Mashable reports that in a major shift of strategy, Elon Musk has appointed former NBC Universal advertising executive Linda Yaccarino as Twitter’s CEO, marking a return to an ad-centric revenue model after attempts to drive profits through the Twitter Blue subscription service appear to have failed.
Mashable reports that Elon Musk unveiled bold plans to transform Twitter’s business model less than a year ago. Musk predicted that Twitter would eventually switch from being a platform that made 90 percent of its money from advertising to one where subscriptions, specifically the premium Twitter Blue service, would become the company’s main source of income.
Mashable stated: “What would be Twitter’s main revenue driver then? Subscriptions, of course. According to Musk, Twitter would focus on its premium $8 per month subscription service, Twitter Blue, rather than ad sales. Musk envisioned that Twitter Blue would have 69 million subscribers by 2025. By 2028, Musk estimated the subscription service would have 159 million users paying.”
However, it doesn’t seem like that’s how things are going so far. Twitter Blue has been taking subscriptions for six months, but according to social media researcher Travis Brown, fewer than 700,000 users are currently signed up. Additionally, not all of them are paying for their subscriptions because Musk has given thousands of ‘complimentary’ subscriptions to powerful people.
Even with the assumption that each and every one of Twitter Blue’s 700,000 subscribers makes a purchase, the service would only make $67.2 million annually. Only 2.8 million people could be expected to become Twitter Blue subscribers by 2025, generating less than $269 million annually. This is far short of Musk’s prediction that by that point, 69 million subscribers would have generated $6.6 billion.
Furthermore, the reception to the service has not been particularly positive despite Musk’s continued promotion of the subscription model, including the launch of another subscriber-based feature formerly known as Super Follows. According to data that Musk has revealed, only about 25,000 of his 139 million followers have chosen to become subscribers to his premium content.
Now, Musk has chosen Linda Yaccarino, a seasoned media executive, World Economic Forum chairperson, and coronavirus vaccination campaign creator, to lead Twitter in what appears to be an effort to make the platform more advertiser-friendly once again.
Mashable notes: “Musk could have easily hired someone at Netflix or Spotify, two of the most successful subscriber-based revenue model companies in the world. But, he didn’t. He hired an advertising executive.”
At the same time, Musk revealed he would continue to serve as Twitter’s executive chair and chief technology officer, leading platform decisions as well as the company’s product, software, and system operations, freeing Yaccarino to focus on advertising.
It seems that Musk’s hope of a multi-billion dollar subscription-based revenue stream in the next few years has been dashed, even though Twitter will still offer subscription features. It is obvious that for the time being, advertising is Twitter’s main source of income, despite any difficulties that may lie ahead.
Mashable writes: “Even if half of Twitter’s biggest advertisers that left when Musk took over still decide not to return. Even if companies that did stick around continue to spend way less on Twitter ads than they did prior to Musk. Even if Yaccarino can’t even bring Twitter’s advertising revenue back to the $4.5 billion of yesteryear, advertising will continue to be Twitter’s bread and butter. Musk’s subscription model plans for Twitter failed. Musk’s hiring of Yaccarino is his first step in admitting it.”
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan