It's over

Original title: The Free Age of the Internet, Ended
Original author: King of the Zirin Dancers, Polar Park

ONCE UPON A TIME, USERS USED INTERNET PRODUCTS FREE OF CHARGE, AT THE COST OF LOOKING AT THE "ADVERTISING" MODEL, AND FINALLY CAME TO THE END OF THE AI ERA。

On 27 May, Meta officially announced the global introduction of a fee-paying subscription scheme, Instagram Plus pricing $3.99 per month, Facebook Plus $3.99 per month and WhatsApp Plus $2.99 per month。

At the same time, Meta is testing advanced AI programs for heavy AI users ($7.99 and $19.99) and a professional package for creators ($49.99), which is being consolidated across the "Meta One" brand。

This is not a simple product update, but a key card that Meta played in a larger strategic transformation. And behind that, it may be the "free Internet age" we used to know, and it may be over。

There's no food left

To understand the weight of today ' s subscription plan, time needs to be set back a month ago。

On 20 May, Meta launched a round of layoffs in the vibrating Silicon Valley, which resulted in the lay-offs of about 800 staff and the freezing of 600 open positions. But at the same time, the company announced that it would invest 12.5 billion to 145 billion dollars in AI infrastructure. Cutting people to put money on AI。

Meta CTO then made a clear statement on May 25 that it would use the AI tool to "mass transformation" of the workforce. 7000 employees were transferred to AI related positions. The centre of gravity of the whole company is tilting towards AI at an eye-visible speed。

THIS BRINGS A CORE CONTRADICTION: HOW CAN INVESTORS BE PERSUADED TO THROW SO MUCH MONEY INTO AI

For Wall Street, the most painful question is not how much Meta spent, but what the expected return is from that money. Google has clouds, Microsoft has Azure, Amazon has AWS -- their AI investments can be used to measure returns by subscriptions and API. But, Meta, on what

Advertising revenues fluctuated with the market and were not stable enough; the large open source model Llama raised the technical reputation but did not make direct money per se; and AI glasses and AR equipment were at an early stage。

Subscriptions, just enter Meta's view。

This is not an accident。

How do you convince users to pay

Meta's product has always had a hidden contract -- you use my platform, I sell advertising with your attention. This logic has worked well for 20 years, with more than 3 billion Facebook monthly live users, more than 2 billion Instagram, and whatsApp users all over the world。

But on this wall, it's starting to pierce。

European regulators have been the biggest pushers. In response to EU data privacy regulation, Meta tested the "no-advertising subscription" option in Europe as early as 2023, giving users a fee option for untraceed data. This global Subscription initiative is in part an extension and deepening of this European experiment。

However, this time, Meta played another kind of logic -- not "pay not to read advertising" but "pay to unlock more"。

The core sales points of Instagram Plus include anonymous browsing Story, detailed replaying data analysis, extended absence time, and custom themes and reactions. WhatsApp Plus plays privacy enhancement and functional extension。

The common feature of these functions is that the free version is enough, but the fee-paying version can make you "a little more control."。

This is more difficult from the point of view of product design than "pay for advertising". Advertising is a user with a clear pain point and a clear functional value; but Unlocking More requires Meta to prove that these "more" are really worth the price。

Forester's research is pouring cold water: 70% of the respondents say "yes" or "may" will not pay for Meta's subscription. There are a variety of reasons — some feel that the current free version is enough, others have long complained about Meta’s privacy practices and others have simply said, “Why pay you more?”。

This resistance is real, but it is not terminal。

Snapchat+ is the best frame of reference. When Snap introduced the fee-paying subscription in 2022, there was a general lack of opinion that users would not pay for a chat software. So far, however, Snapchat+ has surpassed 15 million payers. The key is not that the user is willing to pay, but that the value of the product is specific and direct。

X (former Twitter), Telegram and Snap are all increasing their subscription bets. Pay subscriptions are becoming an increasingly important part of the income mix of social platforms。

03 AI FUNCTION, REAL BATTLEGROUND

If Instagram Plus and WhatsApp Plus are still just testing water, then AI subscriptions are the core ambition of Meta's layout。

Meta announced that it would test the two-tier AI subscription scheme, US$ 7.99 and US$ 19.99, with the main difference between the use of advanced reasoning and "thinking mode". The base version of Meta AI continues to be free of charge, but fees are needed to unlock it if it is to be faster to respond, more reasoned and higher ceilings。

This design logic is almost identical to OpenAI, Anthropic's freemium model。

The difference is size。

OpenAI has a user base of hundreds of millions of levels and Meta has a monthly user of billions. Even if the conversion rate was only 1%, the numbers would be very different. Seeing Alpha analysts have made an account: using whatsApp Plus 2.99 prices and 1.5 per cent conversion rates, this product alone could generate about $2 billion in revenue per year, with a Maori rate close to 100 per cent。

What is more exciting for investors is the certainty of such income. Advertising revenue fluctuates with macroeconomic and privacy regulation, but subscription revenue is a predictable recurrent revenue. That's exactly what Meta used to say about AI investments: Now it has a story for investors。

On the day the news was released, Meta stock prices rose by almost 3 per cent, and the market's response was straightforward and clear. Evercore ISI analyst Mark Mahaney, who gives a buy-in rating, is particularly optimistic about whatsApp's potential for long-term liquidity, with whatsApp expected to generate $40 billion in annual income by 2030。

This, of course, is the most optimistic scenario, and the realistic path is full of variables. But it at least makes it clear that the road is not an imaginary one, but a numerically supported business logic。

The 04 Free Age is over

Remember that long-standing saying in the world of technology: "When the product is free, you are a commodity."

Meta's business model has been the most typical footnote to this sentence. Users trade their attention and data for free, and Meta sells them to advertisers. This logic is based on the rapidity of the smartphone era, the rise of Facebook, the outbreak of Instagram, and the global expansion of whatsapp。

But the definition of "free" is quietly changing。

On the one hand, the awakening of privacy has led to a growing number of users becoming alert to the exchange of “data for services”. The EU's GDP R, DMA regulations are tightening, and Meta spends billions of dollars annually on regulation. On the other hand, the competition of the AI era has made the cost of "free" more expensive than ever — to train an advanced model, to maintain the calculation of an "AI" assistant, more expensive than to display a few advertisements。

Zuckerberg needs a way to get users who get real value from Meta AI to pay directly for that value。

THIS IS NOT THE BEGINNING OF A BETRAYAL OF THE FREE INTERNET, BUT THE RECOGNITION OF A REALITY — THE "FREE" OF THE AI ERA — THAT PEOPLE HAVE TO PAY ELSEWHERE。

The fee may be paid either by the advertiser or by the user himself. Meta now wants both to exist。

The success or failure of the subscription scheme ultimately depends on the answer to a question, anonymously browsing to Story, advanced AI reasoning, creator data analysis ... Are these functions really worth the dollars you pay each month

Twenty years ago, when Zuckerberg knocked down the first line of the code at Harvard House, he probably didn't expect to charge the user one day。

But that was 20 years ago。

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