Micro-blogging platform Twitter is developing a subscription product, in an effort to lessen dependence on advertising revenues
Twitter is reportedly building a new way for it to generate revenues, amid pressure from activist investors to monentise growth.
Bloomberg reported that Twitter is actually building a subscription product as a way to ease its dependence on advertising, and is also considering adding charges for ‘power’ users of the platform.
This development should not come as a surprise. In July 2020 CEO Jack Dorsey confirmed the platform was actively exploring additional ways to make money from its users, including a possible subscription model.
That admission came after Twitter in July last year reported its second quarter results, which revealed a sharp decline in its core advertising business during the Coronavirus pandemic.
The bulk of Twitter’s revenue (like Facebook) stems from targeted advertising, which delivers promoted posts aimed at specific groups of users, Bloomberg reported.
That business has grown in recent years at a slower pace than rivals such as Facebook. and Snap, and Twitter’s slice of the digital ad market globally remains at at a lackluster 0.8 percent, according to EMarketer.
Therefore Twitter could potentially benefit from a separate revenue stream that isn’t as reliant on brand advertising.
To explore ways to generate revenue aside from ad sales, a number of Twitter teams are reportedly researching subscription offerings, including one using the code name “Rogue One,” according to people familiar with the effort.
At least one idea being considered is related to “tipping,” or the ability for users to pay the people they follow for exclusive content, the people, who asked not to be named because the discussions are internal, told Bloomberg.
Other possible ways to generate recurring revenue include charging for the use of services like Tweetdeck or advanced user features like “undo send” or profile-customisation options.
The San Francisco-based company may update investors on its thinking when it reports earnings on Tuesday, it is reported.
“Increasing revenue durability is our top company objective,” Bruce Falck, Twitter’s head of revenue products, was quoted as saying in a statement, adding that this “may include” subscriptions. “While we’re excited about this potential, it’s important to note we are still in very early exploration and we do not expect any meaningful revenue attributable to these opportunities in 2021.”
Twitter has had an eventful 2020, including the decision to permanently suspend the account of former US President Donald Trump.
Last month the platform launched its ‘Birdwatch’ pilot to give users the power to flag misleading tweets, and write background notes about the reason for reporting certain tweets.