Twitter Inc. gave the first outline of a potential subscription product that will let people charge followers for access to special content or experiences, part of a broader effort to diversify the social network’s revenue sources and give high-profile users a way to make money on the service.
The company mentioned a new feature called Super Follows during an Analyst Day event on Thursday, which it described as an “account subscription” where users could charge others on the service for certain content. This could be a number of things, including exclusive tweets, special access to another user’s direct messages or audio conversations, or a paid newsletter, said Kayvon Beykpour, Twitter’s head of product. The company plans to release Super Follows “sometime this year.”
The shares rose to an all-time high on the product announcement and an upbeat forecast for sales and user growth through 2023. San Francisco-based Twitter recently purchased newsletter startup Revue, and executives have said they are excited about letting newsletter writers build a paying audience on the service. The company is also considering “tipping,” or letting users donate money to people they enjoy following, and charging for Tweetdeck.
“We also think that an audience-funded model, where subscribers can directly fund the content that they value most, is a durable incentive model that aligns the interest of creators and consumers,” said Dantley Davis, Twitter’s chief design officer. Presumably, Twitter would take a cut of the subscription fee.
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Bloomberg previously reported that Twitter was exploring user subscription features, and Chief Executive Officer Jack Dorsey discussed the idea of paying to “unlock” content or “tip” another user during a recent interview. Almost 90 per cent of Twitter’s sales come from advertising, which can be seasonal and easily influenced by factors outside of the company’s control. For example, revenue fell 19 per cent in the second quarter during the height of the pandemic shutdowns.
Twitter stock finished the day about 4 per cent higher at a record $74.59. The product updates were shared during the event for analysts, which spanned more than three hours and covered a number of different areas of Twitter’s business. Earlier Thursday, Twitter set a target to double annual revenue to $7.5 billion by 2023, and said it expects to increase its user base by an average of almost 20 per cent each of the next three years.
Despite its interest in subscriptions, Twitter says the bulk of its revenue growth will come from targeted advertising, and executives said Twitter has a lot of room to grow in the crowded digital advertising industry. Twitter makes 85 per cent of its ad revenue from brand marketing, for example, meaning just a small portion of its revenue comes from the more specific and granular direct response ads that often lead to more direct sales.
Those direct response ads have become more important given the push toward online shopping, and Twitter has been working to bolster offerings there to attract more small and medium-sized advertisers, which make up the bulk of Facebook Inc.’s ad base.
Twitter executives also talked on Thursday about the need to move faster, pointing out that the company has historically moved too slowly when it comes to launching and testing new products. “We agree we’ve been slow,” Dorsey said to start the event. “If you compare us to our peers on the market, this is especially stark.”
In addition to goals around revenue and user growth, Twitter also said it wants to “double development velocity” by 2023, which means “doubling the number of features shipped per employee.”
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