The Twitter Blue Problem (and Potentials)
On October 7, 2022, Elon closed the Twitter deal, and let that sink in. Many things have happened including
Elon laid off 50% of the Twitter workforce (see email here), recruited engineers from Tesla and SpaceX to help with Twitter products, and became a hated figure within Twitter
Elon polled on Vines and if people saw fewer bots, Elon also mocked advertisers on their political stances — and promised creator monetization features
Elon rolled out $8 Twitter Blue subscription programs, causing corporation impersonations, celebrity backlash/withdrawals and complaints from everywhere
Marques Brownlee (MKPHD) published a Dear Twitter video
My Central Thesis Around Twitter is that Twitter Blue was an experiment with lots of room for improvement. And Twitter will need to become a creator-led platform to achieve financial sustainability and scale
Today we’ll cover
Elon Musk’s Visions & Ideology
Potential of Creator Monetization
What I’m Paying Attention To
Elon Musk’s Vision & Ideology
To begin with, we need to understand Elon’s vision for Twitter, which has a few characteristics:
(1) Turning Twitter into a super app with a cash balance (Verge), similar to TikTok and Weibao as examples
(2) Monetizing more from users, and less from advertisers, to arrive at a more balanced mix of income streams
(3) Becoming more mission-driven with the idea of becoming all source of truth, the town square of corporations, and a place of free speech.
These three factors, in addition to the financial constraints Twitter faces have led to decisions to relaunch Twitter Blue, explore Twitter-as-a-payment features, conduct massive layoffs and introduce more features including pre-roll video ads, long-form tweets, undo/edit buttons, etc.
I’m optimistic about the overall direction and vision Elon has for the future of Twitter, there will be short-term problems with advertisers and employees.
Potential of Creator Monetization
Creator monetization on Twitter is going to reshape Twitter.
The first layer is through introducing a monetization mechanism for creators. I want to emphasize that creator monetization is centric to the success of Youtube, Twitch and TikTok. Being able to financially reward creators incentivizes high-quality consistent content to users, it creates competitive dynamics and as a result, we will see more native self-made experts/creators than people who were already famous/reputable from a different medium to begin with.
I am not entirely sure how the economics would work out but Elon promised that Twitter would be able to offer a more competitive revenue share percentage compared to Youtube (45%) and TikTok (50%).
The deeper layer would be through greater community features. Today we have Super Follow, it enabled people with Super Follows can access bonus Tweets and receive badges on all their replies to the person they’ve Super Followed. I believe in the future, we will see more established versions of Super Follows, including exclusive polls, members-only giveaways/Twitter Space, and badge-like bio status.
To further that argument, most Twitter creators are knowledge-based creators communicating through texts and paragraphs. I think Twitter can tap into Patreon’s market by shipping community features for creators to market, engage, and monetize their community who are willing to pay.
What I’m Paying Attention To
Overall, I remain optimistic about Twitter’s future, because it is evident that Elon has been putting work into resolving bot problems within days and overall usage has gotten up. There will be continuing cultural conflicts among the leadership team and debate between advertisers on Twitter’s political stance. However, they seemed to be temporary and not detrimental to Twitter’s survival.
In the next 12-18 months, I believe Elon will revise Twitter Blue’s pricing, restore the blue check for celebrities and create a user-friendlier experience for all. I’m paying attention to a few key decisions:
Details on creator monetization - will it be similar to a Youtube Partner Program in Youtube’s early days where it is invite-only? If so how they are going to share revenue on content? Text feeds are messier than videos, given it is algorithmic and doesn’t occupy as much real estate as TikTok. How competitive is it?
Details on Twitter-as-a-payment - who will be their service provider? (seems likely to be Block, whose founder is the founder of Twitter - Jack Dorsey) What would the go-to-market plan look like? (is it starting with microtransactions like Gumroad / Koji and then towards subscriptions like Onlyfans / Patreon, then towards Commerce)
Details on Platform health - how would key metrics such as ARPU, mDAU, and revenue mix change over time? It is likely that since Twitter is taken private, they are no longer obligated to release quarterly audited statements, however, it would be interesting to see Elon sharing some insights about the platform like the below.
