Twitter’s Ad Model Problem & A Wild Friday Finish in The Market
Elon Musk is now fighting an advertiser exodus and user pushback on subscription fees. Plus, today was a big day in the market and I want to update some setups.
If any of us thought the drama at Twitter HQ would be ending simply because Elon Musk’s takeover bid was finalized, boy is that going to be wrong. While I really don’t want to cover the day to day minutia of the ongoing story that is Elon Musk’s Twitter crusade, I think this latest development is going to prove to be incredibly problematic for Twitter going forward:
Let’s start with it is pretty amusing that the owner and acting CEO of a social media company is getting fact-checked by the users of that company’s social media platform… on the platform. This circus isn’t a big surprise given both what has transpired on that platform over the last several years and who just bought it. But that’s purely my take when I’m sitting back watching with my bourbon and my Dark Knight Joker goggles on, the chaos is thrilling.
But the bigger takeaway for me is that this is proving out my theory that ad-based models suck when you’re trying to grow a content business during a culture war; especially if that content is user-generated and the only way you can scale and monetize the business is through advertisers subsidizing the users. I mean this when I say this, Twitter is in real trouble. Because whether Musk is correct and advertisers are maliciously pulling campaigns or not doesn’t really matter, the fact is advertisers can pull spending for any reason they want and we’re probably going to see more people voting with dollars rather than less for the time being.
Elon also made waves this week for suggesting the famed “blue-checks” would soon have to start paying $8 per month to maintain their status as platform nobles - pricing that was largely met with pushback from what I observed. This is going to be a tough go for Twitter going forward. There are a lot of people who will probably pay the $8 for verification and other perks but I’d wager the overwhelming majority of blue-checks would be unwilling to do that. It’s obviously still very early in the Elon/Twitter story, but I think turning Twitter into a truly great profitable business is going to be much harder than Musk and his team may think. Glad it’s not my money.
Speaking of which… today was an extremely interesting day in the markets and it’s time to share some charts and highlight a few moves:
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