Straight Talk Consumer and Entertainment Services
Twitter has long been the social network of choice for the politically inclined to share, debate, and argue on. However, being highly politicized is proving to be problematic for Twitter in 2020. It has drawn the ire of President Trump for censoring some of his tweets, and incensed the political left for not censoring other tweets. Disagreements between political groups often lead to highly charged exchanges and accusations of bullying on both sides.
Add to this the COVID-19 pandemic and ensuing protests and you have a recipe for falling advertising revenue. Indeed, Twitter’s Q2 advertising revenue fell by 23% year-on-year as advertisers hit the pause button on campaigns.
Discussing the decline in advertising revenue in the earnings call, CEO Jack Dorsey revealed that the service is likely to test subscription services this year, although he admitted that the bar for charging for services is “really high.” Indeed, the bar is so high that the firm is no further forward in terms of a paid service than when it talked about testing premium accounts in Japan in 2009!
The prospect of a paid version of Twitter will no doubt interest some of the platform’s heaviest users. Some people will be willing to pay for ad-free access. Others would be willing to pay to ensure that their tweets reach the right people—without it appearing as a promoted tweet—and others would be willing to pay to lock their content behind a paywall.
But subscription services might come with a downside. Will subscribers accept their tweets being subject to the same moderation policies as free users? Will subscribers be as forgiving about their Twitter accounts being hacked? The recent security breach where a hacker was able to social engineer access to an internal admin tool and take over high-profile accounts would be difficult to swallow if these users were paying for access, and also perhaps for any subscribers who had fallen for the Bitcoin scam that the hackers used the violated accounts to promote.
Locking content behind a paywall, either on an account-by-account basis as in the Patreon model, or as a separate premium area as in the YouTube Premium model, would also have its downsides. A large part of Twitter’s popularity comes from the fact that every user can theoretically see (almost) every tweet. Giving non-subscribers a sub-par experience risks alienating them. With most of its revenue coming from advertising, Twitter cannot risk driving users towards lower engagement with the platform.
Dorsey has said that the firm wants to make sure that any new revenue line is complementary to the existing ad-driven business model, but that he thought that subscriptions can be complementary as could commerce. The challenge for Twitter is finding the right complementary model—and getting users to accept it.
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