Top Insights
- Twitter is reportedly building a subscription service called “Twitter Blue” that will start at $2.99/month (or $36/year)
- Jason wrote about Twitter launching a premium subscription as early as May of 2007
- Twitter’s product velocity has been rapid since the beginning of 2020, as they’ve shipped Spaces (social audio) and Tip Jar (tipping functionality), and have announced Super Follows (which allows users to pay their favorite accounts for premium content)
- Twitter’s six acquisitions of 2021 (so far) can be used as a roadmap into how they plan on adding and scaling their paid offerings
- If 1-5% of users pay $36/year for the initial premium product, that will generate $72M-$360M in yearly revenue for Twitter
- Twitter’s initial subscription will likely feature bookmarking, an “undo tweet” button, and cleaner/faster news scrolling, amongst other things
- Twitter will offer tiered pricing with the most exclusive features being reserved for the highest tiers
Twitter test plays YouTube videos directly in its iOS app
Intro / Background
Big news:
Twitter is reportedly launching a subscription service called “Twitter Blue” that will start at $2.99/month (or $36/year)
For some context, Twitter did $3.7B in revenue in 2020 (7% YoY growth) and is currently valued at $41B
Twitter Blue Scoop
The Twitter Blue scoop was first reported on Twitter by app researcher Jane Manchun Wong (@wongmjane) on Saturday, May 15th
According to Wong, the initial features could include:
- The ability to bookmark tweets into organized collections
- An “undo tweet” button timer much like an “undo send” for emails
- Clutter-free news reading / better news aggregation
Twitter is reportedly also planning to offer multiple paid tiers, with more premium features reserved for higher tiers
According to Wong:
- “FYI: This “Twitter Blue” screenshot is work-in-progress and not final. Things like the name, pricing, feature set, etc may change ahead of the official launch. But I’m sure the feature set will grow as time goes”
Rumors of a paid version of Twitter heated up in 2020 as their product velocity increased drastically
Twitter decided to address these rumors head-on in its Q2 2020 shareholder letter from July:
- Quote:
“We are also in the early stages of exploring additional potential revenue product opportunities to complement our advertising business,”
“These may include subscriptions and other approaches…”
Jason’s prescient thoughts on Twitter from 2007-2009
People have speculated about a premium version of Twitter for over a decade… including Jason way back in 2007!
Timeline:
Twitter was officially created on March 21st, 2006 when Jack sent the first tweet “just setting up my twtter”
On May 14th, 2007, Jason posted the first of a series of blogs on Twitter’s features and monetization options on Calacanis.com
The first blog was titled “I would pay for Twitter.com”
He proposed paying $100/year for a premium version of Twitter that included:
- a dedicated server that is independent of the free cluster of servers
- more features
- better speed
One year later in May 2008, he posted “Twitter Pro — one year later, the same request: take my money for less downtime”
“… I still think there is a huge market–perhaps 1-5% of the twitter base–that would pay for a professional account. If 1% of 10m users would pay ($20/month or $250/year) you are looking at 100k paid users. At $250 a year each that is $25m a year in revenue.”
Breaking down Jason’s projections with current data:
- As of Q1 2021, Twitter has 199M mDAUs (monetizable daily active users)
- If 1-5% of those users paid for Jason’s $250/year version, that would be 2M-10M users generating a total of $500M-2.5B per year
- So, if Twitter got 5% of their current users to pay $250/year for an ultra-premium subscription product, that would account for ~67% of their total 2020 revenue
- If 1-5% of those same users paid for Twitter’s reported $2.99/month product ($36/year), that would be 2M-10M users generating $72M-$360M revenue per year for Twitter
In a January 2008 blog, Jason forecasted Twitter’s three most lucrative business models for after they hit scale (at this point they were still pre-revenue)
- In-feed advertising (Currently their main revenue generator)
- SMS Advertising (This was when Twitter was still working over SMS)
- Subscriptions (Only took ~13.5 years but here they finally made it!)
In a March 2009 blog, Jason responded to reports that he offered Twitter $250K to be a “default user”
- He confirmed that he offered Twitter $250K to be a “featured user” which he estimated would result in 5K-10K new followers per day
- He did not want to use this for his personal account, but for twitter.com/questions, which used to be Mahalo’s “Answers” product
- Some choice quotes:
Of course, I was only half-bluffing with this move. I was 90% sure Twitter wouldn’t take the money and I wouldn’t have to pony up a $250,000 check. However, if they did call my bluff and cashed in the $250k, I actually would have gotten what I wanted: two to ten million Twitter followers and the ability to drive one to two million visits to Mahalo a month from Twitter. My plan was to post the Top Five most absolutely fascinating questions from Mahalo Answers to our @questions account every day.
The point is that Twitter has the ability to unleash a direct marketing business the likes of which the world has NEVER seen. I predict they will, and when they do, they will make the Twitter nay-sayers look like the donkeys they really are. (Note: you ever notice the folks who have the most to say about making money are the ones who’ve never made any? Exactly.)
Twitter is a giant, open email box that we all hang out in every day. The power of Twitter is yet to be fully understood, in the same way email and the Web weren’t fully understood…
Twitter’s recent product velocity
Kayvon Beykpour (@kayvz), a Periscope Co-Founder, is Twitter’s Head of Consumer Product
- He joined Twitter in January 2015 after Periscope was acquired pre-launch
- He was moved from Periscope to Head of Product in a 2018 reorganization by Jack Dorsey
- Periscope was sunset and officially shut down on March 31, 2021
Recent notable features:
Spaces: Twitter began testing Spaces in November 2020 and launched it publicly on Monday, May 3rd
- Spaces can now be started by anyone with over 600 followers
- This is a direct competitor to Clubhouse and the other recent big tech social audio plays (Spotify with Locker Room, Discord with Stages, Facebook also working on social audio, amongst others)
Super Follows: announced on Feb. 25th, and will let users earn money from followers who pay them for exclusive content, e-commerce deals, or other perks
- Large tech companies have seen this as an opportunity to keep people on the platform and avoid people monetizing elsewhere
- Patreon, Substack, YouTube, etc.
Tip Jar: Twitter launched tip functionality on May 6th, and will let users tip their favorite accounts
- The services you can add include Cash App, Patreon, PayPal, Venmo, and Bandcamp
- Twitter takes no cut
- On Android, tips can also be sent within Twitter Spaces
Twitter’s six 2021 acquisitions so far
Incomplete deals:
- They were involved in early acquisition talks with Discord and Clubhouse, but both deals fell through, and both companies eventually decided to stay independent (for now)
Acquisitions:
Breaker (acquired Jan. 5th, 2021 for an undisclosed amount)
- Breaker was a social podcasting app where you could create a profile, follow other users, create playlists, and more
- Why?: Twitter will sunset Breaker’s app and is using their team to build out Twitter Spaces and social audio
Ueno (acquired Jan. 6th, 2021 for an undisclosed amount)
- Ueno was a full-service creative agency that they had previously worked with Twitter
- Why?: Acqui-hired to “accelerate the quality and execution of Twitter’s product experiences.” according to Chief Design Officer Dantley Davis
DriveScale (acquired Jan. 25th, 2021 for an undisclosed amount)
- DriveScale was a server company that optimized computing, storage, and network fabric
- Why?: Acqui-hired to “accelerate application development” at Twitter
- **Revue (acquired Jan. 26th, 2021, undisclosed amount)**
- Revue was a newsletter subscription service
- Why?: Integration allows Twitter users to monetize their audience, adds another feature for creators
- Competitors include Substack, Ghost, and DIY solutions like Memberful & Mailchimp
Reshuffle (acquired March 2021, undisclosed amount)
- The reshuffle was an API integration platform
- Why?: Twitter called this a “strategic acquihire” as they will shut down Reshuffle and add the seven-member team to Twitter’s API team
- In 2020, Twitter launched a V2 API for the first time since 2012 which included threading, poll results, pinned tweets, spam filtering, and more
Scroll (acquired May 2021, undisclosed amount)
- The scroll was a subscription service that offered a better, cleaner way for users to read news online
- Why?: Scroll increases the UX of reading long-form content on mobile, Twitter could use this as a premium feature for Twitter Blue
Jason’s Takes
What lit the fire at Twitter?
1) Recent aggressive projections
- According to a filing from Feb. 25th, Twitter announced plans to double revenue from 2020-2023 going from $3.7B to $7.5B
- Twitter also set a goal to double “development velocity” by the end of 2023, which means doubling the number of features shipped per employee that “directly drive either mDAU or revenue”
- mDAUs are monetizable daily active users, of which Twitter reported 192M in Q4 2020 and 199M in Q1 2021
- by Q4 2023, Twitter is aiming to grow their mDAUs to 315M
Twitter does not currently monetize users as well as Facebook
- Facebook’s daily user base is ~14x Twitter, as their daily active people across all platforms is 2.7B
- Facebook’s current quarterly revenue is ~25x Twitter, their Q1 2021 revenue was $26B compared to $1.04B for Twitter
2) Twitter’s disappointing returns since IPO
- Twitter IPO’d in November 2013 under then CEO Dick Costolo
- They closed their first day of trading at almost $45/share with a ~$31B market cap
- After a brief surge to $60/share, Twitter dropped back to $40 and traded flat until May of 2015, when it dipped to $30/share and continued a steady drop
- In June of 2015, Dick Costolo announced he was stepping down and that Jack Dorsey would replace him to bring back “founder authority”
- In the three years that followed, Twitter mostly traded down, bottoming out at ~$14/share in April 2017
- In June 2018, Jack Dorsey announced a reorganization of Twitter’s GM model to which the market responded well, and Twitter briefly reached $40/share for the first time since 2015
- Twitter again traded flat/down until April of 2020 when they began a year-long stock run fueled by an increase in usage (COVID) and a ton of new features
- They peaked at $77/share in Feb. 2021 (after their aggressive projections were released) and now sit at $51/share today with a ~$41B market cap
Twitter revenue by year (2012-2020) via Business of Apps
- 2012: $300M
- 2013: $600M
- 2014: $1.4B
- 2015: $2.2B
- 2016: $2.5B
- 2017: $2.4B
- 2018: $3B
- 2019: $3.4B
- 2020: $3.7B
3) Apple’s strict privacy updates might have sped up Twitter’s timeline for subscriptions
- Apple’s iOS 14.5 privacy updates have seen ~96% of users opt out of ad tracking, according to Flurry Analytics (owned by Verizon)
Other potential premium features Jason mentioned
- Ability to “save” or play Twitter Spaces on demand
- Third-party algorithm (choose your own algorithm: news, sports, reverse chron, etc.)
- Improved news aggregation and pre-loaded news stories that you can read natively in Twitter (much like Apple News)