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Social media’s journey to the centre of your wallet

Social media companies are making a solid attempt to earn money directly from their users in India. Will it work? Also in today’s edition: Audible Round 2 of wooing Indian listeners with homemade content.

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“Senator, we run ads.”

This bemused one-line response from Mark Zuckerberg during his 2018 Congressional testimony launched a million memes (and a firm that teaches digital marketing). Surely a senior elected lawmaker should know how Facebook and other social media companies make money while staying free? Apparently not.

At any rate, social media companies are no longer relying on just ads to make money. They want our money directly, and they’re using increasingly creative ways to get us to spend. What’s more, this is already happening in India, which is everyone’s largest market by users but among the smallest by revenue. But platforms are rolling out user monetisation models such as virtual gifting, subscription-only content, and account verification, mostly on the back of the creator economy and businesses that rely on social media to make money or manage customer relationships.

Can social media make money directly from their massive Indian user base? That’s my first story for today.

Social media is coming for the ‘bag’

Aniket Narula/Unsplash

This month, Meta finally launched a paid ‘Verified’ programme in India. A blue tick on Facebook and Instagram will cost ₹699 ($8.5) per month via iOS and Android or a hundred rupees less if bought on the web (not rolled out yet). Still cheaper than Twitter Blue (₹900 a month on app stores, ₹650/month on web), but is it cheap enough?

On Twitter at least, blue ticks have lost their status symbol and instead become an object of ridicule and the preserve of bots. Just this week, blue-tick accounts were accused of tweeting in favour of Bajaj Finance in an apparent PR campaign (although Twitter influencer marketing campaigns are very commonplace). Twitter is also paying verified accounts a share of revenue from ads shown in their replies. But the catch is that only ads shown to verified accounts will count. Looks like the move is structured to try and push more users to pay up for a blue tick.

What sort of Indian users will pay for Meta Verified? If Twitter Blue’s rollout in India is anything to go by, businesses and large organisations will be among the first to sign up. Creators with a large audience base on Facebook and Instagram will probably also be in the queue. However, an important caveat: Meta is going to honour previously verified accounts. So, we’re not likely to see a bloodbath of lost blue ticks as we did on Twitter in India earlier this year. Verified accounts will also get access to more customer support (remember, Twitter fired most of its India team and has only one remaining office here).

But spending on verification makes sense most if you earn your living online. For content creators and businesses acquiring customers or engaging with them, a blue tick can be a business expense. Ditto for government functionaries and political party representatives who need social media for their campaigns.

But India is a notoriously low ARPU (average revenue per user) market. Meta’s Facebook, WhatsApp, and Instagram are among India's top five most-used apps, according to research firm Data.ai. Yet, Meta’s Asia-Pacific ARPU was a mere $4.61 in the quarter ended December 2022, compared with $58.77 for American and Canadian users (pdf). What’s more, almost all of the Asia-Pacific revenue was from ads, whereas 4% of US-Canada revenue for that quarter came from non-ad income.

Meta obviously wants to wean off just ad revenue. But there’s one more reason it needs Indian users to sign up to pay for services like Verified.

“We expect that user growth in the future will be primarily concentrated in those regions where ARPU is relatively lower, such that worldwide ARPU may decrease at a higher rate, or increase at a slower rate…,” Meta said in its annual report. India (along with Nigeria, the Philippines, and Bangladesh) contributed the most active users to Facebook and other Meta apps, but these users aren’t opening their wallets.

Introducing payments for access doesn’t always go as planned for social media companies. Take what’s happening with Reddit, for example.

Reddit has been looking for ways to jack up revenues as it prepares for an IPO. The messaging board is reportedly fixing sky-high prices for third-party apps to access its APIs. Reddit’s own app is not as popular as several third-party interfaces that are older and better designed, such as Apollo and Reddit Is Fun; they rely on Reddit APIs to function and sustain Reddit’s user base.

These apps are usually ad-funded and free to use, with some subscription plans, but high API charges will kill their ability to remain free. Several subreddits have gone ‘dark’ (set themselves to private) for 48 hours until June 14 in a concerted blackout of the platform. These include popular Indian subreddits like r/India and r/BollyBlindsNGossip.

Last month, Meta dedicated an event in Mumbai to popularise a bunch of other Instagram features. Among them was a number slides dedicated to Notes, a Stories-like feature that lets a user put up a text that any follower can view. Along with DMs (direct messages), Notes is the last frontier of apps that haven’t been monetised yet. “100 million teen accounts shared a Note in the past 90 days,” a senior Meta India executive told the press and creators’ meeting, also adding that “Notes trapping” (similar to thirst trapping but with an intriguing Note) was a new thing among younger users on the app. There doesn’t seem to be much independent documentation of this trend, but it’s clear that Insta wants to drive more usage to this feature.

So, will Indian users ever pay? There may be one way to make it happen: virtual gifts. All major social media platforms, from homegrown ShareChat/Moj to YouTube (in Shorts) to now Instagram, have slowly been rolling out virtual gifting to accounts of highly engaged or top content creators. Sending a gift (say, a sticker or a message of appreciation) has a very low entry point; it gives creators another stream of revenue, and platforms take a cut from every transaction. Instagram has been rolling out gifting in India since last month, and the cheapest costs about 10 stars (you must buy a minimum of 45 stars that cost ₹99 (~$1.2).

Meta has a similar feature on Facebook Reels. Instagram also has a subscription feature that allows users to pay to access paywalled content from creators. This revenue is also split between creators and the platform. But this hasn’t come to India yet. In an interview with me last month, Meta India’s head of content & community partnerships, Paras Sharma, indicated that this feature may not be on the top of the India team’s priority list.

Gifting has also worked for apps like Sharechat. Virtual gifting was a significant portion of its total revenue in the last financial year. There are other creative, low-cost ways to get users to pay up. For instance, Snapchat lets Indian users restore a broken “streak” (chain of private Snaps exchanged with another user) for as little as ₹9.

But these are low-cost, high-volume games. That means social media companies must change user behaviour to make it commonplace for users to purchase credits for virtual gifts or pay up for broken streams.

Just another feature for social media companies to push in the search for ARPU.

Speaking of Big Tech, The Signal is launching something new this weekend. My colleagues Roshni and Rajneil—polar opposites in their feelings about technology—will host TechTonic Shift, a no-nonsense conversation on all things tech. Check out the trailer here. You can listen to TechTonic Shift on Spotify and Amazon Music. Tune in starting this Saturday, June 17!

Audible India’s local redux

Audible/GIPHY

Audible India is piling on the local originals. This month, it is releasing a series of Hindi podcasts based on stories from the Marvel Cinematic Universe. These shows feature top Bollywood talent, starting with Marvel Wastelanders: Star-Lord, starring actor Saif Ali Khan. Another show based on Black Widow will star actor Kareena Kapoor.

Audible has been attempting to build a local connection with audiences in India ever since it launched here. The first attempt was in 2019 when it launched a free-to-listen app, Audible Suno. It, too, was packed with originals in Hindi starring the biggest Indian stars (Amitabh Bachchan, Diljit Dosanjh, Anurag Kashyap, among others). But two years later, Audible folded Suno into the main app, where its shows are still free to listen to.

Audible, like its podcasting rival Spotify, has been treading the line between being premium enough for its target audience but also packing in content with a lot of local flavour. However, it looks like doing both may be difficult. A look at the top charts of local audiobook rivals shows what actually sells among the Indian masses. On Kuku FM, Hindi romance shows like Ishq Ya Junoon and Ajab Sa Ishq top the charts with 20-30 million listens. On Pocket FM, Hindi adventure action originals such as Super Yoddha and Number Zero, are popular, along with romance shows like Ek Ladki Ko Dekha To and Silent Love.

Maybe Audible is on to something. Hindi action and adventure is clearly popular with mass Indian audiences. Besides, Marvel films are among the top earners at the Indian box office, as per PVR INOX’s latest presentation to investors (pdf). It helps that they’re dubbed in several Indian languages. “We continue to see significant increases in listening for non-English content, and regional languages are a key focus area for us going forward, including new Marathi, Tamil and Telugu titles,” Audible India head Shailesh Sawlani said in response to questions from The Impression. “In 2022, we saw 39% growth in paid member listening hours in India, and are also seeing exponential growth in our free tier.”

Audible’s best-performing genres are similar to local rivals’. “Over the past two years, our top five genres are self-development, Indian mythology, horror, romance, crime/thriller, and slice of life,” Sawlani said. “We also see a good share of listening from mythology and mytho-fiction, which includes titles and Originals from Devdutt Pattanaik, Kevin Missal, and Amish Tripathi.” Besides, romance show Little Things: When Dhruv met Kavya (a spinoff of Dice Media’s hit show Little Things) was the top-performing new release among podcasts for Audible India last year.

However, Audible has understood that “premium local” alone won’t cut it. In March, it announced a partnership with storytelling firm Pratilipi to adapt its bestselling titles into audiobooks and series for an 18-month licensing period. Among the titles are Hindi romance originals like Bepanah Ishq and Kothewali. What’s more, Audible offers Ranveer Allahabadia’s Hindi language podcast The Ranveer Show for free.

While Audible slowly scales up into romance and pulp fiction, remember that rival Spotify is cutting its investments in podcasting. Last week, the company cut 200 jobs, announced internally it was merging its acquisitions Gimlet and Parcast into Spotify Studios, and shifting focus to creator-led podcasts rather than slick in-house originals, according to The Wall Street Journal.

Meanwhile, back home, audio entertainment platforms are acquiring an audience using stories written, edited, narrated, and even uploaded by independent artists. Pocket FM is now hiring an in-house fiction writer. Production costs for these shows are usually low, often referred to as ‘professional user-generated content’ or PFGC.

Audible is also slowly pricing itself at par with homegrown competitors like Kuku FM (both at ₹199/month). Now, it needs Saif All Khan and some good old local ishq and action to make it worth a user’s while. Which one will be a more compelling reason to pay?

Last Scroll Down📲

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Nightmare on Dalal Street: The Zee-Sony mega merger has hit a massive snag. Markets regulator Sebi has barred Zee’s promoters Subhash Chandra and Punit Goenka from holding any managerial or director positions in any listed companies (or their subsidiaries). The order (pdf) pertains to a relatively old case: the Goenkas are accused of siphoning off over ₹140 crore (~$17 million) via a loan from Yes Bank. Last month, Sebi had passed an interim order (pdf) against the Goenkas for allegedly siphoning funds from a gold refinery in the same manner—using a web of interconnected subsidiaries and associate companies. Zee has moved the Securities Appellate Tribunal against Sebi’s order. Without a stay, the merger will be in limbo; Punit Goenka is supposed to lead the Zee-Sony combine as CEO.

‘…the worst of times’: Indian advertising must brace for impact. According to a report by advertising major groupM, India’s ad industry will grow only 12% in 2023, as against an expected 16.8%. A global slowdown is hurting the ads business worldwide. India’s biggest ad medium is television, and it is expected to grow slower than before this year. There are bright spots, though. US media companies are expecting political ads to boost growth in the run-up to the elections next year.

Season of breakups: Regulators aren’t rushing to bless any unions. The US Federal Trade Commission (FTC) is filing an injunction to prevent Microsoft’s acquisition of gaming firm Activision Blizzard. The FTC had filed a case against the deal last year, saying it would give Microsoft unprecedented control over how non-Xbox users access games published by Activision. Last month, the European Union’s antitrust regulator approved the deal after Microsoft announced it will make top Activision games like Call of Duty available to rival gaming platforms. However, the UK’s Competition & Markets Authority has also blocked the deal.

Meanwhile, the EU’s antitrust regulator may also ask Google to break up its digital ads business and sell off parts of it, The Wall Street Journal reported. The US Justice Department had filed a similar antitrust suit against Google in January this year. Along with Meta, Google holds a near-duopoly on the digital ads industry worldwide.

The Writer Strikes Back: Hollywood’s ongoing writers’ guild strike is beginning to hurt big-budget global releases. Disney is reportedly delaying several Marvel movies and TV shows that were set to release starting next year. These include Avengers: Kang Dynasty and Avengers: Secret Wars. James Cameron’s Avatar 3 and Avatar 4 are also delayed by a year each.

Trumpet 🎺

Bhavesh Kaware @properytransactionguru

You’ve followed finfluencers, gotten tips from skinfluencers, admired momfluencers… maybe you even have a favourite petfluencer.

Now, there’s a new gig in town: property brokers (brofluencers? propfluencers?)

This reel by Mumbai-based property broker Bhavesh Kaware has inspired memes, copycats, even a song by musician Yashraj Mukhate. Kaware is already doing brand collabs. No, not with real estate developers. This one is with India Today Group’s radio channel Ishq FM, and this one has Kaware promoting YouTube India (that too on Instagram).

But he isn’t the only one taking to Instagram to promote the properties in their portfolio.

Among the earliest adopters was Mumbai-based Rafique Merchant, who became famous for his comically frequent “Wow!” and “Amazing!” for mediocre ‘luxury’ properties in his videos. He does paid partnerships with developers to promote their projects. Several others are taking to Reels to get an audience—more memes than real information or serious business. Check out this young man targeting Indian home buyers in Dubai, and this Mumbai-based property brokerage firm.

I’m not sure how many property brokers are actually selling multicrore rupee luxury properties via Instagram. Most large real estate developers like Lodha, Godrej, and Prestige Group run ads on Facebook and Instagram, but these are largely static performance ads served in the feed or between stories. Indian real estate isn’t big on influencer marketing yet, but it just might embrace it now.

That’s all this week. If you enjoyed reading The Impression, please share it with your friends, family, and colleagues. And please write to me anytime at [email protected] with thoughts, feedback, criticism or anything you’d like to see discussed in this space. I'd love to hear from you.

Thanks for reading, and see you again next Wednesday!

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