also pushing to monetize Facebook and WhatsApp in addition to Instagram. Core features will remain free, and the company is reportedly envisioning subscription models with differentiated exclusive features tailored to each app's characteristics. With Facebook, Instagram and WhatsApp each boasting more than 3 billion monthly active users (MAU) and a solid user base, even converting some of them into paid subscribers is expected to help generate additional sales and revenue.
Major social media (SNS) platforms are also adopting paid subscription models as part of their monetization strategies. X, led by Tesla Chief Executive Elon Musk, operates the paid subscription service X Premium ($8 a month), and subscribers can also use xAI's AI chatbot "Grok," offered as a bundle. To expand Grok's user base, Musk leveraged the X platform, which has a user base of 600 million, and Meta could take a similar approach to improve access to its own AI services. CNBC reported that Meta is considering including its AI video generation app "Vibes" in the paid subscription service.
Another SNS platform, Snapchat, introduced the paid subscription service "Snapchat Plus" ($3.99 a month) with exclusive features a few years ago, and its subscribers recently surpassed 25 million. LinkedIn, an SNS platform focused on hiring, offers the "LinkedIn Premium" subscription service for job seekers, while TikTok runs a subscription model that allows access to exclusive content from popular creators active on the platform.
It will take more time to see how well Meta's monetization policy is received. People today already subscribe to countless products and services, from OTT (online video services) like Netflix and YouTube to AI chatbots like ChatGPT and Gemini and to music streaming services like Melon, resulting in substantial "subscription fatigue." This is why some say Meta will need features that are that much more differentiated or new to persuade users to pay an additional expense each month to keep using Instagram, which they have already been using for free without issue.