TikTok’s Experimenting With an Ad-Free Subscription Offering

Hot on the heels of reports that Meta could also be considering an ad-free subscription option for each Facebook and Instagram, TikTok is now also experimenting with a paid, ad-free experience, in line with latest code spotted within the app, which incorporates a basic overview of its coming ad-free experiment.

As per the above screen, shared by Android Authority, TikTok is seemingly trying to charge users $US4.99 per thirty days to eliminate ads from their TikTok experience. Well, it looks like US dollars, based on AA’s discovery, nevertheless it could also relate to other currencies and payment markets. But the underside line is that TikTok is at the least considering offering an ad-free version, for a monthly fee, joining Meta, and potentially X, in providing an ad-free experience tier.

Further findings within the back-end code spell out the choice more clearly:

“We’re testing an Ad-free plan with the TikTok community. By continuing, you conform to the [terms], and acknowledge that you’ve read our [terms] to find out how we collect, use and share data. You furthermore may accept the immediate provision of the Ad-free subscription.”

So why are apps trying to implement ad-free versions now?

Well, in Meta’s case, the experiment pertains to evolving E.U. digital privacy regulations, and the capability for social platforms to gather and utilize user data.

Under the E.U.’s latest Digital Services Act (D.S.A.), European users will soon give you the option to opt out of all personalization that uses their data to customize their experience. That features ads, and Meta’s concern here is that less data insight will result in a lesser user experience, which could then see people using its apps less in consequence.

As such, offering a paid, ad-free version could actually be a greater alternative, in order that E.U. users aren’t getting more random promotions within the app, which could harm the user experience.

X owner Elon Musk has also been discussing a higher-priced, ad-free tier of X Premium for a while, though that’s less tied to E.U. changes and more linked to X’s push to maximise subscription take-up, with a view to combat bot armies, and expand its revenue potential.

But essentially, every app is seemingly its options on this front. And while they might be prompted by E.U. changes, ad-free options is also expanded beyond European markets, giving social platforms more ways to expand their revenue streams, independent of broader ad market impacts.

Though the pricing here is difficult. For instance, Meta reported in Q2 that its average E.U. revenue per user is $US17.88, though for U.S. users, its ARPU is $US53.53.

That’s a major variance, and it’ll be hard for Meta to cost their ad-free offering at a level which replaces that ad exposure intake, and is equitable across regions.

TikTok could be much different calculations, attributable to the more evolved nature of Meta’s ad business. However the calculation is basically the identical, in that the value the platforms charge for an ad-free version must offset the quantity they’ll lose in direct ad exposure. And so they then need to take care of balance in each, with a view to maximize ad reach, and entice ad partners, while also ensuring they don’t lose money in the method.

It’s a difficult calculation to get right, which varies across markets. But perhaps, at the suitable price point, there’s a way for platforms to make more cash from a dual income approach, while also offering one other alternative for users.

It does seem, nonetheless, that it’s more useful, overall, for the platforms to maintain the ads coming, versus augmenting their income with subscriptions.

The brand new E.U. regulations do change this somewhat, but outside of Europe, it might not be well worth the platforms exploring this as an option, at the least not at this stage.

But perhaps, that can be the long run.

Possibly, as Elon Musk has noted, paid social will eventually be “the one social media that matters”, attributable to the influx of AI bots and other intrusive elements that’ll disrupt the user experience.

Evidently, at least, the foremost platforms are considering their options.