> Still, even if you cut the userbase by a third to 141 million daily addicted users — which I think vastly overstates Twitter’s elasticity of demand amongst its core user base
Am I reading this correctly, that he believes Twitter would retain considerably more than two thirds of their daily addicted users if they asked them for ~$4/month? Even two thirds sounds grossly unrealistic to me. I would be astonished if even one in ten stayed. I’d even be more than a little surprised if one in ten stayed if you asked them for $1/month.
(I’m mostly a non-spender and non-user of social media. All I’m basing this on is my feelings and observations of the fickleness of consumption and people’s commonly-irrational behaviour around free things.)
I'd expect it to be more like 1 in a hundred staying. Certainly I'd take it as an excuse to cut the tie and try to find which discords people had fled to. They'd probably lose a third of their users simply by annoucing the plan.
There is one plan which they've never considered and probably never will: something like Twitch, where you can pay for the "content creators" you like.
> There is one plan which they've never considered and probably never will: something like Twitch, where you can pay for the "content creators" you like.
Twitter rolled out Super Follows[1] and Twitter Blue[2] a few months ago
Not just Discord, every little social circle would spin up local mastodon instances. It would be really good for decentralization actually, I kinda want them to do this lmao
> There is one plan which they've never considered and probably never will: something like Twitch, where you can pay for the "content creators" you like.
They will never do this.
Twitter has become a self-absorbed status tool for people who believe the supposedly correct things. These days, one of those things is thin-skinned censorship. Allowing payments would reveal that their most popular users are people that do not agree with the worldviews of the Twitterati.
If it comes down to charging marketers for some hand-wavy conception of "reach" that can't be attributed, or direct attribution that would definitively show that Twitter is a biased dumpster fire, Twitter will always pick the former.
Your take is correct. Twitter would be decimated by requiring $4/month to use it, and that might be generous. Could they even get 5-10 million paying subscribers? Probably initially, however the network would erode rapidly and those paying subscribers would drop off.
Someone else would simply step in and fill their shoes with an ad model. The ad model works exceptionally well. Twitter's primary problem is and always has been cost bloat. They should have 30-40% operating income margins; instead it's more like 7%. They have always been very poorly operated and very poorly structured as a business. They did $357m in operating income on $4.8b in sales the last four quarters. When Facebook was that size they had 25-30% operating income margins (while growing very fast), there's no reason Twitter shouldn't be able to at least match that at this stage of their business life (there isn't some great 80% growth surge coming next year that they need to be prepared for, staffing up ahead of time).
They could limit their free tier to say 1000 characters and 10 retweets a day, while retaining unlimited browsing and "likes." If you want more than that, subscribe to Twitter Blue. Or watch a 30 second ad to reload your character/retweet inventory. If they do it right they could get obsessive Tweeters paying $99.99 a pop like free-to-pay gamers trying to max out their gear.
Twitters Revenue/Employee Headcount (not counting any contractors) is currently around 636k/employee. As far as FAANG companies go Twitter has an over bloated workforce.
Except for youtube premium you don't have any alternative for the sites available for free. For twitter there is sea of alternatives that does the exact same thing.
The key is that none of these have free alternatives, besides NY Times and Washington Post (I don't know what Charter is). Twitter has many free alternatives so it'd be closer to the bottom of this list.
The blue check, calling card of the Twitter cultural elite, is such a highly coveted status symbol that it's almost incomprehensible to me that Twitter hasn't come up with a way to directly monetize it. It's an incredible amount of value just sitting there.
or charge few cents per post for users with large number of followers. if you have thousands for followers you should be little careful in terms of what you post. charging money would put some control.
> I would be astonished if even one in ten stayed.
Yep. They don't even need to go to subscription model to be profitable. Keep on doing what they're doing, maybe trim the employee headcount to something more reasonable, and continue to enjoy modest - as in, unsexy but consistent - year-over-year ad revenue gains.
This might work if Twitter was a private company. Their stock has been an enduring stinker and frankly I would bet on it being sold rather than the owners being satisfied with 'unsexy consistency'
I think they should try it. What's the worst that happens? A horrible blight on society goes under or it becomes something worthwhile for the first time in its corporate history. Either way it improves the world!
A move like that could make very transparent how many of those accounts are bots. It seems risky if the active users are inflated (idk if it is the case but it could very well be)
Twitter's success derives from how well it serves the people who work on Twitter. Think politicians, business leaders, investors, celebrities, influencers, tech workers, journalists.
People who work on Twitter, who have built a large following, who use Twitter to propagate messages, to network with peers, and to learn facts and rumors, would pay not just $4/month but $4000. Whatever the price Twitter would charge journalists, they would gladly pay; it's a cost of doing business.
Actually, in addition to being a business expense, Twitter is a super-addictive dopamine hit ego booster, a game that makes it's high-scoring players feel important.
Twitter's problem is that it makes the low-scoring players feel bad. To use Twitter without a Blue Check is just not that valuable to most people. Just like the Twitter elites derive a sense of self-importance from their internet followers, the Twitter masses feel a sense of illegitimacy, an angst against the platform for driving the public discourse into a dumpster fire.
As long as Twitter provides news and entertainment, it'll get used. But Twitter insiders and power users (Blue Checks) would be well-served to heed the infamous advice: "Don't get high on your own supply."
> Twitter's success derives from how well it serves the people who work on Twitter.
Black Rock and Cato pushed Dorsey out. I thought this was common knowledge and a clear sign of where Twitter is headed (and indeed where some notorious Twitterers would have liked it to go a while back).
Getting high on ones own supply is precisely the point. Its meant to be addictive, for Twitterers and followers alike.
I’m not sure a blue check is very important for engagement. I don’t have a blue check, and easily drive more engagement than many verified accounts I follow. And I’m not the only one.
Assuming that you "work on Twitter", ie, your career is in part built on Twitter, what do you think the value of a Blue Check is? I would bet it's worth more than $1000/yr to the average person in the "Twitter Middle Class" (someone using Twitter for work but not at mega scale). Even a single digit percentage point boost in engagement is worth a lot, or do you disagree?
> Twitter's problem is that it makes the low-scoring players feel bad. To use Twitter without a Blue Check is just not that valuable to most people. Just like the Twitter elites derive a sense of self-importance from their internet followers, the Twitter masses feel a sense of illegitimacy, an angst against the platform for driving the public discourse into a dumpster fire.
I don't really agree with this. In my experience as a daily Twitter user, most of the posts I see that aren't from specific sub-communnities I participate in are from low-follower accounts that had one of their tweets go viral. I think generally as long as you have some followers, you're only one timely/clever joke away from hundreds of thousands of people seeing your tweet.
Totally agree, I’ve met with people in person after hanging around and chatting with my sub community, they know what I think through my tweets and I know what they think. We share resources etc. it’s wonderful. It’s harder to join different communities where you want to say different things. I hate following people that are all over the place. Twitter works well to create a community around a cause or topic. But it’s hard as a generalist to say multiple things and think diversely.
I always found it amusing that common people who are not that interesting share the same platform with influential people / thought leaders / celebrities. The fact you can just cold tweet and @mention a famous person out of the blue is highly parasocial and strange.
I would be surprised if Twitter doesn't already have some kind of behind-the-scenes payment arrangement for these "VIP" level users to protect their accounts and do whatever other special things.
If Twitter doesn't already do this, then it's dumb, quite frankly, from a business sense due to all the extra labor (in terms of engineers, support, etc) to provide services for these VIPs compared to normal users. Like you said, if these Twitter VIPs are having their cake and eating it too with monetizing Twitter for their own benefit, why wouldn't Twitter ask for a cut.
Twitter's already done what even other major social platform has done and become dependent on advertising revenue. If Twitter becomes all paid and charges even $1/mo, that would wipe out a huge amount of "normal" users that are accustomed to paying the price of free, and then that's going to impact the ad revenue because of lesser targeted normal people to advertise to.
I think the problem Twitter is going to face is how to balance all the plates they have in the air with realistic expectations.
It's the "classic" problem that these platforms want to solve to keep up with investor expectations. So far, there's mostly a bunch of 'little' approaches to this like selling some random digital trinkets or paying for some 'meh' extra features, but these things are like side-dishes that don't reap enough benefits to compensate for appetites of continuous profit expansion.
This is sort of like being torn different ways. From one angle, if Twitter "changing the formula too much" makes the platform worse and people leave, then they don't grow and face shareholder backlash. From another angle, if Twitter hits a wall on monetization and can't figure out how to boost their cap, then Twitter becomes an unattractive investment and will just kinda flatline growth. And finally, people could still just find a new thing to go to anyways and if Twitter does not and stays Twitter, people still might get bored and move over to TikTok or Reddit or whatever.
Basically, even Twitter shows it's still hard to balance reality with desire with mission.
>If Twitter doesn't already do this, then it's dumb, quite frankly, from a business sense due to all the extra labor (in terms of engineers, support, etc) to provide services for these VIPs compared to normal users. Like you said, if these Twitter VIPs are having their cake and eating it too with monetizing Twitter for their own benefit, why wouldn't Twitter ask for a cut.
They probably drive a ton of engagement, which benefits twitter.
> behind-the-scenes payment arrangement for these "VIP" level users
Twitter licenses premium data APIs. Twitter's "VIP level" users are those that pay significant amounts of money to consume these data APIs to extrapolate whatever sort of information the data can provide.
You can research and confirm this yourself but sources for my assertion:
You could offset the costs of building "customer" filters for super users as well -- ones that do a lot of work to ensure certain people never comment or their comments are downweighted.
> People who work on Twitter, who have built a large following, who use Twitter to propagate messages, to network with peers, and to learn facts and rumors, would pay not just $4/month but $4000. Whatever the price Twitter would charge journalists, they would gladly pay; it's a cost of doing business.
No they wouldn't pay $4000 a month, you vastly over-estimate the willingness of users to pay for social media. Any paid social media was a complete failure. Twitter customers are the advertisers and data hoarders, not the people who tweet.
I've felt for a while that a pay-to-post model with a straight chronological feed would solve a lot of the problems of today's social media. I toy with the idea of building it myself.
Twitter offers a chronological feed, the little star thing on the upper right. Works well to get rid of endless scrolling if you don't follow hundreds of people.
This would be the usual rent seek if news publishers had to pay and would also consolidate the richest media houses. Not really a good idea for anyone aside from Twitter of course.
I would monetize the reach of a post if i were Twitter CEO. Today leaders politicians, celebrities, corps etc have such a wider reach through Twitter due to their following, so Twitter can set a default max threshold on the how many audience the post will reach to and allow users to pay for boost their reach.
I like this because "reach" scales with "moral hazard" and so adding default network decay would help dampen the outragememes. But if you pay to take the dampening off you can be accurately judged for paying to propagate helpful or harmful things.
It seems crazy that people bemoan the fact that twitter only does 4.8 bill or whatever the current run rate is. Since when is that awful? It's only awful when you compare it to Facebook and a few others. Compared to almost all businesses ever, it has grown to be a giant in an amazingly short period of time and is doing well on every dimension, including financial.
It's popular, engaging and has a solid business model. Again, only when you compare it to some of the most freakish outliers in the history of business does it look less than amazing.
Twitter's Board of Directors is a listing of people who've come to expect the projects with which they're involved - either directly or tangentially - or with which they invest, to perform in such a ridiculously obscene manner that even exceptional growth and profits appears to be "underperforming".
For many of these people, there's no problem - where "problem" is defined as 'not being a 1000x bagger stock 5 - 10 years from IPO launch' - that cannot be solved through some alchemical combination of AI/ML, automation, aggressive user engagement, monetization, etc.
Compared to Amazon, Facebook, Google, Netflix, etc., Twitter is an also-ran. Which is absolutely, utterly, unabashedly insane to think.
I just did a super take with a sibling comment to yours comparing Twitter to other social media and comm products.
> Twitter is an also-ran. Which is absolutely, utterly, unabashedly insane to think.
Yes, this is absolutely crazy!
The other problem is how much Twitter is brought up by people and the media. Data shows a minority of the already minority of people who use Twitter, talk politics. Yet you can’t go any time without people pointing to Twitter as a representation of a huge population to prove their points.
For example, reactions to “cancelling” someone will have droves of people and media point to a tiny portion of Twitter saying things that can’t represent the massive demographic people are critiquing.
All of this makes Twitter seem so much more important even to people not constantly around tech, startup, or SV circles.
I wish that one day, there is a non-profit organization which provides social media and almost everyone uses it. Direct ads are forbidden. There are set of some high level rules and any country can be part of moderation as long they follow these same rules.
Maybe money could come selling from some anonymized data. Even partially government funded. Infrastructure should be decentralized. Maybe you can pay 1€ per month to get more some features.
It takes only tiny fraction what these current companies are making money, to maintain such environment.
I combined two draft blog posts and wrote an intro to give some context to why people may see Twitter as not having lived up enough. It’s going to be very long. Heh. No worries if it isn’t read:
———
Many growth/tech stocks are off by 10-40% from higher peaks or averages since the market went bananas in April & May 2020. Almost all growth/tech stocks are off by over 10% from late Oct or mid Nov.
Twitter as you stated with its run rate, will top $5B rev in 2021. The stock price opened at $45.5, $36.5B market cap. Twitter is off ~30% from most of 2021. Which is $65/share and a $52B market cap.
*Comparisons*:
- Pinterest market cap is ~25% less. Not well monetized so far. ~$2.5B rev in 2021.
- Snap's market cap is more than double. Rev could hit $4B for 2021. So ~22% less.
- LinkedIn was acquired by Microsoft in 2016. Announced in June, completed December 2016. It was trading at a $17.5B market cap before acquisition. Rev for 2016 was $3.7B. This year the run rate has topped $10B. 2021 rev will top $11.5B.
- For context, Twitter was worth $13B in June 2016 with $2.5B rev for 2016.
- Github was bought for $7.5B in stock. Announced and completed in June and Oct 2018. Microsoft shares were $99 in June 2018. They opened at $335 today. Those $7.5B acquisition shares are worth $25.5B today.
- Gitlab, a partial competitor to Github, closed its 1st public day on Oct 14, 2021 above $15B. It's valued above $14B today. Annual run rate above $200M.
- Gitlab has no overlap with Twitter. GitHub does with its social network and other trends. GitHub's valuation, whether under Microsoft now, or as a hypothetical public company, is likely 3x+ Gitlab. Or ~$45B. Github 2018 rev was likely above $300M. These numbers won't line up with Twitter because of both getting a lot of SaaS, subscription, and enterprise revenue.
- Telegram allegedly has been bank rolled by its founder since inception. I personally doubt this, but regardless, its bank roll has been limited. It didn't get the vast capital or marketing/namespace an SV company gets. Telegram's burn rate is lower than Twitter or any other company listed. Rumors say Telegram has turned down funding at a $30B valuation. Other rumors speak to a $30-50B IPO in 2023.
- LINE, a messaging app with some social network features, is based in and most popular in Japan. It was a subsidiary of Korean company, Naver. LINE went public a few years ago. It did a 50/50 merger with Softbank's Yahoo Japan. The combined company, Z Holdings, has a market cap of $45B. LINE is most popular in a couple of South East Asian countries and with expats.
- KakaoTalk, a messaging app with some social network features, is based in and most popular in Korea. It is much smaller than the others. 50M active users in 2021 with 90% in South Korea. KakaoTalk's parent company, Kakao, merged with Naver's competitor Daum with the current company called Kakao and valued at $45B. KakaoTalk only represents a fraction of this value.
This reminds me of when everyone found out during the dot com bubble that Booking.com[1], at the time a unicorn startup, was run out of a single office with something like a dozen or so employees.
It didn't lead to the stock market crash, but it always stuck me as the first time that the general public started to really think that the whole dot com scene was a little out of whack.
Twitter has a monopoly and 3B+ in revenue. It's hard to see how this justifies a 36B+ market cap. It's in a much better position than many, many other unicorns.
[1] I'm going off of a twenty two or twenty three year old memory, so I may have gotten the company wrong.
Don't their employees handle communication with the myriad accommodation owners and tourists that often don't speak the same language? Sure, often you can just do everything using the web interface, but sometimes you need to ask questions and Booking handled that quite quickly in the past.
> It didn't lead to the stock market crash, but it always stuck me as the first time that the general public started to really think that the whole dot com scene was a little out of whack.
That's because the general public, and frankly even the non-general public, have never fully understood the digital computer: it's a leverage machine. It allows the exceptionally intelligent and/or insightful to leverage code to do what would have taken thousands, or even millions of workers to achieve.
That's why a billion dollar photo startup can be created by three people and sold to Facebook.
It looks like alchemy to the people without knowledge, because it's complex, difficult, requires a bit of luck (the right time / right place combination), and frankly, does require a certain level of intelligence that's well above average in order to fully exploit.
The question is, which aspect is monetized: reading or writing? If it's reading, then I see Twitter quickly losing out to a platform that is free to read. Politicians and celebrities wouldn't make announcements on a platform that requires payment to read. If it's writing / having an account, then the suggestion is a lot more reasonable. I would pay $4/mo, and would be very glad to not have spam comments below every tweet I read.
Twitter is a first-responder medium. If people had to pay we'd miss so many breaking events that make it valuable to journalists et al in the first place. That model would work for a newsletter , but not for a live medium
It enhances the experience on Twitter for those that desire more features: a thread feature (which is /really/ nice IMHO), ability to cancel tweets after send, more color themes and customizable icons, etc.
The Twitter "as we know it" will likely always remain free and ad-driven, but if you want an enhanced experience, you're going to have to pay for it. And that's fine by me.
I'd buy twitter blue right now if it didn't still have ads. I'd pay 3 times its cost if it was just ad free. Sure it's not a problem on my computer because I have adblock but I primarily use twitter on my phone, and I'm too lazy to set up an adblocking DNS like pihole.
A carefully-applied monetisation model could be quite helpful for the community as well as Twitter's bottom line. Private accounts - perhaps with an extended network, friends-of-friends - could still remain free and generate ad revenue.
The one issue is that chipping off existing features would cause major backlash. While removing low-quality replies and other spam is nice, it relies on even higher-quality moderation, to provide adequate incentive not to lose out on a purchase, but also to avoid regulatory issues, as this now becomes a product.
When it comes to adding features to sweeten the deal, however, there are very few that can really be added that provide a tangible benefit. The only feature I can think of is being able to edit tweets - or more accurately, embed a second tweet, similar to a quote-tweet, to provide an update. This would allow people to provide context, retract claims, or other uses, especially when a tweet gets attention or controversy, and could go a small way in reducing toxicity.
If Twitter was worth paying for, they wouldn't have used an ad-supported model to begin with (because people would have found it valuable enough to pay for in the first place). In some ways, Twitter has the "news" problem in that people just aren't willing to pay for it. As this says, Internet advertising really isn't that effective, especially on a site that is the equivalent of standing in town square with a megaphone. I think Twitter is tapped out on how much money it can make and drastic changes will just drive users to other places. If you're looking for higher returns a different company might be a better idea.
You’re ignoring the competitive landscape. You might pay for Google, but a lot of people would choose to use a free alternative if they needed to pay. The loss in users would give Google less data and make Google less effective as a search engine.
> Plenty of companies and services which people would pay a lot for choose to be ad-supported.
I don't think that's true, because they would charge for access and have ads. These are fairly rare.
>Google, Bing, and other search engines are ad-supported but, if they weren’t, I’d pay a lot for them in a blink of an eye.
Most people wouldn't or they would charge for access and increase their RoI. Search isn't really valuable to Google, they make most of their money in ads.
>plenty of them successfully transitioned to paid subscription model
That's not really true, you have massive consolation because their business model is nonviable any other way.
They could also boost profits by lowering their OpEx. I genuinely don’t know why they need to spend a billion dollars a quarter for a product that really doesn’t change that much and isn’t massively complex.
What counts as complex? Is Facebook complex? Google? How about Netflix?
By the measure of “I can explain how they work in a blog post” none of these are complex. But trust me, operating internet scale services is complex, regardless of how simple they seem from the outside.
The amount of money I’m willing to spend on jeans, electronics, etc. is much higher than the amount I’m willing to spend on Twitter. Makes sense that a service can sell ads for more money than I’m willing to pay for the service.
> If Twitter was worth paying for, they wouldn't have used an ad-supported model to begin with
Twitter doesn’t cost $0 because no one thinks it’s worth paying for (demand side), it’s because if they did charge they’d be replaced by someone who didn’t (too much potential supply).
If there was a market of people who would pay for such an app, there would be one on the market to satisfy the demand for it. Supply is irrelevant if there is no demand for it in the first place.
Even taking this assertion, it means there is effectively infinite supply so Twitter's service has effectively no monetary value to the consumer. It's still impossible to charge a consumer for it then (and the costs to provide the service have to be paid by a 3rd party in ads).
Edit: It's very difficult to build a network and get to a critical mass like Twitter. I'm still arguing it's demand constrained (people unwilling to pay) because you would see more viable competitors if it were supply.
I've proposed a business model for a while for Twitter: take their software and whitelabel it for institutions, media, or whoever's big enough to own their own domain name and wants to have their own @namespace @example.com
this would be a good fit for large media sites (journalism twitter is huge), government, businesses. let them pay.
You might be surprised to know the NSA has already cloned versions of Facebook, Tumblr, and Twitter onto US classified networks so IC and DoD agents can use them to publish and exchange classified information the same way influencers use normal social media. I can't remember what they call the Tumblr clone, but the Twitter one is eChirp and the Facebook one is called Tapioca.
It's not like there's anything all that complicated about the basic tech model of "loosely synchronized, eventually consistent live data feed algorithmically sorted with the ability to follow and group sources." Where these services earn their valuations is in sheer scale of the user base combined with the backend telemetry and machine learning services that drive user profiling and personalized ads, but government institutional use would not want or need those features. As far as I know, eChirp and Tapioca are maintained by volunteers and functionally equivalent to Twitter and Facebook if you stripped out the features built for serving personalized ads and maximizing reader engagement.
edit: Eugen, you can steal this business model from Twitter if they don't want to play in this space. Run Mastodon-as-a-service and sell it to institutional actors. I don't know who runs Masto.Host but they seem to be positioned to offer your software as a service to these groups.
There are other AP implementations that can be sold (as a service) to these large pocketed groups, not just your own software product.
another edit: this may leave a sour taste in your mouth but you now have a notable political user of your software, one that more than likely does not have the technical competence to be running it on their own. Someone could be making money off of them by providing a managed, white-labeled Mastodon instance (and then be responsible for scaling, security, availability, all the devops shit, etc). Not saying that should be you, but someone could.
And companies already run their own Mastodon instances - the Japanese imageboard/artist website Pixiv runs a Mastodon instance called Pawoo. That's apparently how elephants and/or mammoths sound like in Japanese. :)
Twitter need better relevancy. Their ads are some of the worse I've seen on any platform. The other thing they need, as pointed in the article, is other streams of revenue. Like LinkedIn for example. They sell a premium subscription to a small subsets of overall users (Twitter Blue is trying to do the same), have a successful job board, etc. The article mentions Twitter is making money of selling data. That's a good stream of revenue but they can do much better. I doubt the new CEO would make a big difference though. I think it's a bigger management issue than just replacing the CEO. We'll see how things turn out.
So to respond to the original article by Ben Thompson, I don't think it makes sense to charge all users, but it does make a lot of sense to charge a subset of the users. People (companies) who use twitter for marketing for example.
Readit News
Am I reading this correctly, that he believes Twitter would retain considerably more than two thirds of their daily addicted users if they asked them for ~$4/month? Even two thirds sounds grossly unrealistic to me. I would be astonished if even one in ten stayed. I’d even be more than a little surprised if one in ten stayed if you asked them for $1/month.
(I’m mostly a non-spender and non-user of social media. All I’m basing this on is my feelings and observations of the fickleness of consumption and people’s commonly-irrational behaviour around free things.)
There is one plan which they've never considered and probably never will: something like Twitch, where you can pay for the "content creators" you like.
Twitter rolled out Super Follows[1] and Twitter Blue[2] a few months ago
[1] https://blog.twitter.com/en_us/topics/product/2021/introduci... [2] https://blog.twitter.com/en_us/topics/company/2021/introduci...
They will never do this.
Twitter has become a self-absorbed status tool for people who believe the supposedly correct things. These days, one of those things is thin-skinned censorship. Allowing payments would reveal that their most popular users are people that do not agree with the worldviews of the Twitterati.
If it comes down to charging marketers for some hand-wavy conception of "reach" that can't be attributed, or direct attribution that would definitively show that Twitter is a biased dumpster fire, Twitter will always pick the former.
Matrix and/or IRC works REALLY well for me, for the most part.
I am on discord mostly because pre-existing communities/not having any alternative.
Someone else would simply step in and fill their shoes with an ad model. The ad model works exceptionally well. Twitter's primary problem is and always has been cost bloat. They should have 30-40% operating income margins; instead it's more like 7%. They have always been very poorly operated and very poorly structured as a business. They did $357m in operating income on $4.8b in sales the last four quarters. When Facebook was that size they had 25-30% operating income margins (while growing very fast), there's no reason Twitter shouldn't be able to at least match that at this stage of their business life (there isn't some great 80% growth surge coming next year that they need to be prepared for, staffing up ahead of time).
Subscriber counts for a handful of subscription companies:
Yep. They don't even need to go to subscription model to be profitable. Keep on doing what they're doing, maybe trim the employee headcount to something more reasonable, and continue to enjoy modest - as in, unsexy but consistent - year-over-year ad revenue gains.
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People who work on Twitter, who have built a large following, who use Twitter to propagate messages, to network with peers, and to learn facts and rumors, would pay not just $4/month but $4000. Whatever the price Twitter would charge journalists, they would gladly pay; it's a cost of doing business.
Actually, in addition to being a business expense, Twitter is a super-addictive dopamine hit ego booster, a game that makes it's high-scoring players feel important.
Twitter's problem is that it makes the low-scoring players feel bad. To use Twitter without a Blue Check is just not that valuable to most people. Just like the Twitter elites derive a sense of self-importance from their internet followers, the Twitter masses feel a sense of illegitimacy, an angst against the platform for driving the public discourse into a dumpster fire.
As long as Twitter provides news and entertainment, it'll get used. But Twitter insiders and power users (Blue Checks) would be well-served to heed the infamous advice: "Don't get high on your own supply."
Black Rock and Cato pushed Dorsey out. I thought this was common knowledge and a clear sign of where Twitter is headed (and indeed where some notorious Twitterers would have liked it to go a while back).
Getting high on ones own supply is precisely the point. Its meant to be addictive, for Twitterers and followers alike.
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I don't really agree with this. In my experience as a daily Twitter user, most of the posts I see that aren't from specific sub-communnities I participate in are from low-follower accounts that had one of their tweets go viral. I think generally as long as you have some followers, you're only one timely/clever joke away from hundreds of thousands of people seeing your tweet.
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I always found it amusing that common people who are not that interesting share the same platform with influential people / thought leaders / celebrities. The fact you can just cold tweet and @mention a famous person out of the blue is highly parasocial and strange.
Though I'm sure some do actually use it themselves (Musk seems to, for instance)
If Twitter doesn't already do this, then it's dumb, quite frankly, from a business sense due to all the extra labor (in terms of engineers, support, etc) to provide services for these VIPs compared to normal users. Like you said, if these Twitter VIPs are having their cake and eating it too with monetizing Twitter for their own benefit, why wouldn't Twitter ask for a cut.
Twitter's already done what even other major social platform has done and become dependent on advertising revenue. If Twitter becomes all paid and charges even $1/mo, that would wipe out a huge amount of "normal" users that are accustomed to paying the price of free, and then that's going to impact the ad revenue because of lesser targeted normal people to advertise to.
I think the problem Twitter is going to face is how to balance all the plates they have in the air with realistic expectations.
It's the "classic" problem that these platforms want to solve to keep up with investor expectations. So far, there's mostly a bunch of 'little' approaches to this like selling some random digital trinkets or paying for some 'meh' extra features, but these things are like side-dishes that don't reap enough benefits to compensate for appetites of continuous profit expansion.
This is sort of like being torn different ways. From one angle, if Twitter "changing the formula too much" makes the platform worse and people leave, then they don't grow and face shareholder backlash. From another angle, if Twitter hits a wall on monetization and can't figure out how to boost their cap, then Twitter becomes an unattractive investment and will just kinda flatline growth. And finally, people could still just find a new thing to go to anyways and if Twitter does not and stays Twitter, people still might get bored and move over to TikTok or Reddit or whatever.
Basically, even Twitter shows it's still hard to balance reality with desire with mission.
They probably drive a ton of engagement, which benefits twitter.
Twitter licenses premium data APIs. Twitter's "VIP level" users are those that pay significant amounts of money to consume these data APIs to extrapolate whatever sort of information the data can provide.
You can research and confirm this yourself but sources for my assertion:
https://www.bbc.com/news/business-24397472
https://www.fool.com/investing/2017/06/19/what-will-happen-t...
If you're paying money to Twitter for this sort of info, Twitter bends over backwards to support you.
No they wouldn't pay $4000 a month, you vastly over-estimate the willingness of users to pay for social media. Any paid social media was a complete failure. Twitter customers are the advertisers and data hoarders, not the people who tweet.
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Twitter is biased, that's what I think.
It's popular, engaging and has a solid business model. Again, only when you compare it to some of the most freakish outliers in the history of business does it look less than amazing.
Twitter's Board of Directors is a listing of people who've come to expect the projects with which they're involved - either directly or tangentially - or with which they invest, to perform in such a ridiculously obscene manner that even exceptional growth and profits appears to be "underperforming".
For many of these people, there's no problem - where "problem" is defined as 'not being a 1000x bagger stock 5 - 10 years from IPO launch' - that cannot be solved through some alchemical combination of AI/ML, automation, aggressive user engagement, monetization, etc.
Compared to Amazon, Facebook, Google, Netflix, etc., Twitter is an also-ran. Which is absolutely, utterly, unabashedly insane to think.
> Twitter is an also-ran. Which is absolutely, utterly, unabashedly insane to think.
Yes, this is absolutely crazy!
The other problem is how much Twitter is brought up by people and the media. Data shows a minority of the already minority of people who use Twitter, talk politics. Yet you can’t go any time without people pointing to Twitter as a representation of a huge population to prove their points.
For example, reactions to “cancelling” someone will have droves of people and media point to a tiny portion of Twitter saying things that can’t represent the massive demographic people are critiquing.
All of this makes Twitter seem so much more important even to people not constantly around tech, startup, or SV circles.
Maybe money could come selling from some anonymized data. Even partially government funded. Infrastructure should be decentralized. Maybe you can pay 1€ per month to get more some features.
It takes only tiny fraction what these current companies are making money, to maintain such environment.
Forbidden dystopia...
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Many growth/tech stocks are off by 10-40% from higher peaks or averages since the market went bananas in April & May 2020. Almost all growth/tech stocks are off by over 10% from late Oct or mid Nov.
Twitter as you stated with its run rate, will top $5B rev in 2021. The stock price opened at $45.5, $36.5B market cap. Twitter is off ~30% from most of 2021. Which is $65/share and a $52B market cap.
*Comparisons*: - Pinterest market cap is ~25% less. Not well monetized so far. ~$2.5B rev in 2021.
- Snap's market cap is more than double. Rev could hit $4B for 2021. So ~22% less.
- LinkedIn was acquired by Microsoft in 2016. Announced in June, completed December 2016. It was trading at a $17.5B market cap before acquisition. Rev for 2016 was $3.7B. This year the run rate has topped $10B. 2021 rev will top $11.5B. - For context, Twitter was worth $13B in June 2016 with $2.5B rev for 2016.
- Github was bought for $7.5B in stock. Announced and completed in June and Oct 2018. Microsoft shares were $99 in June 2018. They opened at $335 today. Those $7.5B acquisition shares are worth $25.5B today. - Gitlab, a partial competitor to Github, closed its 1st public day on Oct 14, 2021 above $15B. It's valued above $14B today. Annual run rate above $200M. - Gitlab has no overlap with Twitter. GitHub does with its social network and other trends. GitHub's valuation, whether under Microsoft now, or as a hypothetical public company, is likely 3x+ Gitlab. Or ~$45B. Github 2018 rev was likely above $300M. These numbers won't line up with Twitter because of both getting a lot of SaaS, subscription, and enterprise revenue.
- Telegram allegedly has been bank rolled by its founder since inception. I personally doubt this, but regardless, its bank roll has been limited. It didn't get the vast capital or marketing/namespace an SV company gets. Telegram's burn rate is lower than Twitter or any other company listed. Rumors say Telegram has turned down funding at a $30B valuation. Other rumors speak to a $30-50B IPO in 2023.
- LINE, a messaging app with some social network features, is based in and most popular in Japan. It was a subsidiary of Korean company, Naver. LINE went public a few years ago. It did a 50/50 merger with Softbank's Yahoo Japan. The combined company, Z Holdings, has a market cap of $45B. LINE is most popular in a couple of South East Asian countries and with expats.
- KakaoTalk, a messaging app with some social network features, is based in and most popular in Korea. It is much smaller than the others. 50M active users in 2021 with 90% in South Korea. KakaoTalk's parent company, Kakao, merged with Naver's competitor Daum with the current company called Kakao and valued at $45B. KakaoTalk only represents a fraction of this value.
It didn't lead to the stock market crash, but it always stuck me as the first time that the general public started to really think that the whole dot com scene was a little out of whack.
Twitter has a monopoly and 3B+ in revenue. It's hard to see how this justifies a 36B+ market cap. It's in a much better position than many, many other unicorns.
[1] I'm going off of a twenty two or twenty three year old memory, so I may have gotten the company wrong.
Ironically, they still have the same business model now - but with severe bloat (20k employees).
That's because the general public, and frankly even the non-general public, have never fully understood the digital computer: it's a leverage machine. It allows the exceptionally intelligent and/or insightful to leverage code to do what would have taken thousands, or even millions of workers to achieve.
That's why a billion dollar photo startup can be created by three people and sold to Facebook.
It looks like alchemy to the people without knowledge, because it's complex, difficult, requires a bit of luck (the right time / right place combination), and frankly, does require a certain level of intelligence that's well above average in order to fully exploit.
If you combine all of the different 'social media' platforms together into a single category? No.
It enhances the experience on Twitter for those that desire more features: a thread feature (which is /really/ nice IMHO), ability to cancel tweets after send, more color themes and customizable icons, etc.
The Twitter "as we know it" will likely always remain free and ad-driven, but if you want an enhanced experience, you're going to have to pay for it. And that's fine by me.
The one issue is that chipping off existing features would cause major backlash. While removing low-quality replies and other spam is nice, it relies on even higher-quality moderation, to provide adequate incentive not to lose out on a purchase, but also to avoid regulatory issues, as this now becomes a product.
When it comes to adding features to sweeten the deal, however, there are very few that can really be added that provide a tangible benefit. The only feature I can think of is being able to edit tweets - or more accurately, embed a second tweet, similar to a quote-tweet, to provide an update. This would allow people to provide context, retract claims, or other uses, especially when a tweet gets attention or controversy, and could go a small way in reducing toxicity.
Google, Bing, and other search engines are ad-supported but, if they weren’t, I’d pay a lot for them in a blink of an eye.
Most media companies started with ad-supported websites and plenty of them successfully transitioned to paid subscription model.
I don't think that's true, because they would charge for access and have ads. These are fairly rare.
>Google, Bing, and other search engines are ad-supported but, if they weren’t, I’d pay a lot for them in a blink of an eye.
Most people wouldn't or they would charge for access and increase their RoI. Search isn't really valuable to Google, they make most of their money in ads.
>plenty of them successfully transitioned to paid subscription model
That's not really true, you have massive consolation because their business model is nonviable any other way.
By the measure of “I can explain how they work in a blog post” none of these are complex. But trust me, operating internet scale services is complex, regardless of how simple they seem from the outside.
Twitter doesn’t cost $0 because no one thinks it’s worth paying for (demand side), it’s because if they did charge they’d be replaced by someone who didn’t (too much potential supply).
Even taking this assertion, it means there is effectively infinite supply so Twitter's service has effectively no monetary value to the consumer. It's still impossible to charge a consumer for it then (and the costs to provide the service have to be paid by a 3rd party in ads).
Edit: It's very difficult to build a network and get to a critical mass like Twitter. I'm still arguing it's demand constrained (people unwilling to pay) because you would see more viable competitors if it were supply.
this would be a good fit for large media sites (journalism twitter is huge), government, businesses. let them pay.
examples of this being expressed here by me:
https://news.ycombinator.com/item?id=21159283
https://news.ycombinator.com/item?id=25895654
It's not like there's anything all that complicated about the basic tech model of "loosely synchronized, eventually consistent live data feed algorithmically sorted with the ability to follow and group sources." Where these services earn their valuations is in sheer scale of the user base combined with the backend telemetry and machine learning services that drive user profiling and personalized ads, but government institutional use would not want or need those features. As far as I know, eChirp and Tapioca are maintained by volunteers and functionally equivalent to Twitter and Facebook if you stripped out the features built for serving personalized ads and maximizing reader engagement.
[1]: https://joinmastodon.org
edit: Eugen, you can steal this business model from Twitter if they don't want to play in this space. Run Mastodon-as-a-service and sell it to institutional actors. I don't know who runs Masto.Host but they seem to be positioned to offer your software as a service to these groups.
There are other AP implementations that can be sold (as a service) to these large pocketed groups, not just your own software product.
another edit: this may leave a sour taste in your mouth but you now have a notable political user of your software, one that more than likely does not have the technical competence to be running it on their own. Someone could be making money off of them by providing a managed, white-labeled Mastodon instance (and then be responsible for scaling, security, availability, all the devops shit, etc). Not saying that should be you, but someone could.
Journalists don't get value from Twitter?
Influencers and other business users don't get value from Twitter? Sports teams? Non-commercial entities?
I appreciate your insight but I disagree with your analysis.
So to respond to the original article by Ben Thompson, I don't think it makes sense to charge all users, but it does make a lot of sense to charge a subset of the users. People (companies) who use twitter for marketing for example.