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Analyzing Facebook’s Fan Subscription Feature

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Mar. 1 2019, Published 11:07 a.m. ET

Facebook’s new feature

Facebook (FB) has been trying to increase its revenue sources as its core business slows down. The social media giant announced a fan subscription feature, a competitor to Patreon, in March of 2018. The feature allows people to access their favorite creator’s exclusive content for $4.99 per month per user.

According to a report by TechCrunch, Facebook is trying to “pull an Apple” by taking up to a 30% cut of the creator’s revenues minus fees. In comparison, Patreon only takes a 5% cut.

For now, creators will be able to keep their whole subscription revenues because the feature is still in the test mode. However, the company plans to take the 30% cut after the feature goes mainstream.

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Facebook’s access could put off creators

The feature could be a meaningful revenue source for Facebook due to the kind of reach the platform has. As TechCrunch pointed out, Facebook might have to give creators a more competitive offering with more control. The royalty-free rights Facebook would have over the content would put off some creators.

As we mentioned earlier, the feature is still only in the test mode in select countries including the US, UK, Portugal, Germany, and Spain. The subscribers will get a profile badge and access to exclusive content including live videos.

After enduring the worst year in its history, Facebook stock rose 18.8% after reporting better-than-expected growth in the fourth quarter. The company’s revenue growth continued to decelerate, as the above graph shows.

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