We implemented a rule over the summer that we would only chart about Twitter once the will-they-won’t-they saga with Elon Musk was completed. So, now that the $44bn deal is done and Musk is the self-titled Chief Twit, we thought we’d explore the potential outcomes of some major business model changes that he and his (new) team are considering.
The blue tick biz
Pulling a number of trusted Tesla employees over to help, as well as advisors from other tech circles, Musk now appears to be pursuing a "freemium" model for Twitter. On Tuesday he tweeted "Power to the people! Blue for $8/month", confirming that a subscription model, in which users could pay $8-a-month for a “verified blue tick”, is in the offing — with employees given a very tight deadline to launch the new feature or else be fired.
As details emerge on what the new Twitter will look like, we thought we’d explore what it might mean for the business. Some napkin math suggests that Twitter would struggle to run if only reliant on paid users, especially if the company uses some of the revenue to reward content creators, as Musk has suggested.
If every single currently-verified user signed up to pay, but no others, that would be worth a paltry $40m a year to Twitter. If the company successfully convinced 10% of their 238m active users to pay the proposed $8-a-month charge, they'd generate ~$2.3bn in revenue — a much more substantial sum, but still just over half of the $4.5bn they made in ad revenue last year. Even in a leaner version of Twitter, it's hard to see a future without ads.
