So after week two of the Elon Musk Twitter drama, we’re left in a state of limbo, as we await the ultimate approvals for the deal, which can finally make Musk the pinnacle honcho at a non-public Twitter, which can or could not run advertisements anymore, could or could not permit all sorts of racist, homophobic and abusive speech, and will or could not be capable to, at some point, truly generate income, regardless of these modifications.

And we have now little to go on proper now as to the way it will impression the corporate, and the platform as we all know it. What we do know is that Twitter staff are more and more nervous about their jobs, and the enterprise that they could find yourself working for underneath Musk, whereas we’ve additionally had some slight hints as to how Musk plans to vary the app.

To be clear, Twitter isn’t a charity, and after spending $44 billion on the app, Elon Musk can be searching for methods to maximise Twitter’s income consumption, and recoup no less than a few of that price. In a latest interview, Musk mentioned that doesn’t care in regards to the economics of the deal in any respect, and that his driving mission is to run “a public platform that’s maximally trusted and broadly inclusive”.

However with enormous debt, and accumulating curiosity, Musk has to generate income too, and the bull case for the acquisition is that Musk, being the visionary that he’s, sees one thing that others don’t, and may clear a pathway to optimum success for the platform – despite the fact that most market analysts see no viable pathway to turning any important revenue from the app.

So how will Musk do it?

Listed here are the areas that Musk is reportedly proper now – and to be clear, Musk has give you these proposals with out inner data of the corporate and its present make up.

• Rising subscriptions – Musk is reportedly trying to construct Twitter Blue right into a registration layer, of types, with customers paying a month-to-month payment to get a verification tick that confirms that they’re an precise, actual particular person. That would higher allow Twitter to deal with bots (as it might make operating bot farms price prohibitive), whereas it might additionally guarantee a stage of transparency within the app, since you would know, primarily based on these new types of authentication tags, that you just’re interacting with an actual particular person, who’s registered their contact and fee particulars within the app. The economics might be troublesome – if Musk have been to cost $1 monthly for this, that may herald $229m monthly/$2.7b every year, if the present variety of energetic customers stick round, and aren’t all bots. You’d should assume that fairly just a few received’t find yourself paying, which brings this down loads, and would cut back Twitter’s income consumption considerably, if this have been the one method Twitter may generate income in future. For reference, Twitter made $5.08b in income in 2021.
• Taking Twitter non-public – After all, a few of that income strain is lessened if Twitter goes non-public, as it might now not be beholden to shareholders who anticipate to see income rise by an outlined, acceptable quantity. Musk’s view is that Twitter must go non-public to make sure that it may well make selections free from the strain of outdoor forces, enabling it to actually change into a platform of free speech. The issue with that, in fact, is that advertisers can be much less snug inserting advertisements alongside doubtlessly offensive content material – however that then leads into the subsequent stage of Musk’s grand Twitter plan.
• No extra advertisements – This might clearly be the most important impression from a social media advertising and marketing perspective – Musk has mentioned that Twitter ought to now not run advertisements in any respect to stay actually impartial. That then additionally signifies that Twitter would wish to depend on alternate sources of revenue, and with advertisements making up 98% of the corporate’s income, that’s an enormous gap to fill. A part of Musk’s pondering right here might also be that Twitter can minimize prices by additionally eradicating all the employees that work on its advert components, which might be a significant price saving – besides, if Musk needs to get shut to creating Twitter worthwhile, when factoring in its working bills versus revenue, it’ll be an enormous shortfall to make up. It’s troublesome to see how this may be attainable, however perhaps, Musk is aware of one thing that we don’t.
• Charging for tweet embeds – This looks as if a bit extra of a stretch, however Musk has additionally reportedly floated the concept of charging web sites for embeds of tweets from verified customers, with the cash doubtlessly going again to the customers themselves. That may align with Musk’s push to get extra excessive profile customers tweeting extra usually – perhaps, if they will make a couple of dollars from tweeting, that might act as a motivator to get them sharing extra within the app, which may spark extra engagement with their followers, and generate extra in-app exercise general. After all, the counter is that folks may simply screenshot tweets as a substitute, although there are methods that Musk may make tweets copyright protected, which might be even simpler if he have been to take this subsequent step.
• Make Twitter ‘Pay to play’ for customers – This can be a extra radical transfer – and to be clear, Musk himself has not proposed this concept, as such, simply but. However aligning with the idea of charging customers for a verified consumer tick (completely different to the present blue tick for top profile customers), Musk may look to make all customers pay, or they merely wouldn’t be capable to use the app. Your first intuition to that is that nobody can pay, proper? Individuals can simply use Fb or Instagram or Snapchat as a substitute – so why would anybody pay to easily go online and skim tweets? I assumed that too, however upon additional reflection, I do assume that Twitter is a essential platform for a lot of journalists, political and different media sorts that use tweets to remain up with the most recent information. That’s why Twitter is so influential, regardless of having solely a tenth of the energetic customers that Fb does – whereas its viewers could also be smaller, the those who do use Twitter are typically among the many most energetic of their respective industries, and following the most recent tweets allows them to steer developments, re-distribute the most recent information to their audiences off-platform, stay in-the-know, and so on. As such, I think that a lot of them would pay, and if Musk have been to lock tweets down, that may imply that they’re now not publicly accessible, making it a lot simpler to implement costs for tweet embeds, in addition to every other re-use of on-platform content material.
• Price-cutting – The opposite key space that Musk is exploring is cost-cutting, which once more aligns with the above factors, in that Twitter may minimize prices considerably if it now not ran advertisements. Twitter spent $1.7b final 12 months on gross sales and advertising and marketing and common admin prices, whereas it additionally spent an extra $1.2b on analysis and growth, and $2b on infrastructure. With out advertisements, these prices may come down loads, and if Musk can cut back these outgoings in an enormous method, he may, theoretically, make sufficient cash from his subscription proposals to generate optimistic money movement for the app over time, whereas additionally enabling it to stay impartial, and due to this fact higher capable of run with a ‘free speech’ strategy.  

Once more, Musk has made these pitches in conferences to safe funding for his Twitter bid, and with out inner perception into how the corporate is at the moment run, and what’s actually attainable throughout the present construction, or inside any future re-shaping of the enterprise.

Nevertheless it does seem to be that is the place Musk is more likely to make his huge modifications, particularly provided that Twitter doesn’t have plenty of different paths to take, primarily based on historic efficiency.

However there could also be further alternatives that we’re not seeing, and the overall view is that Twitter has underperformed over time, with even present CEO Parag Agrawal noting in an all-hands assembly this week that:

“I may have carried out issues otherwise. I take into consideration this loads. I really feel accountable for my actions I’ve taken over the past decade. I’ve solely been on this job for 4 months, however I’ve been on the firm for a decade. And sure, we may have carried out higher. Ought to have carried out higher.”

Possibly, now’s the time that Twitter could make these huge modifications, with extra freedom as an impartial firm – and once more, many have pointed to Musk’s genius in different fields, so perhaps he does certainly see one thing that others don’t right here.

What we all know for positive is that this would be the most public demonstration of that genius that Musk has ever had, and if he actually is the visionary that many consider, he’ll positively have an opportunity to show it.