Elon Musk wants to diversify Twitter’s revenue streams beyond advertising, but no mainstream social network has yet managed to do without advertisers.
“Facebook has quite simply fixed the economic model”, notes Jasmine Enberg, of the cabinet Insider Intelligence: the service, free, is remunerated thanks to the sale of advertising space. This model has proven particularly lucrative for Meta (Facebook, Instagram) and Google (search engine, YouTube), which can fine-tune ads at massive scale.
But “it’s not the only way,” tempers the analyst. Faced with the budget cuts of advertisers weighed down by inflation and the increasing regulation of the collection of personal data, “all platforms are exploring other methods”.
The situation was already particularly thorny for Twitter, which depends 90% on advertising for its turnover, but whose advertisers can more easily do without than its neighbors. It has become catastrophic since its takeover by the boss of Tesla at the end of October.
According to the NGO Media Matters, half of Twitter’s 100 largest advertisers have announced that they are suspending or “apparently have suspended” their spending on the social network. They fear being backed by increasingly toxic content, because the new owner, a big fan of provocations, advocates more lax moderation.
Elon Musk “didn’t understand that Twitter was a brand in itself. The platform had cachet. Now companies don’t want to be associated with it,” notes Sarah Roberts, a social media specialist at UCLA University.
Tax users
The platforms are testing two types of solutions: charging users and/or content creators. Reddit, a forum platform, has a hybrid model with advertising, a paid subscription and tokens that give access to privileges. But “it’s always complicated to ask for money for something that was free” at the start, summarizes Carolina Milanesi of Creative Strategies, “unless you bring something new”.
Twitter has been offering a paid subscription to additional features since last year. Elon Musk wanted to increase his price to $8 a month — the equivalent of the cheapest deals for Disney+ and Netflix — and include account authentication. But the partial launch was chaotic and sparked so many fake accounts that this new system was suspended. Mr. Musk plans to redeploy him next Friday.
“The idea is not bad in itself, but he did not find the right price level, believes Jasmine Enberg. The benefits may not be attractive enough to get enough people to sign up. And account verification is used to ensure the integrity of conversations, it shouldn’t be chargeable.” “Blue Verified” subscribers — arguably the network’s most active users — will also be half the exposure to advertising, which will “reduce the quality and size of the audience” for advertisers, she considers.
Newer platforms try to do without advertising altogether, with no guarantee of long-term profitability. On Discord, a social network for live discussions, users can subscribe to have access to more emoticons, in particular. Booming fledgling platform BeReal is also hoping to evade brands with in-app purchases, according to the report. FinancialTimes.
Taxing influencers
Twitter had some 230 million daily active users as of June. Elon Musk continues to congratulate himself on the growth in the number of users since he has been at the helm. But it will not necessarily translate into dollars. Snapchat, which also launched a paid version of its application in June, has more and more users, who are paying less and less.
Faced with this reality, platforms compete for the favors of content creators, to attract and retain audiences, but also to take commissions from their income or make them pay for the promotion of their messages and videos. “This represents a huge opportunity for Twitter, which has many celebrities, political figures and journalists with whom the company could enter into fruitful partnerships for both parties,” notes Jasmine Enberg.
The tweeting network already offers promotional tools, but they are “expensive and not very effective”, judges Carolina Milanesi. Following the same principle as Apple and Google’s application stores on smartphones, which take a percentage of the revenue, you have to be able to justify these commissions by investing in “services that really create value”, she says.