Twitter is working on subscription products to move away from ads revenue – Report

Bloomberg reports that popular social media app, Twitter is working on a subscription product to reduce the platform’s independence on advertisements to generate revenue. The current COVID-19 pandemic and the pressure from investors to increase growth are cited as the reasons for the need to shift the revenue generation method.

Although the social media network runs targeted ads, it has not been successful in capturing a large share of the digital ad market. Therefore, it is reported to launch a separate subscription based product/service.

The majority of Twitter’s revenue comes from targeted advertising, which serves up promoted posts aimed at specific groups of users. That business has grown in recent years at a slower pace than competitors like Facebook Inc. and Snap Inc., and Twitter’s slice of the digital ad market globally remains at at a lackluster 0.8%, according to EMarketer.

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Twitter plans to launch a subscription product

As per the report, it is no longer beneficial for the company to gain more users and it needs to explore other options to generate capital. Thus, it is working on a new subscription-based product, internally, called “Rogue One” which would offer exclusive content and users would ‘tip’ the people they follow or would offer advanced options like undo send or profile personalization for a monthly fee.

Subscriptions have always offered a tantalizing alternative to advertising, but social networks have traditionally stayed free as a way to encourage user growth and engagement, which is then subsidized with paid marketing posts.

Still, Twitter Chief Financial Officer Ned Segal said on a call with investors last year that a subscription option of some kind would offer sales “durability,” and recurring revenue is more consistent than advertising spending. Segal cautioned in July that Twitter was not only “very, very early” in exploring a subscription service, but also planned to be picky about how it goes forward. “We have a really high bar for when we would ask consumers to pay for aspects of Twitter,” he said.

Although the network is actively engaged in devising a subscription-based Twitter, it will be not be launched in 2021.

“Increasing revenue durability is our top company objective,” Bruce Falck, Twitter’s head of revenue products, said 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 is expanding its service, it is testing ‘Spaces’ its clubhouse like voice chat service, launched ‘Fleets’ disappearing tweets feature, and updated its platforms misinformation and cyberbullying policies to make the platform safe. The social network was recently also in news for actively deleting violent enticing tweets by the former U.S. President Donald Trump and later suspending his personal account permanently, in the wake of the unfortunate Capitol Hill attack.

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