Photo: Phil Pasquini / Shutterstock.com
After trying to make his way out of the $44 billion deal that Elon Musk signed with Twitter and facing a lawsuit, the Tesla founder finally did end up acquiring the social media platform in 2022. Ever since his arrival, Musk has been making one bold move after the other claiming that it was all for the better of the company. But is it really?
Twitter now operates with a much smaller staff than before he arrived, the site doesn’t have a media department anymore, and Musk’s radical new changes to the platform in order to monetise it wherever possible have led to some equally radical consequences.
Besides the massive layoffs, Twitter is now facing a significant projected drop in ad revenue as advertisers flee the platform over concerns about Musk’s rapid changes and overall brand image. The Twitter Blue subscription that Musk desperately wanted to take nearly half the company’s revenue isn’t panning out very well and overall, there’s still quite a ruckus happening at Twitter, something that’s giving competitors a revived momentum.
But are Musk’s monetising moves really helping Twitter? Or will they in the foreseeable future?
In the News: Israel is using facial recognition technology to track Palestinians
What has Musk already done at Twitter?
Musk’s arrival at the Twitter HQ has been nothing short of controversial. Other than making his dog the CEO of Twitter, here’s a quick overview of everything he’s done so far.
- Massive layoffs: Twitter’s 7,500 staff was already cut down to 2,000 with a majority of its executives, engineers, data scientists and the entire communications department being fired. Musk told employees in November 2022 that there would be no more layoffs. Despite that, another round of layoffs happened in February 2023 and ended up cutting 200 more employees loose, including Esther Crawford, who was responsible for Twitter Blue, was considered to be in Musk’s “inner circle” and even gained popularity for sleeping in the Twitter office while working on new changes for Twitter Blue.
- A revamped Twitter Blue: Another one of Musk’s early changes involved changing Twitter Blue upside down. Not only did Twitter Blue start costing more at $11 on phones and $8 on the web, as compared to the $4.99 price tag it previously had, but Musk also tied Twitter’s famed blue checkmark to the subscription, causing chaos on the day the new subscription went live.
- The verification system went haywire: The days of reputed and verified accounts having their blue checkmark are long gone. Twitter is now a chaotic mess of multi-coloured checkmarks indicating different verification statuses. The blue checkmark now means nothing more than indicating that a specific user has purchased a Twitter Blue subscription, regardless of whether they actually did or not. Companies now get handed a gold verification badge, with government officials getting a silver one. The platform has also started axing verified checkmarks from accounts that refused to pay for the subscription and came up with alternative checkmarks for official accounts.
- Moderation and curation have been completely changed: One of the most obvious changes on the platform has been made to its content and curation systems. Users now have two tabs to choose from, ‘For You’ and ‘Following’. What many users haven’t noticed is that the Twitter app tends to default to the ‘For You’ tab from time to time, which makes sure you only see tweets from existing Twitter Blue subscribers or whatever else that Twitter wants you to see, instead of tweets from people you actually follow.
- Reinstating controversial accounts: Under Musk’s regime, several high-profile accounts that were previously blocked on the site were brought back to life. These include Ye (Kanye West), who was banned for his antisemitic posts on the platform, internet influencer Andrew Tate and former US president Donald Trump, whose tweets were accused of causing the Capitol Hill riots in January 2021.
- A focus on metrics and longer content: Tweets now show a view counter visible across the Android and iOS apps and the website. Musk has also been adding more ways for Twitter Blue subscribers to write up to 10,000-word tweets and post hour-long videos, all in the hopes of luring creators to the platform.
- New monetisation methods: Twitter Subscriptions have also been revamped to make them more alluring for content creators. At the moment, Twitter promises to not take any cut from content creators’ subscriptions on the platform (which can be offered at $2.99, $4.99 and $9.99) until April 2024. This means that creators get everything they make on the platform after a 30% app store fee on the subscription is cut. Musk has been focussing on decreasing reliance on ad revenue in favour of subscriptions, and these new monetisation methods and tools are all but instruments for his will.
- The promise of transparency: The platform has also promised to be more transparent under Musk, with the “Chief Twit” announcing on February 3 2023, that the company would begin sharing ad revenue with creators on the platform the very same day. The catch? You need to be a Twitter Blue subscriber. However, we’re still waiting for that to happen. The platform also claimed that it’ll be informing users if their tweets have been limited, as the site uses restrictions as a way of moderation quite often.
- Charging for API access and killing off third-party ways to access Twitter: In another rather controversial move, Musk started charging for the Twitter API, something that was previously free for independent developers, researchers and companies alike. Musk did say that bots offering “good content” can get API access for free, but that has been just as shaky as all his other announcements, and third-party Twitter apps are suffering.
Musk has made big claims about why he acquired Twitter. From “saving humanity” to wanting to transform Twitter into an all-inclusive app that can be used for news, food orders and sending payments, he’s been making changes since his first day. But all of these radical changes are yet to amount to something.
Is Twitter really becoming more profitable?
It’s been nearly six months since Musk took over Twitter, and his ambitions for the platform remain mostly that — ambitions. Truth is, despite promising transparency, we don’t have a solid number of Twitter revenues at the moment. However, it doesn’t take a lot to figure out that Musk might be in hot water over all these new changes.
First up, advertisers have been fleeing the platform left and right. Ad revenues formed over 90% of what Twitter made and while Musk might’ve been wanting to change that, he still needs the money. Considering the CEO himself evaluated the company at $20 billion in his employee stock grant evaluation, less than half of what he paid for the company almost six months ago, we can start seeing the signs of trouble here.
All this has amounted to Twitter’s 2023 ad revenue falling nearly 28% to an estimated $2.98 billion, or nearly 37% less than what was projected in the previous forecast just before Musk’s takeover according to Insider Intelligence. The biggest problem here is that “advertisers don’t trust Musk”, said Jasmine Enberg, Insider Intelligence’s principal analyst. For context, Twitter made $4.14 billion from ad revenue in 2022.
As for how well Twitter Blue is doing, that’s shrouded in secrecy as well. However, as per Sensor Tower estimates at the end of March 2023, Twitter Blue had 385,000 mobile subscribers on both Android and iOS, with the US being its largest market with 246,000 subscribers only bringing in around $11 million in mobile subscriptions in three months after its relaunch. Another report from The Information put this number at 180,000 in the US in February 2023, two months after its launch.
Finally, a third estimate from Quartz says that Twitter Blue subscriptions will make around $27.8 million in revenue per year. Musk staked out a $12.5 billion loan to help complete his Twitter deal, meaning in order to cover the $1 billion in annual interest Twitter Blue would need 10.4 million subscribers. Safe to say the subscription is pretty far from its target at the moment.
Twitter Blue is also charged differently for individual customers and organisations. For organisations looking to get the “verified organisation” status on Twitter, the subscription runs $1000 per month, quite a steep rise from the already high $11 price tag. To add salt to the wound, for any additional affiliates, companies need to shell out an extra $50/month in the US, with prices varying based on region. Oh, and these prices exclude any applicable taxes.
One more avenue that Musk opened up for monetisation is API access. Previously offered for free, the Twitter API can run anywhere between $42,000 per month for access to 50 million tweets all the way up to $210,000 per month for 200 million tweets, with a “medium package” coming in at $125,000 per month for 100 million tweets.
It’s not that the Twitter API was completely free previously either. However, the highest advertised plan would only set a customer back $2,899 per month, paired with a free tier of its API. However, Musk’s extremely high API prices have driven enterprises off the edge, with a fair bit of them dropping the API altogether including major companies like WordPress, Microsoft and Intercom.
What’s the cost of this ‘monetisation’?
In Elon’s mad dash to reduce dependence on ad revenue, he’s just done that. Not only Twitter’s ad revenue projections for 2023 have fallen drastically, with more and more advertisers pulling out of the platform with concerns over the rapid changes, missteps and overall concern about brand image, but Twitter does also look poised to lose out on ad revenue for sure.
The hopes of Twitter Blue making up for this dent in revenue also seem unlikely at the moment. The service hasn’t picked up nearly as well and has a long road ahead of itself if it needs to make up those billions of dollars in revenue deficit, not to mention the loans that the Twitter leader needs to pay off for buying the platform in the first place.
Finally, all these changes have hurt Twitter’s overall image as well. The verification checkmark once looked at as a seal of authenticity, is now merely a joke with an $11 (or $8) price tag. As for creators coming to the platform, Twitter isn’t taking anything from them until 2024, so that won’t amount to much in terms of the company revenue for the time being.
That said, given Musk’s track record, it wouldn’t be surprising if he goes back on his word and starts charging the 10% cut early, which would presumably leave a sour taste with creators who were hoping to get away with more revenue for themselves until the promised date.
What’s the competition doing?
All these new changes have also opened the door for Twitter’s competition, which seems to be booming. Substack and Mastodon are already becoming budding communities where Twitter rejects are finding new eyeballs. Employees who previously worked at the company are also launching their own Twitter rivals, with the most prominent examples being T2 and Spill.
Meta also announced a new app named Artifact, featuring a personalised news feed powered by AI quickly earning itself comparisons to Twitter. Other up-and-coming rivals include Post News, which got funding from a16z in November 2022, and Bluesky, a service launched by Twitter creator Jack Dorsey himself.
Bluesky started as an internal Twitter project in 2019 but was set up as an individual company in 2022 and as of April 2022, it had raised $13 million from Twitter alone. The platform shared an update on its private beta and started waitlisting users in early 2023, already crossing 40,000 users so far. Similar to Mastodon, it runs on a decentralised framework while offering Twitter-like capabilities where people create profiles and post short messages including text and media in addition to a few unique features of its own.
Sure these apps and services don’t have anywhere near the number of active users Twitter has, but their recent rise and regain in momentum has been fuelled by all the chaos at Twitter that’s forcing dissatisfied users to look for other options. Twitter used to be in a league of its own, but now it’s surrounded by smaller rivals targeting different areas where the platform is lacking and siphoning off users without much work.
What does the future hold?
Either the Twitter Blue subscription and all the other monetisation tools that Musk has launched work in his favour and make up the revenue lost from ads, or Twitter would be left scrambling as the platform figures out how to deal with the reduced revenue and increased workload — not an ideal situation.
While some of the initial shock and media attention has waved off from Twitter and Musk’s rapid changes, there’s still a lot going on that can make waves and make or break the game for Twitter. However, it goes without saying that some corrective action is required.
Critics and sceptics have often pointed out that Musk’s Twitter run is marred with erratic decisions often overshadowed by a billionaire’s ego. Musk’s rollercoaster ride at the helm has seen more downs than ups and might make the idea of colonising Mars seem easier than conquering the metaphorical online town hall.
In the News: BeReal’s new ‘RealPeople’ is a celeb-only timeline