Twitter May Turn Toward A Subscription Or Tipping Model To Enhance Revenue

Like most social media platforms, Twitter is both loved and reviled by its own users. A big difference between Twitter and other social media platforms, such as Facebook, is the amount of money it generates. Facebook is an amazing money-making machine, whereas Twitter, not so much.

In an effort to generate greater revenue and profits, Twitter is flirting with the idea of a subscription model. This will reduce its dependence on advertising, which has been slow across the board during the pandemic. CNN Business reports, “Twitter’s growth plans are under close scrutiny as many advertisers pull back due to the pandemic.” The company saw a decrease in advertising revenues by 23% compared to last year at this time. Part of the contraction could be due to advertisers “participating in an ad boycott of social media, linked to the nationwide racial justice protests.”

Jack Dorsey, CEO of Twitter, said in a conference call with Wall Street analysts, “You will likely see some tests this year” to better monetize the site. Dorsey needs to ascertain how to increase revenue with a leveling off of new users and a heavy reliance upon advertising. He added about the process for potentially rolling out new paid plans, stating, “We will continue to build out these teams and to research and also to test on Twitter, and I’m sure you all will see those tests and have the opportunity to participate or observe them. But I wouldn’t expect you to see these be meaningful contributors until next year.”

Dorsey said, “We want to make sure any new line of revenue is complementary to our advertising business.” The chief executive added, “We do think there is a world where subscription is complementary, where commerce is complementary, where helping people manage paywalls…we think is complementary.”

Some of the ideas are in the concept phase and include, according to Bloomberg, a tipping feature to pay for exclusive content, requiring fees to use Tweetdeck and ancillary products, an “undo send” option and the ability to customize profiles.

There must also be some internal concern at the company that without former President Donald Trump and the doors closed on the 2020 United States presidential election, traffic would trail off, causing advertisers to either leave or demand lower costs.

The social media platform, despite the hesitation from Dorsey to act quickly, needs to take action. The Wall Street Journal reported that although Twitter saw a 28% increase in fourth quarter revenue—collecting $1.29 billion for the quarter—it still reported a $1.14 billion loss for the year.