Social Media Enters Interregnum
It’s the end of social media as we know it, but the future remains unclear — What does it mean for brands and advertisers
Two months ago, I wrote about the “in-flux” state of social media and dove into the unique crisis that each of the major social platforms was facing at the time, which ranged from Meta’s employee morale crisis to the looming U.S. ban on TikTok. Since then, recent developments have made it clear that the era of social media as we know it has come to an end.
From Twitter’s slow-mo implosion under Elon Musk’s controversial leadership, to Reddit’s user revolt over API policies, plus Meta’s ongoing issues with EU regulators, mostly in relation to the anti-monopoly DMA laws, it has been a particularly tumultuous two months for social media companies. And with the EU looking to potentially outlaw end-to-end encryption (E2EE), a technology that all major messaging platforms now deploy, more disruptions may be still to come for social media platforms.
This week, Twitter is facing a reckoning following the launch of Threads, Meta’s text-based social network designed to replace Twitter. Piggybacking off Instagram’s backend infrastructure, Threads boasts a fast and user-friendly onboarding process that has already paid off — Mark Zuckerberg shared that over 30 million users have signed up for Threads within 24 hours of its launch.
Taken altogether, the chaos and uncertainties strongly indicate that social media is entering an era of interregnum, as the existing paradigm starts to shift beyond recognition, yet the future remains out of focus. Previously dominant platforms are starting to give way to new alternatives, with ongoing experiments in decentralization and business models attempting to chart new paths forward. With the launch of Threads, we’re now at an interesting crossroads in the evolution of social media.
The recent chaos and uncertainties indicate that social media is entering an era of interregnum, as the existing paradigm starts to shift beyond recognition.
Prioritizing Revenue over Engagement
From a big-picture perspective, the centralized social platforms that rely on algorithmic feeds and ad-supported business models, aka the likes of TikTok and Instagram, are not going away. Rather, they are already morphing into something less of a social platform — a platform that focuses on social connection by serving up content from people in your social network — and more of an entertainment platform flush with compelling user-generated content from people you don’t know and didn’t choose to follow.
This bifurcation of social media functions has been growing since TikTok blew up, as major social platforms followed suit and switched to algorithmic feeds. In essence, in the chase for user attention and ad dollars, all social media platforms have more or less transformed into entertainment platforms that live and die by the quality of the creator content they host. In other words, nearly every social platform has turned into a media platform with an algorithmic feed and comment section. (At a time when widespread loneliness is taking friend-making apps mainstream, it’s rather ironic that social media platforms have failed to make money from connecting people in meaningful ways.)
Nearly every social platform has turned into a media platform with an algorithmic feed and a comment section.
As a result, the ad-supported model easily prevailed with social media. After all, selling ads against entertainment content is at the very root of the advertising business. In fact, we’ve become so conditioned to the fact that social media are “free” that most people are unwilling to pay to use a social platform.
Yet, the downside of this is that the ad-supported model demands constant engagement, which, in turn, has led some social platforms to prioritize outrage content designed to provoke. This type of engagement-driven reactionary content, some have argued, contributed to our polarized socio-political climate today. This, then, has led to an increasingly toxic environment on some social platforms, most notably Twitter. After all, not all of our social interactions and public discourses should be monetized as entertainment.
After all, not all of our social interactions and public discourses should be monetized as entertainment.
In response, the real social interactions that social media platforms were originally designed to facilitate have mostly retreated from public feeds into group chats and private forums. Messaging apps like iMessage, Discord, and WhatsApp are far more important for keeping up with one’s IRL or online communities than the nominally “social” media apps today. And the private nature of these channels makes it difficult for brands to enter, for better or worse. The aforementioned EU’s plan to target E2EE technology could further sow chaos amongst the messaging apps and further displace connected communities and online social interactions.
In some ways, the ad-supported model has failed the users. Ironically, with perhaps the exception of TikTok, it has not really been that successful for any non-Meta social platforms either. From Twitter to Snapchat to Reddit to Pinterest, all of them are under-monetizing their content, partly because none of them have the comparable mass scale, and partly because advertisers prefer the robust suite of ad products that Meta provides across its properties.
Meta, despite doing relatively well on its ad business, also has its own troubles to contend with, most notably the heightened regulatory scrutiny from EU — In fact, Meta’s ongoing issue with EU regulations has hindered Threads from being available in EU markets at launch — and, more importantly, the bottomless hole that Zuckerberg’s costly bet on the metaverse is burning in Meta’s P&L sheets. Launching Threads may seem like a distraction to the company’s long-term ambitions, but it would certainly help with the bottom line if they can successfully siphon away some eyeballs from Twitter to monetize against.
The early success of Threads indicates that there is a real hunger for a stable, user friendly, and sanely-ran Twitter alternative. Although the head of Instagram has stated in interviews that it currently has no plans to monetize Threads, it seems inevitable that Meta will sooner or later open it up to advertisers. After all, it is built on the same infrastructure as Instagram, which means that most, if not all, the ad products currently available on Instagram should be easily transferable to Threads as well. And because it implements the same content guidelines as other Meta platforms, it is guaranteed to be a brand-safe environment as well.
So, in conclusion, for every player in social media, the engagement era is over; now it’s all about the revenues. This priority shift explains the recent turmoil at both Twitter and Reddit, as both social platforms decided to risk alienating their respective user base to double down on revenue-generating products, Twitter Blue and Reddit API. It also explains why, despite all the setbacks, TikTok and others have not given up on integrating social commerce features into their apps. It’s why Meta has started to monetize WhatsApp with brand-friendly features lately. And ultimately, it explains why Meta is launching a Twitter alternative. Whatever the symptoms, the goal is the same, and it’s one neatly aligned with what most brands want out of social platforms — a stable, brand-friendly channel to reach target audiences.
The engagement era is over; now it’s all about the revenues.
(As an aside — the rise of generative AI could also be helpful for social media looking to maximize their profits by cutting down the cost of content production. As I wrote two months ago, the implementation of AI creative tools may soon become a crucial differentiating point for social platforms.)
Into The Fediverse & Paths to Monetization
Another interesting aspect of the arrival of Threads is that it may also mark a milestone in the development of decentralized social networks (DSNs). Over the past few months, you’ve probably heard of the likes of Mastodon and Bluesky, two of the most prominent examples of DSNs that have emerged since Elon Musk bought Twitter. Most DSNs today support a common protocol called ActivityPub to share user-generated content across different domains, thus forming a federated universe (aka the fediverse) made up of independent and interoperable platforms.
Unlike centralized platforms like Instagram or TikTok, which control the content and host them on their own servers, the DSNs in the fediverse would allow users to choose their own interface, server, and community, and to interact with others regardless of their choice.
Meta is not making Threads a decentralized network at launch, but it does promise to integrate with ActivityPub over time to allow interactions with other fediverse servers. When/if that integration is complete, Threads will be able to access all the content posted on Mastodon and other DSNs that adopt ActivityPub. Notably, Tumblr and WordPress, which share a parent company, have both said they will support publishing on the protocol as well. This means that, in a year or two, you might read a WordPress blog post on Threads, or read Threads posts on your Bluesky client of choice.
Of course, Meta is not decentralizing Threads without any ulterior motive. Hypothetically, if Threads turns out to be a successful Twitter alternative, it could exacerbate the antitrust scrutiny around Meta’s monopoly power in social media, as well as privacy concerns about how Meta uses the data it collects on users. By signaling that Threads will adopt the ActivityPub protocol down the road, Meta is perhaps trying to get ahead of those pushbacks, while also hedging its bets on the centralized vs. decentralized debate on the future of social media.
Of course, Meta is not decentralizing Threads without any ulterior motive.
Transforming the social media landscape from the walled gardens of centralized aggregator platforms into a fediverse of open and decentralized networks would not be an easy task. If successful, it could potentially create a more open and democratic social media landscape, where users have more control and freedom over their user experience and personal data. But for that to work, paths to monetization will need to be carefully considered.
Despite integrating with ActivityPub, Threads will likely employ the ad-supported model that has worked well for Meta so far. As long as it can gate-keep some of the questionable content from the fediverse out of its platform through content moderation protocols, it should be able to maintain a brand-safe platform for advertisers.
Another viable route of ad-supported monetization in the fediverse would be through network-agnostic ads that are distributed at the API level. This type of advertising would allow advertisers to target users across different fediverse DSNs, without having to integrate with each platform individually. For the DSNs, API-based ads would likely be less profitable than platform ads, but it could be a more efficient and cost-effective way for advertisers to reach fediverse users.
Lastly, perhaps the move towards DSNs is a chance to re-examine our relationship with social media and the value we place on them, and perhaps consider an ad-free model that hinges on convincing users to pay for the privilege of being in control of the content you see and the data you generate. In an announcement posted on Thursday, the Jack Dorsey-founded Bluesky shared new VC investments while committing to non-ad-supported model, stating that it intends to monetize by selling premium services, starting with custom domains.
Overall, this means that, if the fediverse does turn out to be the future of social media, advertisers will theoretically still be able to reach social media users via ad-supported platforms like Threads. For ones who are willing to pay, however, ad-supported social media may become a thing of the past.
