Money Rehab with Nicole Lapin - You Can Pay To Be Verified on Instagram— Here's Why It Matters

Episode Date: March 20, 2023

Social media apps (first Twitter, now Meta) are testing a premium offering where users can pay to have their accounts verified, signified by the infamous blue check. This may seem like no big deal, but it actually represents a big shift: Meta's newest revenue stream is us.

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money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a It's time for some money rehab. Think back to when you first got an Instagram account and think about the accounts that you followed then and the things you would post about. Now think about what your feed looks like today. I don't know about you, but my algorithm is feeding me very different content than it used to. I remember back in the 2010s, I used to see people posting edits with colorful text over their photos and goofy collage photos with their friends. Now it's a bunch of filters and those

get ready with me videos and businesses. Increasingly, Instagram is being used by businesses to reach their customers. But just as our feeds and algorithms have changed, so too has the business model of social media. Increasingly, influencers and companies have figured out ways to monetize their brands on social media, but the social media platforms themselves haven't kept up with their users in the money-making department. So social media networks have to experiment with new premium offerings. One experiment? Twitter dabbling with its pay-to-verify system, a subscription where Twitter users can pay $8 to get the verified blue checkmark added to their account.

The verification means exactly what you think it means. The account holder has been verified by the platform as some sort of legit human or business. It's helpful for businesses because if you're trying to get people to pay for a product through your social media account, you want some sort of proof that customers can see that you're an actual business and not a scam. But beyond that, in the influencer world, it's a symbol that's become associated, for better or worse, with clout. This pay-to-verify system for Twitter was widely seen as a way for Elon Musk to try and salvage the profit margins on his purchase of Twitter. When Meta, the parent company of Instagram

and Facebook, made the same move, there were hand-wringing articles bemoaning the death of free social networks. But more on that in a second. So far, Meta verification has only rolled out in Australia and New Zealand, which limits the scope of its impact. But while the impact of the system has been limited, what it says about the shifting ways we use Facebook and Instagram is not. It also hints at the changing business structure of meta. Let's start by comparing the systems. That blue checkmark on Twitter gets you quite a few things, like an undo tweet option, which you'd think Musk himself would make more use of, but that is none of my business.

Not all of these services have been rolled out yet. At some point, blue-checked users will see fewer ads as well, but that also hasn't happened. It also gives you a choice to use an NFT as a profile pic. To qualify for that service, you have to meet some usage requirements and be able to show that you aren't attempting to catfish anyone. Overall, it does offer a lot of features, and these features do have wide appeal. This is somewhat different from Meta's policy, which asks users for a government ID to verify who they are. Meta's pay-for-verification system offers a limited number of features aimed at helping subscribers grow their presence. This includes the ability for the subscriber to make their posts more widely visible,

and Meta will monitor for accounts attempting to impersonate the subscriber. But to be honest, I'd strongly argue that none of these extra features really matter. More than anything, verification is more of interest to users because of what it represents. For businesses, it represents that you are who you say you are. In influencer circles, it's more of a status symbol. Now, again, this policy has so far only been rolled out in Australia and New Zealand. Presumably, the limited rollout is because of the limited number of government IDs available in both places. limited number of government IDs available in both places. Meta is charging $11.99 for the service unless you purchase it on an Apple iOS app, and then it's $14.99. That price difference

hints at what this rollout is all about. Since it was founded, the bulk of Facebook's revenue has come from ads. Historically, Facebook would track you all over the internet, including outside of their app, and therefore could develop an incredibly sophisticated customer profile. Using this profile, Meta could sell other brands the ability to target their perfect customer. This used to happen to me all the time. I'm sure it happened to you, right? I'd be Googling, like, the best headphones for podcast recordings, and then I would get Instagram ads for headphones. But all of that changed a little over a year ago when Apple made some serious privacy changes that limit the amount of information companies like Meta can collect about their customers.

This change happened during a time of shrinking ad budgets already, and this has taken a serious chunk out of Meta's profits and growth potential. The shrinking ad industry coupled with the limited growth potential for Facebook and Instagram is part of why they're pivoting to the metaverse, hence the rebrand. Meta knows that Facebook and Instagram are essentially stagnant. Selling verified accounts is a way of protecting their core base of customers these days, businesses. Because impersonating accounts is a way of protecting their core base of customers these days. Businesses. Because impersonating accounts is a problem on Instagram and they have not been able to stop their proliferation. This could help solve that problem and monetize Facebook and Instagram in a new way now that ad revenue is down. Even though it might feel like this is

a small thing, just rolling out a new premium offering, it actually is a big shift in how apps are thinking about monetization. Because for the first time, social media platforms are getting their paydays from their users, not brand partnerships. But Meta believes the future is in the metaverse. Before we can really talk about the metaverse, we need to establish some facts. The video game industry in the USverse. Before we can really talk about the metaverse, we need to establish some facts. The video game industry in the U.S. alone is worth over $97 billion and is the most lucrative part of the entertainment industry. The Oculus, the piece of equipment you need to access the metaverse, is a pretty fun gaming device. Right now, it's more of a novelty, but as the technology improves,

there's every reason to think that it will become a major part of the gaming industry. Now, people are willing to spend real money buying objects that only exist in digital spaces. So, in short, Meta is well on its way to becoming a gaming company. And not just any gaming company. They want you to replace your Zoom meeting with a VR meeting in the metaverse. They want to sell your boss the metaversion of Microsoft Teams or Slack. For that meeting, they want to sell you an avatar. And when you dress that avatar, they want a cut of the transaction between you and the designer. Because as I talked about with

Randy Zuckerberg last year, there is serious money to be made in digital clothing. The classic example that gets thrown out is someone paying $5,000 real dollars for a digital Gucci bag in Roblox. Most transactions aren't going to have anywhere near that kind of price point, but people have been making a living selling digital products since at least second life a video game Meta now owns. Meta's after a new kind of Facebook marketplace, as both the vendor that sells access and the exchange that takes a cut on both sides of the transaction. That's Meta's ultimate goal. There are several obvious stumbling blocks ahead for Facebook, or rather Meta. But the biggest one may simply be its past.

When Meta, still using the Facebook name, tried to create its own digital currency, initially called Diem and later Libra, it was killed by J-Pow and Janet Yellen mostly because of its association with Facebook. When Meta launched its chatbot Galactica two weeks before Sydney, the Bingbot, or ChatGBT, it had the same sort of digital hallucinations and odd tendencies as the other two. But Meta took it down. Their tainted reputation as a source of misinformation meant that they could not have anything public facing that even suggested it could be spreading false information. And now the blueprints of their language learning AI, Llama, have leaked online. After a good run, Meta is facing an inflection

point. Can they make the transition from your grandmother's favorite way to share memes from 08 to becoming the hottest gaming company and co-working space on the planet? Or is it doomed to be forgotten and left behind like Tom from Myspace? One big thing to take away from all of this is just how much your data is worth. Your data made Facebook hundreds of billions of dollars. If you don't pay for a product, you are the product. I'm going to say that again. If you don't pay for a product, you are the product. So if you're an iPhone user, maybe take advantage of that privacy protection option and refuse to allow companies to follow you. If you're an Android user, you can go into your settings and prevent Google from

storing information for more than three months. Think twice about giving out your email address to a website. We've been giving away billions of dollars in information about our lives to essentially look at pictures of other people's food all these years. And maybe that's a fair exchange. Or maybe it's not. Only you can decide. For today's tip, you can take straight to the bank. One of the strangest things to come out of all of this was Elon Musk denouncing text message-based two-factor authentication.

You know, when you log in and then you get a code to enter via text? Musk is not all about it. And he's not wrong. It's not the safest way to verify your login. So consider switching from text-based authentication to using an authentication app. Apples is built in and can be found in the settings. Google requires you to download the Google authenticator. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok

at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make. Thank you.