Twitter’s new boss is blocking his way into the micro-blogging site with offers that are causing a stir among advertisers and prominent Twitter users. The new owner could learn a lesson or two from the Netflix experience.
Twitter’s new boss is blocking his way into the micro-blogging site with offers that are causing a stir among advertisers and prominent Twitter users. The new owner could learn a lesson or two from the Netflix experience.
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Twitter’s new boss Elon Musk is moving fast to make his mark on the social platform, which he bought last week for $44 billion. First and foremost he wants to leave a lasting impression on ‘Blue Tick’ users.
Mr Musk’s proposal to charge blue check-marked users $20 a month has upset many prominent figures who use the platform to share small updates. famous american novelist Stephen King retaliated by tweeting, “F#%k that, they should pay me.” Then, Mr. Musk struck a deal with the thriller writer asking if $8 works, citing Twitter to pay the bills.
For a platform that makes its revenue by selling space for ads, Mr. Musk’s idea of making money from users with blue tick badges is quite a strange one. In fact, the company’s own annual report for the year ending December 2021 states, “we” [Twitter] The bulk of our revenue is generated from advertising. Loss of advertising revenue can hurt our business.”
Twitter’s revenue for the quarter ended June totaled $1.18 billion. Of this, $1.08 billion came from advertising. Only $100 million came from stakes related to the company’s membership. Even before Musk joined Twitter, the company sold its mobile advertising platform MoPub to mobile game software maker AppLovin. The move was aimed at diversifying its source of revenue and going beyond selling ads on the platform.
Given the current macroeconomic headwinds, many companies have tightened their advertising budgets, and so Mr Musk needs to take advantage of the platform’s 237 million monetizable monthly active users. their $8 deal There is a step in that direction with Mr. King.
But charging verified users with blue ticks can harm the platform. And that’s where Mr. Musk would do well to learn from Netflix co-founder Reed Hastings’ change of heart.
Los Gatos, a California-based company, said back in 2010, that whenever an argument came up in support of ads on its platform, it was “killed”. And the service flourished over the past 10 years, and succeeded in its effort to create an ad-free streaming experience.
During the pandemic, the company posted record revenue and a surge in subscriptions. But things changed over the past two quarters as its membership growth declined. Macroeconomic headwinds and competition from other streaming services have forced the company to rethink its revenue model so much that Mr Hastings decided to advertise Platform.
If, for a service like Netflix that creates its content, ads play an important role, Twitter will need more and more revenue from subscriptions. In the case of a micro-blogging site, its users drive traffic and create content on the platform. Therefore, the $8 privilege fee charged to verified users could potentially lock them out of the platform. This will translate into a net loss of both the subscriber and the content for the platform.
Instead, Mr. Musk would do well to create a slate of features that would be attractive to active users of the platform and make them available for one price, either as a subscription bundle or la carte. Charging a monthly privilege fee for a digital blue-tick badge will only turn many active people away from verification.