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How Will Twitter Make Money Under Elon Musk? A Look at the Currently Proposed Options

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How Will Twitter Make Money Under Elon Musk? A Look at the Currently Proposed Options

So after week two of the Elon Musk Twitter drama, we’re left in a state of limbo, as we await the final approvals for the deal, which will eventually make Musk the head honcho at a private Twitter, which may or may not run ads anymore, may or may not allow all types of racist, homophobic and abusive speech, and may or may not be able to, one day, actually make money, despite these changes.

And we have little to go on right now as to how it will impact the company, and the platform as we know it. What we do know is that Twitter employees are increasingly nervous about their jobs, and the business that they may end up working for under Musk, while we’ve also had some slight hints as to how Musk plans to change the app.

To be clear, Twitter is not a charity, and after spending $44 billion on the app, Elon Musk will be looking for ways to maximize Twitter’s revenue intake, and recoup at least some of that cost. In a recent interview, Musk said that doesn’t care about the economics of the deal at all, and that his driving mission is to run “a public platform that is maximally trusted and broadly inclusive”.

But with huge debt, and accumulating interest, Musk has to make money too, and the bull case for the acquisition is that Musk, being the visionary that he is, sees something that others don’t, and can clear a pathway to optimal success for the platform – even though most market analysts see no viable pathway to turning any significant profit from the app.

So how will Musk do it?

Here are the areas that Musk is reportedly looking at right now – and to be clear, Musk has come up with these proposals without internal knowledge of the company and its current make up.

  • Increasing subscriptions – Musk is reportedly looking to build Twitter Blue into a registration layer, of sorts, with users paying a monthly fee to get a verification tick that confirms that they’re an actual, real person. That could better enable Twitter to tackle bots (as it would make running bot farms cost prohibitive), while it would also ensure a level of transparency in the app, because you would know, based on these new forms of authentication tags, that you’re interacting with a real person, who’s registered their contact and payment details in the app. The economics could be difficult – if Musk were to charge $1 per month for this, that would bring in $229m per month/$2.7b per annum, if the current number of active users stick around, and aren’t all bots. You’d have to assume that quite a few won’t end up paying, which brings this down a lot, and would reduce Twitter’s revenue intake significantly, if this were the only way Twitter could make money in future. For reference, Twitter made $5.08b in revenue in 2021.
  • Taking Twitter private – Of course, some of that revenue pressure is lessened if Twitter goes private, as it would no longer be beholden to shareholders who expect to see revenue rise by a defined, acceptable amount. Musk’s view is that Twitter needs to go private to ensure that it can make decisions free from the pressure of outside forces, enabling it to truly become a platform of free speech. The problem with that, of course, is that advertisers will be less comfortable placing ads alongside potentially offensive content – but that then leads into the next stage of Musk’s grand Twitter plan.
  • No more ads – This would obviously be the biggest impact from a social media marketing perspective – Musk has said that Twitter should no longer run ads at all to remain truly independent. That then also means that Twitter would need to rely on alternate sources of income, and with ads making up 98% of the company’s revenue, that’s a big hole to fill. Part of Musk’s thinking here may also be that Twitter can cut costs by also removing all of the staff that work on its ad elements, which would be a major cost saving – but even so, if Musk wants to get close to making Twitter profitable, when factoring in its operating expenses versus income, it’ll be a big shortfall to make up. It’s difficult to see how this would be possible, but maybe, Musk knows something that we don’t.
  • Charging for tweet embeds – This seems like a bit more of a stretch, but Musk has also reportedly floated the idea of charging websites for embeds of tweets from verified users, with the money potentially going back to the users themselves. That would align with Musk’s push to get more high profile users tweeting more often – maybe, if they can make a few bucks from tweeting, that could act as a motivator to get them sharing more in the app, which could spark more engagement with their fans, and generate more in-app activity overall. Of course, the counter is that people could just screenshot tweets instead, though there are ways that Musk could make tweets copyright protected, which would be even easier if he were to take this next step.
  • Make Twitter ‘Pay to play’ for users – This is a more radical move – and to be clear, Musk himself has not proposed this idea, as such, just yet. But aligning with the concept of charging users for a verified user tick (different to the current blue tick for high profile users), Musk could look to make all users pay, or they simply wouldn’t be able to use the app. Your first instinct to this is that no one will pay, right? People can just use Facebook or Instagram or Snapchat instead – so why would anyone pay to simply log on and read tweets? I thought that too, but upon further reflection, I do think that Twitter is a critical platform for many journalists, political and other media types that use tweets to stay up with the latest news. That’s why Twitter is so influential, despite having only a tenth of the active users that Facebook does – while its audience may be smaller, the people that do use Twitter are generally among the most active in their respective industries, and following the latest tweets enables them to lead trends, re-distribute the latest news to their audiences off-platform, remain in-the-know, etc. As such, I suspect that many of them would pay, and if Musk were to lock tweets down, that would mean that they’re no longer publicly accessible, making it much easier to implement charges for tweet embeds, as well as any other re-use of on-platform content.
  • Cost-cutting – The other key area that Musk is exploring is cost-cutting, which again aligns with the above points, in that Twitter could cut costs significantly if it no longer ran ads. Twitter spent $1.7b last year on sales and marketing and general admin costs, while it also spent an additional $1.2b on research and development, and $2b on infrastructure. Without ads, those costs could come down a lot, and if Musk can reduce those outgoings in a big way, he could, theoretically, make enough money from his subscription proposals to generate positive cash flow for the app over time, while also enabling it to remain independent, and therefore better able to run with a ‘free speech’ approach.  
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Again, Musk has made these pitches in meetings to secure funding for his Twitter bid, and without internal insight into how the company is currently run, and what’s truly possible within the current structure, or within any future re-shaping of the business.

But it does seem like this is where Musk is likely to make his big changes, especially given that Twitter doesn’t have a lot of other paths to take, based on historical performance.

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But there may be additional opportunities that we’re not seeing, and the general view is that Twitter has underperformed over time, with even current CEO Parag Agrawal noting in an all-hands meeting this week that:

I could have done things differently. I think about this a lot. I feel accountable for my actions I’ve taken over the last decade. I’ve only been in this job for four months, but I’ve been at the company for a decade. And yes, we could have done better. Should have done better.”

Maybe, now is the time that Twitter can make those big changes, with more freedom as an independent company – and again, many have pointed to Musk’s genius in other fields, so maybe he does indeed see something that others don’t here.

What we know for sure is that this will be the most public demonstration of that genius that Musk has ever had, and if he truly is the visionary that many believe, he’ll definitely have a chance to prove it.

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Elon Musk’s Team Asks for More Data to Complete Assessment of Twitter Bots

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Elon Musk's Team Asks for More Data to Complete Assessment of Twitter Bots

Okay, let’s just check in on the latest with the Twitter/Elon Musk takeover saga, and where things are placed to close out the week.

According to the latest reports, Musk’s team recently asked Twitter for more tweet info, in order to help it make an accurate assessment of bot activity in the app. This comes after Musk questioned Twitter’s claim that bots and fake accounts make up only 5% of its active user base, and said that his Twitter takeover deal could not go ahead unless Twitter could produce more evidence to support this figure.

Which Twitter did, by providing Musk with access to its ‘full firehose’ of tweets over a given period, which it shared with Musk’s team back on June 8th. Musk’s group has now had that data for a couple of weeks, but this week, it said that this info is not enough to go on, and that it needs even more insight from Twitter to make its judgment.

And after initially resisting calls for more data access, Twitter has now reportedly relented and handed over more tweet data access to Musk’s team.

Which may or may not be a concern, depending on how you see it.

In its initial data dump, Twitter reportedly gave Musk’s team info on:

  • Total user tweets (within a given time period)
  • Data on which devices were used

As noted, Musk’s team says that this has not provided it with the insight that it needs to conduct an accurate analysis of potential bot activity, so Twitter has now provided Musk with more ‘real-time API data’.

See also  Twitter Publishes New Industry Trend Reports Based on Rising Areas of Tweet Engagement

It’s not clear whether that means that Twitter has provided everything that its API systems can provide, but that could mean that Musk’s team can now access:

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  • Real-time info on tweet text and visual elements/attachments
  • Data on retweets, replies, and quote Tweets for each
  • Data on tweet author, mentioned users, tagged locations, hashtag and cashtag symbols, etc
  • Date, time, location, device info

That should satisfy any analytical needs to uncover potential bot trends, and get a better handle on Twitter’s bot problem, though it also means that Musk has all your tweet info – which, again, it’s worth noting, Twitter up till now had been hesitant to provide.

I’m sure it’s fine. Musk’s team is beholden to disclosure laws around such, so it’s not like they can do anything much with that info anyway, in a legal sense. But the idea that the sometimes erratic Elon Musk now has all the tweets could be a little concerning for some.

But Twitter likely had to provide what it can, and if Musk is going to become CEO of the app soon anyway, he’s going to have access to all of that data either way.

But still, given Musk and Co’s past history of undermining and attacking critics, sacking trouble maker employees and digging up potential dirt on rivals, it sits a little uneasy.

Should be fine. No problems – no need to go deleting all your DMs (which are likely not included in the data that Twitter has provided at this stage).

According to reports, Musk’s team says that it now has the info it needs to make its assessment of bot activity, which should see the deal move forward (or not) sometime soon.

See also  Twitter rewrites Developer Policy to better support academic research and use of ‘good’ bots

Of course, no one knows what exactly is going to happen next, and whether Musk’s team will look to renegotiate, or even back out of the deal entirely as a result of its bot analysis. But it does seem like, one way or another, Musk will be forced to go ahead with the $44 billion transaction, with Twitter’s past bot reporting methodology already accepted by the SEC, giving it legal grounding to argue that it’s acted in good faith, regardless of what Musk’s team finds.

The next steps then, according to Musk, would be securing debt financing and gaining Twitter shareholder approval, clearing the last hurdles for Musk to change the app’s name to ‘Telsla Social’, and add a million references to ‘420’ into the platforms various terms and conditions.

Because of the memes, because weed jokes are still funny to the richest man in the world – because he vacillates between inspired genius and a massive nerd who now gets to play out some fantasy of being cool.

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Or something. Who knows what goes on in Elon Musk’s head – which is also why most are hesitant to bet against him, as nobody knows if and how he might be able to fix Twitter, and whether this is a great investment or a massive disaster.

It seems like we may soon find out. Maybe. Who knows. Either way, the memes should be great.



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