Elon Musk outlines an uncertain new business model for Twitter

Elon Musk outlines an uncertain new business model for Twitter

The new owner of Twitter outlines an uncertain model. Elon Musk wants to develop the subscription on the social network, and make certain features payable.

Since completing the process to buy Twitter for $44 billion last week, the unpredictable entrepreneur has already taken several steps, thus establishing himself the hard way. Several executives announced their departure, dismissed or not by Elon Musk, (such as the company’s chief executive Parag Agrawal, its chief financial officer Ned Segal, and the head of legal affairs Vijaya Gadde), and he dissolved the board of directors of the group. The press assured Wednesday morning that he could lay off 3,700 employees, or half of Twitter’s workforce.

Elon Musk now has all the power, since he has decided to take Twitter out of the stock market. The effective delisting is scheduled for the opening of the session on Tuesday 8 November. It will thus no longer have the same obligations in terms of publishing its results, and vis-à-vis the multiple requirements of the SEC, the American stock market regulator.

Another twist, in a series of tweets published on Tuesday, November 1, he announced that subscribers wishing to have or maintain an account certified by a blue badge could soon have to pay 8 dollars or euros per month. “Twitter cannot completely depend on advertisers”, wrote Elon Musk. In fact, by charging for the certification of user accounts, he intends to reduce the almost exclusive dependence of the social network on advertising.

Elon Musk also hopes to create a source of recurring remuneration for the platform, already struggling – which he estimates to have bought for an amount far too high, at 44 billion dollars. It is “the most exaggerated amount for the acquisition of a technology company”said Dan Ives, analyst at Wedbush. “With an enterprise value that we estimate around $25 billion, this transaction remains a huge question mark, one that Musk himself could not extricate himself from once a Delaware court ruled. involved in the file”he recalls.

The bet is risky: the founder of Tesla and SpaceX would therefore like to accentuate the shift from one of the main social media, free since its inception, to paid social media. And where the influence would therefore become monetizable, reserved for subscribers (companies, agencies, influencers).

Distrust of advertisers

The billionaire tried to reassure advertisers last Thursday, saying he wanted to allow all opinions to be expressed on the site, and promising consensual content, but several are suspending their advertising investments. Automaker General Motors, then Ford, said it would temporarily stop paying for ads on Twitter. L’Oréal denied having taken this initiative. As for the major media agencies (which manage the purchase of advertising space), Havas Media Group and Interpublic Group have recommended that their clients put their advertising investments on the blue bird network on hold.

In question, the economic situation, which has already pushed brands to slow down their spending on social media, as well as the uncertainty about the projects of the new owner of Twitter. A coalition of more than 40 advocacy organizations, including the Free Press, sent an open letter to Twitter’s top 20 advertisers on Tuesday, asking them to remove their ads if Elon Musk removes content moderation on the platform.