Tech companies once felt confident enough to offer free services and features to allure customers, but now Silicon Valley companies are selling whatever they can sell.
- After a difficult 2022, Netflix has rolled out anti-password sharing features to crack down on accounts being accessed by multiple people.
- Social-media networks Twitter and Facebook have begun rolling out subscriptions and blocking certain features behind paywalls.
- Reddit is currently facing a consumer “blackout” protest for changes to how it lets third parties access data, now requiring a charge for developers.
Why It’s Important
Nothing in life is free, but tech companies have long operated their services with largely free features that allow users to access accounts, profiles, and features without having to pay for them. Facebook, Twitter, and Reddit do not charge for users to create accounts. Many tech companies have thrived on advertising revenues for the past few decades, which has kept the forward-facing aspects of the internet accessible and largely free, with more advanced or professional features for software requiring subscriptions.
The past year has been rough for the tech industry. Post-COVID lowering of profits and declining consumer spending have resulted in widespread tech layoffs, as companies attempt to tighten their wallets and operate with smaller crews. They’ve also resorted to cutting back on free features.
These gambits, so far, have proved somewhat successful. Netflix’s experiment with password crackdowns yielded an increase in new subscribers. The company has also controversially embraced advertising on the service, a feature that was once considered anathema for the company’s philosophy, but which CEO Reed Hastings enthusiastically embraced late last year.
Netflix once permitted widespread password sharing at the height of its profitability and success. When asked in 2016 about a password crackdown, Hastings responded, “We’re doing fine as it is.”
Those days are now over.
Other tech companies are beginning to follow suit, with Reddit’s CEO Steve Huffman citing Elon Musk’s aggressive revenue-seeking attempts at Twitter as a positive example for his controversial website changes.
Shares of Meta Platforms (META) and Netflix (NFLX) have risen sharply over the last six months.