What is Twitter? What’s the appeal?
Twitter is a platform for knowledge and interests. It allows you to do two things very well: 1/ be updated on what happens immediately and 2/ have access to experts in various areas. Anything that happens in life breaks first on Twitter. Not on Facebook. Not on Instagram. Not on LinkedIn. Secondly, you are more likely to communicate with folks that you wouldn’t know about or be able to talk to in real life. Take the tweet below as an example. Somebody had a question for three CEOs of three rocket companies, including Elon Musk – one of the richest men on Earth. All three responded. How likely would you get the same outcome with cold calls and emails?
The unique appeal of Twitter brings it a lot of royal fans and powerful users who are more than willing to share perspectives and expertise for free on the platform. That’s the level of user engagement and culture that other networks strive to have. Personally, I was late to Twitter. I have been using the platform since I came to the US and boy, did I wish I had started earlier. I have learned so much about business, strategy, fin tech, personal finance and much more from friends and strangers on Twitter.
How does Twitter make money? Since the site is free to all users, Twitter generates most of its revenue through ads. Revenue in Q1 2020 was $808 million with 84% of the pile coming from advertising. While revenue is on an upward trend, it comes with a lot of baggage. Twitter has been on the receiving end of several controversies related to the struggle to balance Free Speech and user safety. Despite bringing a significant amount of money, political ads is highly controversial, especially when this is an election year, when the country is more divided than ever and when politicians are distributing acutely questionable information.
Somebody with eagle eyes on Twitter noticed this job posting by the social network that specifically mentioned a subscription service. The idea of a Twitter subscription isn’t new. It has been around for a while and it heats up again when the job ad was spotted. It makes sense for Twitter to launch a subscription.
1/ Another source of revenue will help the platform less rely on advertising money and reduce the risk of such over-reliance. To be clear, I don’t think Twitter will introduce its own subscription as a gateway to force users to pay to use the service. The whole appeal of Twitter to advertisers is access to potential customers. A Twitter-owned subscription would drive users away and put those lucrative ads dollars in jeopardy. Instead, it’s more like a subscription for powerful influencers whose content is valuable enough to make readers pay to read. As of Q1 2020, Twitter has 166 million daily active users. Even a fraction of that base has subscriptions and Twitter shares a piece of that money, it can still be a significant sum over time. Take this user as an example. His tweets that come from his background of national security are only available to people who pay him $10/month. I do think this is the model that Twitter may have in mind.
2/ A lot of writers whose content is hosted on other sites use Twitter to advertise and reach out to target audience. For instance, if you have expertise in one specific area and usually blog about it, Twitter is a great source of like-minded audience who is likely to like and pay for your content. In that case, Twitter offers quality traffic, but no share of revenue. As a micro blogging site itself where folks write down thoughts and construct impressively long threads, Twitter may wonder why they don’t host the content, facilitate the subscriptions itself and get paid in the process.
What are the implications of a Twitter subscription?
At first, I was concerned about what a subscription service would do the engagement on Twitter. The user culture on Twitter is the culture of selfless sharing. Experts share their knowledge and perspectives without compensation. If the majority of experts in one specific area hid all their great content behind pay walls, that would adversely affect the user culture that Twitter painstakingly built. It takes a long time to build a culture, yet it’s pretty darn fast to ruin one.
A counterpoint to the argument above uses precisely the same user culture element. It is possible that despite the presence of a subscription and financial temptation, power users on Twitter just keep offering their content for free. Even if some decided to restrict access to their content, the vibrant activity on Twitter might not be affected much.
Figure above demonstrates what I consider a potentially basic dynamic on subscription-equipped Twitter. On the left hand side, we have casual users who consumer content and produce on a personal basis. On the right hand side, we have influencers who have authority, brand names and appeal to attract subscriptions. Influencers can have two types of content. One is available for free to the public while the other is only to paid subscribers.
Let’s say Influencer A is famous and upon the introduction of the subscription option, starts to tweet his valuable content behind a paywall. Even though some hardcore fans are willing to pay to read his/her content, the overall engagement will likely go down. It creates an opportunity for Influencer B, who is new and wants to build his/her credibility by tweeting out more to the public or Influencer C, who decides to strive the balance of making subscriptions worthwhile and interacting with the public.
In short, I think there is a likelihood that the subscriptions would not drive users away. There is enough supply for valuable content in any given area to satisfy the demand.
Investments in new features
Building out a subscription for users would likely necessitate big changes to the product. I don’t know about other users, but I don’t particularly enjoy tweet storms. It’s tiring to read a long thread. To facilitate the production of content, Twitter may have to build out features to allow long-term writing, and enable Influencers to manage subscribers, payments and their emails. All require investments and allocation of resources, but there is a huge upside in my opinion.
In sum, I am excited about a potential subscription feature on Twitter. Great minds should be rewarded and so should Twitter for building a great product and user culture. The world is getting increasingly more complicated and noisy. There is always a place for people who can help others make more sense of the world and understand concepts better. Internet is a great way to build up credibility and receive feedback. Twitter, as a platform of interests and knowledge, is well-positioned to take advantage of that trend. You have seen the popularity of blogs, newsletter and platforms like Substack. Twitter can follow their examples while retaining their unique value propositions. Though it’s legitimate to be concerned about the engagement of Twitter once subscriptions are available, I do think the platform has built a strong enough relationship with its users that such a concern won’t materialize.
What do you think about a Twitter with subscriptions? Let me know if you agree or disagree with my thoughts above. Stay safe and have a good day!