Elon Musk was indulging in a photo-op moment on October 26th, as he went through the doors of Twitter headquarters, holding a sink.
Nobody could have predicted that a week before this “hilarious moment,” Elon Musk would open every door available to bring money to the social media site, even haggling with author Stephen King to convince him to sign up for a subscription plan.
An upheaval-filled week at Twitter
As soon as Elon Musk agreed to buy Twitter, he removed the company’s top executives and former CEO Parag Aggarwal, leaving only Musk as a member of the board. Musk had to report to no one when the company became private after his acquisition, and he also made a number of changes at Twitter.
With enormous layoffs approaching, Musk ordered engineers and management at his firm to endure 84-hour workweeks to bring his ideas to fruition, according to Business Insider. Musk’s notion of monetizing the verification status was received with strong opposition on the social media site, prompting the CEO to publicly considered lowering the subscription rate, which was then finalised.
According to The Verge, Musk is also considering a revival of Vine, the short video sharing app, and has proposed a paywall for videos as well as the ability to pay and gain access to people’s direct messages.
Interestingly, Elon Musk faced significant issues with the volume of spam and fraudulent accounts on the platform earlier this year when he was a potential buyer of Twitter. However, as CEO, he appears unconcerned about them and is more concerned with human users and making money from them.
Why is Musk so determined to monetize Twitter?
Musk told a TED audience in April that his Twitter acquisition was never about the money and that he believed in the platform’s ability to be the digital world’s town square. So, has the six-month period between his initial bid and acquisition changed his mind?
Musk is an entrepreneur, not just a free speech zealot, and he would never use his wealth to manage a platform for the public good. His desperate attempt to purchase Twitter at a high price was evidence that he identified a number of opportunities to monetize the network more effectively than Dorsey or Aggarwal did while they were in charge.
His recent acts, whether recognised or not, have also been a step in this direction. While Twitter employees are facing layoffs, Musk is concerned about something else. Twitter lost $344 million in the quarter preceding the acquisition. Musk’s buyout has added $13 billion to Twitter’s debt, resulting in an annual interest payment of roughly $1 billion, according to The New York Times. This is more than Twitter earned in 2021.
Ad revenues at internet behemoths like Google and Facebook fell last quarter, and Musk is well aware that soaring advertising revenues at Twitter, which has a considerably lower market share, will not cover the deficit required to make these payments.
If Musk’s numerous monetization tactics fail, he will be forced to pay Twitter’s bills out of his own pocket, which is where manpower will be reduced to minimise out-of-pocket expenses to a minimal minimum.
As The Verge pointed out, even if all of Twitter’s verified accounts sign up for the $8 monthly subscription cost, their tiny numbers will limit Twitter’s revenue to $38 million. Musk requires many more ideas and possibilities for monetizing the Twitter experience with $1 billion in payments due each year.