The Twitter Subscription Boondoggle
Why Musk & Co are already bungling this...
History and Context Matters
Let’s first set some very important details on why checkmarks and verification exist and are important:
The Blue Checkmark on Twitter accounts for roughly 400,000 (source) of the roughly 238m mDAU (Monetizable Daily Active Users, source). That’s about 0.16% (yes, less than 1%) of their mDAU.
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The checkmark was free.
It existed so that the users of the platform would have confidence that the company/individual with the checkmark is who they represent themself as. It cuts down on impersonation, spamming, fraudulent activities and other issues. It also existed so that the companies and individuals could ensure that their brand was secured, and copy-cats would either be deterred or wouldn’t easily trick the other users. The process of deciding who should be verified in the past was a bit of a black box, but it didn’t require a pay to play mechanism as the main determining factor.
Twitter’s own support page says you have to be: Authentic, Notable, and Active. Being authentic is pretty straight forward as is being active…being notable, however, isn’t. This is what Twitter says constitutes being “notable”:
Your account must represent or otherwise be associated with a prominently recognized individual or brand, in line with the notability criteria described below. In addition to confirming the identity of the controller of the account, Twitter will Verify the following types of accounts based on the criteria described. In all categories, Twitter may independently confirm qualifying affiliation through business partnerships or direct outreach. For each category we may request the following type of information to confirm notability:
News Coverage: Provide news articles that are about or reference yourself or your organization multiple times in the article. These articles must be from Verified news organizations and cannot be a blog or self-published content. Some categories may require you to submit articles that reference or link to your or your organization’s Twitter handle in addition to referring to you or your organization.
Google Trends: Provide a link to a profile on Google Trends that depicts search history and is linked to the category in which you are applying.
Wikipedia: Provide a link to a stable Wikipedia article about you or your organization that meets the encyclopedia’s notability standards.
Other industry specific references: Depending on the category, we may ask for more industry specific references such as a link to an IMDB page for entertainment.
Follower or Mention Count: If your account is detected to be in the top .05% follower or mention count for your geographic location, it may count towards notability evidence for certain categories.
So, basically, if you impact society — in a meaningful way — and can prove evidence of such, you should be verified. Now, there are a number of folks I feel should be verified and aren’t, but in the end, I think verification (blue checkmarks) are a net good on Twitter.
Now that the BE (Before Elon) history of the blue checkmark is accounted for, let’s also talk about the BE history of Twitter Blue.
Twitter Blue was introduced in June 2021 in select countries and over time has rolled out elsewhere. It started off as a $2.99/month introductory price. Recently a price hike was announced in July 2022 to be $4.99 and take effect in…October 2022 (yes, this past month).
The feature set is as follows:
Custom App Icons
What’s important to note about Twitter Blue is that while it originally offered ad-free access to roughly 300+ news sites, that has since been removed (source).
Not exactly the most compelling set of features.
And with the price nearly double from $2.99 to $4.99, I’d be curious how much of a drop-off in subscriptions happens.
SIDENOTE: I would love to see internal survey data showing *why* users leave their subscription over the coming months, especially if they’re honest in the survey and add “Elon Musk” as one of the options.
As it stands today, Twitter Blue only accounted for $6.4m of its revenue (source). This pales in comparison to advertising which accounts for nearly 90% of Twitter’s total revenue (nearly $1bn in total). The argument, of course, is that Twitter Blue has room to grow. But with price hikes, decreasing benefits, I’m relatively bearish on how much growth Blue will have.
Pay to Play
Whatever you may think about Twitter Blue, with the recent price increase only going into effect a month ago, rumours surfaced that Elon & Co were going to charge $20/month for a version of Twitter Blue that would give you a blue checkmark (among other more nebulous features).
There was a massive blowback from the Twitterverse on that price point. My read is that it was intentionally floated to help soften the blow of the actual price being released. But you’d think that the $20 price point would have been floated days prior to the actual price announcement for it to settle in first.
Shortly after, Jason Calanis posted a hastily put together poll asking Twitter users what they’d pay to be verified (and get a blue check mark):
Some things really stand-out to me:
82% wouldn’t pay.
8% would pay $10 or $15/month.
11% would pay $5 a month.
Splitting this a bit differently: 93% of people either wouldn’t pay or only pay $5/month.
Now, users of platforms vastly overrate how much they’d (or if they even would) pay for a platform service. Also, this is Jason Calanis posting this survey initially to his followers (nearly 600k) which can bias the results. That said, it — of course — went viral. There has to be a lot of noise in the results. The Musk fanbois flocking to it to boost paying for it, the anti-Musk crew flocking to it to saying they wouldn’t pay.
But with how dismal Twitter Blue has been doing, I’d actually think that the 93% noted above is probably closer to 97.5%. I’m mainly sticking with 2.5% because that’s what YouTube was actually able to turn into actual paying customers. More on this in a minute.
The $8 Bombshell
Elon Musk eventually announced that the feature would actually be $8/month.
$8/month. 2/3s more than the existing Twitter Blue price hike of $4.99.
What is the potential revenue unlock look like here? Back to that 2.5% conversion rate for a second. A 2.5% conversion of 238m users isn’t chump change, but with ~5% of those users being bot traffic, that leaves about 5.7m potentially willing to shell out $8 month. Over the course of a year, that’d be about $547m. I personally would be absolutely shocked if 2.5% of the non-bot userbase ends up paying that, and even more shocked if they pay it month-in/month-out. The value prop for this just isn’t great. Twitter Blue isn’t YouTube Premium.
So, what does that feature include aside from verification/blue checkmark? Well, that’s tough to tell aside from Elon’s tweets, as none of the Twitter support pages talk about it. Presumably because the Twitter team is too busy working 84-hour weeks to try and release this plan (and attempt to keep their jobs).
If you’re to believe Elon Musk, and that’s incredibly difficult to do considering his past (broken) promises at Tesla, here’s supposedly what that $8/month will include:
Priority in replies, mentions and search
Be able to post longer video and audio
See half as many ads
A paywall bypass from "publishers willing to work with us."*
There’s a lot to unpack there. But Musk followed up the feature list by saying this little number:
So, let’s just be frank here. The “lords” of Twitter that currently have blue checkmarks are made up of people from all walks of life: those that are without homes, some making minimum wage, some below national average salaries, local politicians all the way up to celebrities and athletes worth millions and billions of dollars. This is not a “lords & peasants system”. As said at the start of this article, the blue checkmark exists for the users of the platform more-so than for the people with the blue checkmarks.
By changing the dynamic so that *anybody* can pay to get that blue checkmark, it will actually make it *worse* for the users of the platform. How may you ask?
Well, first and foremost it will increase the number of people impersonating others - whether it be actual companies or individuals. This will increase fraudulent activity. Additionally, it will give more credibility to Alex Jones types. Those people should be relegated to the dustbins of history and not given sunlight (looking at you Megyn Kelly), but now you’ll see them verified. With Musk supposedly wanting to scale back tremendously content moderation policies and employees, this also means we’ll see more folks come over from sites like Gab, Daily Stormer, etc. That…isn’t a good thing. It will make this platform worse. And it will make society worse. We are better off kicking those people out of the town squares, not giving them platforms and credibility.
Furthermore, the other features actually make the paying customers more like lords! Giving them precedence in replies. mentions and search does the exact opposite of what Musk is proclaiming.
Alright, so now that we’ve established that this new Twitter Blue further increases the chasm between the haves/have-nots, does it do anything to fight the supposed bot problem?
Well, no. Absolutely not.
If you believe Twitter’s year-in/year-out SEC filings, the number of bots account for less than 5% of the mDAU (238m). The math says that this is basically <12m accounts at any given time. Twitter does routinely remove bot accounts, and they have a number of features to cutdown on folks receiving DMs from them and hiding replies from them. It’s gotten markedly better over the last year+.
Now, that said, bots exist. Good bots exist. Some of the best accounts on Twitter are bots. For example, Umpire Scorecards is a bot that posts images of a baseball umpire’s performance to Twitter. It’s fantastic.
And then there are awful bots: the ones, for example, that impacted the 2016 election. The ones that continue to exist in droves to support Donald Trump. And let’s be frank, they don’t only exist for Trump, they exist for countless others. There’s an entire industry propping them up.
Business Insider said (source) that one Russia troll farm had a $1.25m budget during the 2016 election. Twitter themselves said (source) that Russia accounted for *at least* 50,000 bot accounts during the 2016 election.
Now, imagine those 50,000 accounts all being verified with blue checkmarks. That’s a mere $400k/month. Only 1/3 of the budget of that Russia troll farm.
I want to say again - everything Musk is doing will actually *increase* disinformation, *increase* the incentive for bot creation and traffic.
If Musk legitimately cared about cutting down on bot traffic he’d put the engineering effort behind better verifying all accounts on the platform. There are countless ways to do this. Some are more intrusive and will increase friction during signups for real people. Some are less intrusive and rely on identifying bot like traffic during account creation and immediately following.
But one thing is for certain: the effort that Musk & Company are focusing on has nothing to do with cutting down bot traffic. Its only focus is to increase revenue. That’s it.
Advertisers…Leaving En Masse?
The tricky thing with Elon Musk and other investors steering the ship of Twitter is that they have a vested interest in their other companies and political factions. Musk, with huge ties to Peter Thiel and his hard right-wing organizations as well as with Musk’s companies like Tesla. These should scare any advertiser that either doesn’t want to be caught up in the slew of white supremacists that are sure to feel emboldened on the platform, but also advertisers that are direct competitors to Tesla - like GM and Ford.
GM suspended their advertising on Twitter (source). Now, this may be typical when acquisitions happen so that the advertising company can assess (and negotiate) the direction of the advertising platform. But don’t for a second think that GM isn’t pondering how much data will be shared with Musk who is a direct competitor to GM. Ford has done the same (source), too.
One of the bigger bombshells that dropped was the ad giant IPG is advising their clients to pause Twitter spending (source). Now, this could be a temporary pause. But with the current shift in consumer spending due to the economy, advertising budgets have already taken a hit. IPG recommending that the clients of its IPG Media Brands agencies pause Twitter spending is going to impact Twitter immensely for the time being. Why?
Well, advertising accounted for nearly 90% of Twitter’s total revenue.
Advertising is Twitter’s lifeblood — making up 90% of revenue. Musk has said the platform’s “commitment to brand safety is unchanged” since he took over five days ago. But over the past weekend, he tweeted — and then deleted — a false story about Paul Pelosi’s attacker, touching off a flurry of controversy.
With a decrease in advertising revenue on the horizon, this could very well be the reason for Musk to try and juice the Twitter Blue service offering.
The lifeblood of most platforms are content creators. They’re the ones that drive users to not just use the platform, but to stay on it and interact with it. YouTube, TikTok, etc. all create revenue for their content creators/influencers.
Twitter does pay their influencers, too.
However, if Twitter is going to now charge those influencers for the “privilege” of the blue checkmark, they should expect a blowback from some of them. This blowback come could in the form of not paying for Twitter Blue all the way to leaving Twitter or not creating content for it altogether. We already know that a number of these Twitter power users don’t want anything to do with Elon Musk, so it’ll be interesting to see how this all shakes out in the end.
Right now, paying content creators seems to be an afterthought for Elon. He was recently found trying to extend a tin cup to Stephen King, after all:
This was followed up after Twitter Blue feature announcement by saying the absolute bare minimum about his content creator plan:
…which to those in the back:
That’s not a plan.
Here’s a really simple word of advice for Musk: if you cared about your content creators, you’d have rolled out a plan w/ your Twitter Blue announcement.
And if you cared about your users and society, you wouldn’t make it easier for disinformation to spread.
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