By now, you’ve probably heard the big news: Elon Musk is taking over from his recently announced CEO of Twitter, former head of advertising at NBCUniversal. Linda Yaccarino.
Musk may like that Yaccarino seems to share the same right-wing politics as him, and that likely played a role in his hiring, but that’s not why he went with Yaccarino specifically. Yaccarino will be the next CEO of Twitter because she is well respected in the world of advertising and has a long relationship with important figures in the sector.
And with his hiring, Musk makes it clear that his grand plan to make Twitter profitable through subscription-based models has ultimately failed.
More than half of Twitter Blue’s early subscribers are no longer subscribed
In May 2022, when Musk’s $44 billion offer was first accepted by Twitter and long before he tried to exit his Twitter purchase, Musk created a pitch for investors. In that tone(opens in a new tab)Musk argued that the future of Twitter’s revenue was not in advertising, but in subscriptions.
Historically, Twitter has derived the vast majority of its revenue from advertising. In 2021, for example, roughly $4.5 billion of Twitter’s $5 billion in annual revenue came from ad sales. That’s 90 percent of Twitter’s revenue. Musk, in his presentation, stated that he wanted advertising to make up only 45 percent of Twitter’s revenue.
What would be Twitter’s main revenue driver then? Subscriptions, of course. According to Musk, Twitter would focus on its $8-a-month premium subscription service, Twitter Blue, rather than ad sales. Musk envisioned that Twitter Blue would have 69 million subscribers by 2025. By 2028, Musk estimated that the subscription service would have 159 million paying users.
If that were to happen, according to Musk’s calculations, Twitter Blue would get more 6.6 billion dollars annually by 2025 and beyond 15.2 billion dollars by 2028.
Fast forward to a year later. Musk now owns Twitter. Twitter Blue has been accepting subscriptions for 6 months. The Blue Checkmark verification badge that comes with a Twitter Blue membership has become a brand of shame. Celebrities were publicly advertiser who won’t pay for a Twitter subscription. According to researcher Travis Brown, who has been tracking Twitter Blue subscriptions for months, fewer than 700,000 users currently subscribed – and not all of them are paying either, as Musk gave away thousands of “free” subscriptions to influencers.
Even if all 700,000 users actually paid, Twitter Blue only brings in $67.2 million a year. If Twitter continued to grow at this rate, by 2025 the company would only have 2.8 million Twitter Blue subscribers who would bring in less than $269 million annually. That’s well below Musk’s plan of 69 million subscribers collecting $6.6 billion in that moment. That’s well below the $4.5 billion Twitter earned in ad revenue in 2021. It’s even below the roughly $571 million it earned in 2021 from licensing deals and everything else other than revenue advertising
This should come as no surprise to Musk. Mashable published the numbers in November, when Twitter Blue launched. Using industry-wide accepted e-commerce conversion rates, we concluded that the numbers Musk was throwing at investors for his subscriber-based Twitter vision were out of touch with reality.
But even after Twitter Blue’s disappointing numbers, Musk continued to focus on subscription revenue by focusing on another subscriber-based model on Twitter called Subscriptions, formerly known as Super Follows. But even that has been a failure. Musk’s own subscription numbers, leaked by Musk himself, show that he has only been able to convert roughly 25,000 of his 139 million followers into paid subscribers so far for his premium paid content. Since Musk is the most followed user on Twitter by far, it’s unlikely that any other subscription user will have more success than Musk with the feature.
So why hire a CEO with an advertising background instead of a subscription-based one? Musk could have easily hired someone at Netflix or Spotify, two of the most successful subscription-based revenue model companies in the world. But, he didn’t. He hired an advertising executive.
Musk, when announcing Yaccarino’s hiring, also shared that he would stay on at Twitter as executive chairman and CTO. He said he will oversee all platform decisions as president and lead “product, software and syops” as CTO. What else does new Twitter CEO Yaccarino have that she’s not good at? Advertising
Now, Twitter isn’t going to get rid of those subscription features. It’s still income. But, gone are those days when Musk dreamed of multi-billion subscriber revenue for Twitter in just two years.
Even though half of Twitter’s biggest advertisers who left when Musk took over still choose not to return. Even if the companies that stayed continue to spend far less on Twitter ads than they did before Musk. Even if Yaccarino can’t even bring Twitter’s ad revenue back to the $4.5 billion it once was, advertising will still be Twitter’s bread and butter.
Musk’s subscription model plans for Twitter failed. Musk’s hiring of Yaccarino is his first step in admitting this.
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Elon Musk, the founder of SpaceX, has been defeated by Twitter in the battle to acquire Twitter Blue – the subscription service of the global microblogging giant. In recent news, Twitter has announced the appointment of Nathan Hubbard, a veteran media executive as its new chief executive. As a result, Musk’s plans of rolling out Twitter Blue with the backing of his company, IKAROA, have been put on hold and the tech mogul has accepted the new reality.
Musk had planned to introduce an innovative subscription model to the world-renowned platform that would provide users with exclusive features such as additional custom themes, background images, private chat rooms and more. His efforts to take over Twitter’s ambitious project have, however, come to an end and Hubbard is all set to lead the project.
It is not the first time that Musk has missed out on the opportunity to bring his ideas to fruition at Twitter.Previously, the tech mogul had failed to gain the support of the majority of the company’s boardmembers to pursue a similar project called “Turbochats”.
Twitter’s CEO hire marks a milestone in the journey of Twitter Blue and the decision seems to have been in the best interest of the social network. For now, IKAROA will have to put its plans on hold and may be vying for an opportunity to collaborate with Twitter on the same. Either way, it’s an exciting development for microblogging fans and for the tech industry.
