November 25, 2022, 9:16 AM
November 25, 2022, 9:16 AM
Elon Musk wants to diversify Twitter’s revenue streams beyond advertising, but no massive social network has survived without advertisers.
“Facebook created the economic model”explains Jasmine Enberg, from the consulting firm Insider Intelligence: the free service is sustained thanks to the sale of advertising space.
This model was particularly lucrative for Goal (Facebook, Instagram) and Google or YouTube, capable of personalizing ads in detail, on a large scale.
But “it is not the only way,” the analyst qualifies.
Faced with budget cuts by advertisers, affected by inflation, and the increasing regulation of the collection of personal data, “all platforms are exploring new methods” to finance themselves.
The situation was already particularly difficult for Twitterwhich is 90% dependent on advertising, but is a network that advertisers can do without more easily than others.
The problem has worsened since the purchase of the blue bird network by the founder of Tesla at the end of October.
According to NGO Media Matters, which has criticized Musk’s Twitter in the past, half of the top 100 advertisers on the network said they were suspending or “apparently suspending” their ad spending on the platform.
Musk “didn’t understand that Twitter is a brand in itself. The platform had value. Now companies don’t want to be associated” with that network, says Sarah Roberts, a social media specialist at UCLA University.
Charge users?
The platforms try two types of solution: charging users or content creators.
Reddit, a forum site, has a hybrid model with advertising, a paid subscription, and coupons that give access to benefits.
But “it’s always hard to ask for money for something that’s free,” summed up Carolina Milanesi of Creative Strategies, “unless you bring something new to the table.”
Twitter has proposed a paid subscription since last year with additional functionalities.
Musk wanted to increase the price of this system to $8 per month in the United States – a value similar to the cheapest proposals of Disney + and Netflix – and include account authentication.
But the partial launch of this system was chaotic, causing so many fake accounts to break in that it ended up being suspended.
“The idea is not bad in itself, but it didn’t find the right price level,” Enberg said.
“The perks might not be so attractive to get enough people to sign up. And account verification serves to ensure the integrity of accounts and conversations,” which is why “it shouldn’t be paid.”
Subscribers to “Blue Verified” – the most active users of the network – will be twice as exposed to advertising, which will “reduce the quality and size of the audience” for advertisers, explains Enberg of Insider Intelligence.
Newer platforms try to avoid advertising entirely, with no guarantee of long-term profitability.
On Discord, a live discussion social network, users can subscribe to access more emoticons, for example.
The highly successful startup BeReal hopes to finance itself through in-app purchases, according to the Financial Times.
Charge influencers and content developers?
Twitter had about 230 million daily active users last June. Musk has endlessly welcomed the increase in users since he has been at the helm of the company.
But that growth doesn’t necessarily translate into dollars.
Snapchat, which launched a paid version of its app in June, has more and more users, who report less and less money.
Faced with the reality of the numbers, the platforms compete with content creators to attract and retain an audience, but also to obtain commissions on their income or charge them for promoting their messages and videos.
“This is a huge opportunity for Twitter, which has (among its users) many celebrities, political figures and journalists with whom the company could reach mutually beneficial deals,” Enberg said.
