Elon Musk Wants Twitter to Ditch Ads

Business of Technology News Now

Elon Musk wants Twitter to diversify its revenue stream beyond advertising, but no major social network has managed to go without ads altogether. Facebook pretty much set the standard for having an ad model for social networks, but that doesn't have to be the way social platforms monetize. Social networks are facing budget cuts from inflation-afflicted advertisers and increased regulations on the use of personal data, so it makes sense for them to be exploring new, non-ad monetization techniques. The issue is delicate for Twitter, whose revenue is 90% dependent on advertising. Advertisers do not necessarily need Twitter and can turn to other social networks. In recent weeks, half of Twitter's 100 top advertisers have announced they are suspending or have otherwise stopped advertising on Twitter. They fear being associated with toxic content as Musk, who describes himself as a "free speech absolutist," advocates for laxer moderation. That said, "It's always hard to charge for something that used to be free," said Carolina Milanesi of research firm Creative Strategies. "Unless you give something different or create a different product, you can't go from not charging to charging." A partial launch of Twitter Blue was chaotic, however, and prompted the proliferation of so many fake accounts that the rollout has now been paused. "Figuring out a way to charge users for premium features and make money off of users is not a bad idea," Enberg said. Finally, because paid subscribers would see 50% less advertising than non-paying users, the plan would "dilute the quality and the size of the addressable audience for advertisers." The fledgling photo-sharing app BeReal is hoping to not have to sell ads by making money through in-app purchases instead. Snapchat, which also launched a paid version in June, has gained more and more users, but not necessarily money. This represents "a really big opportunity" for Twitter, Enberg said. Twitter "does have a lot of celebrities and big-name influencers, politicians and journalists" with whom it could form a mutually financially beneficial relationship.