Elon’s Big Moneymaker Plan… Doesn’t Appear To Be Paying Off

So far, the biggest genius idea from Elon Musk for Twitter was to try to make people pay for blue checks. He keeps insisting that this will somehow solve the bot/spam" problem, but no one has come up with a credible explanation for how or why. Musk himself has compared it to a spam filter: saying that with Twitter Blue, tweets will be given priority, and that like with a spam filter users can choose to look through the un-blued dreck if they so choose.

But... that makes no sense if you can think about it for more than a few seconds. Spam filters work by getting rid of spam. But most non-bluecheck Twitter is... not spam. Similarly, you can't subscribe your way around an email spam filter. Indeed, that seems likely to only encourage spammers to pay, and drive lots of other people away. The whole thing seems... just completely confused.

Still, Musk keeps defending it by arguing that he needs* new revenue streams and needs them fast, saying:

I think we need to spool up subscriptions. The reason I have extremely high urgency around subscriptions is that we are headed into, I think, quite a serious recession. And you can see that with basically every company doing layoffs. It's not just Twitter. And in a recession, advertising is disproportionately affected. And then advertising where the advertiser cannot clearly trace how much they spent on an ad to what demand it generated, which is known as brand advertising, will be even more affected. This puts Twitter as we look ahead into a very dire situation from a revenue standpoint.

Which, in theory, maybe could make sense?

* The reality is that the only reason he needs" to increase revenue so quickly is because of the massive debt load he chose to take on, after stupidly bidding an inflated price for Twitter and then realizing he didn't want to cough up all $44 billion himself.

And, from the beginning, I have been pointing out that Twitter actually could come up with some real potential value that would make sense as a subscription product. But Musk seems incapable of finding the value adds. So far, the entire thing has been a complete and total disaster, something that a few of the remaining trust and safety people warned him about directly, according to a leaked memo obtained by Casey Newton over at Platformer.news. Based on the widespread abuse (much of it used to mock Musk), the whole system was put on hold. It's being revamped as we speak, with a newly planned launch date of November 29th, which is a bit later than Musk initially said it was coming back.

But... here's the thing: it's not at all clear that this will make very much money at all. As I've noted, I can't see any value in subscribing at all. The bluecheck-denoting-payment is almost an anti-signal these days. The benefits" for signing up are minimal at best. And, according to Mashable... not that many people did sign up when it was available the first time:

Twitter Blue brought in $488,000 in those two days. Accounting for the $8 price tag, that's 61,000 new subscribers at most.

Now, 61,000 new subscribers is nothing to sneeze at over a couple of days, but... it's not a huge success either. As Mashable notes, it's a tiny, tiny percentage of power users."

If you factor that only the 10 percent of Twitter users that the company considers to be power users" would be interested in paying, the conversion rate is a bit better but not great at just over 0.25 percent. The average conversion rate in e-commerce is roughly between 2 and 3 percent.

And, it could be even worse. Because as the report notes, at least some of that revenue likely includes automatic renewals from the old Twitter Blue, and at least some of those accounts may not be so interested in renewing long term.

None of that is great. Now, you could argue that one or (if we're being generous) two days and half a million dollars is not terrible, and if the program continued to grow with an increasing number of new signups, perhaps this could be a decent source of revenue to help pay down the $1 billion interest payments that Twitter is now facing.

But... you have to consider a few things. First, as Mashable notes, even if Twitter continues to sign up users at this same rate, it's not going to make a huge dent:

In a best-case scenario where Twitter continues to gain 30,500 subscribers every day with zero cancellations, Twitter is looking at generating $7.32 million per month, or just over $87.8 million per year. That's not quite the half of $5 billion that Elon Musk seeks.

Unfortunately, for Musk, that assumes a very large number of Twitter users who want to sign up, but haven't. What seems a lot more likely, however, is that the core audience of Musk's obsessive fans signed up immediately. And that audience is now at least partially exhausted.

It's important to factor in that a substantial portion of the audience for Twitter Blue's main feature, the verification badge, has likely signed up already. Twitter's most requested feature over the years, the edit button, resulted in only 100,000 total paying subscribers when it launched last month. Also note that the allure of the verification badge prior to the new Twitter Blue was that only notable" users received one. If anyone can just buy it for $8, it loses its appeal and less people will actually want it.

So... then what? I'm sure there are still a bunch more people who will subscribe, but it's difficult to make this math work out in a way that makes sense, especially after Musk chose a strategy of driving away most of the lucrative advertisers.