Elon Musk’s $44 billion purchase of Twitter signals is changing the traditional way the social media platform operates – a change that could be both good and bad for businesses.
In his announcement, Musk mentioned Twitter has “enormous potential”. It aims to improve the platform by adding new features, making algorithms open source, and tackling security issues such as spam bots. Musk also promoted the idea of making Twitter more open to free speech, Tweeter that it is “against censorship that goes far beyond the law”, while making the platform less dependent on advertisers. Today, a large portion of Twitter’s revenue is generated by advertising.
Musk’s entry into the social media industry signals potential disruption to the operation of Twitter, said Alan Wink, chief executive of business advisory organization Eisner Advisory Group LLC.
This could mean Twitter moving to a subscription-based model to make it less reliant on advertising dollars and improving Twitter’s platform for business entities for things like hiring rather than a primarily large platform. public, he said.
“When you look at Elon Musk’s career, he’s really disrupted multiple industries already, whether it’s Tesla, whether it’s SpaceX, whether it’s PayPal, so you know social media is going to be disrupted by Elon Musk,” he said. said Wink. . “I guarantee you there are business cases for Twitter that we haven’t even thought of.”
Musk will seek to make Twitter more profitable
Wink said Musk will run Twitter to “maximize profitability and valuation of the business,” meaning he’ll likely try to change the way the social media business works.
Although Twitter ranks among the largest social media platforms, it has struggle to monetize users, according to research firm Statista. The company’s annual revenue was $3.72 billion in 2020, compared to Meta’s $86 billion. Meta owns and operates Facebook and Instagram.
Alain Wink Managing Director, Eisner Advisory Group LLC
Making Twitter a subscription-based service like streaming service Netflix could be a way to strictly earn ad revenue, Wink said.
“It’s ingrained in so many people’s lives and so many people use it as a source of information that I think there’s a price people will pay for using it every month,” Wink said.
Indeed, Twitter is “poorly marketed” compared to companies like Meta or Google, said Marcel Hollerbach, chief innovation officer at Productsup, a Berlin-based e-commerce company.
Hollerbach said he expects Musk to find a “strong and scalable business model” in addition to an ad-only reliance on which to drive Twitter’s value, whether that’s a model subscription or billing of influencers and brands to reach audiences.
“Given that Twitter hasn’t reached its full potential, I expect this to be a win for the company,” Hollerbach said.
Ray Wang, founder of Constellation Research in Cupertino, Calif., said he expects Musk to make improvements to Twitter’s overall platform.
Its ownership will likely lead to more innovations in the platform, including the use of AI to improve fake account removal, the ability to edit, and a faster release cycle for user-driven features. “, did he declare.
Musk’s ownership of Twitter raises content moderation issues
Some of the biggest concerns about Musk’s ownership of Twitter stem from his promises to make Twitter a platform for free speech.
Over the past two years, policymakers have begun to challenge social media platforms like Twitter and Facebook for spreading misinformation and inciting violence, leading to both platforms censoring content and banning online content. accounts, particularly that of former US President Donald Trump following the US Capitol riot on January 6. , 2021.
Musk has made it clear that he thinks Twitter’s content moderation policies are too strict, but when brands consider using and investing money in social media platforms, safety and appropriateness of the brand are “crucial valuation metrics,” said Forrester senior analyst Kelsey Chickering.
Content moderation, especially when it comes to misinformation, is something not only policymakers but also brands and agencies are pushing on social media platforms, she said.
“If Twitter becomes a Wild West platform similar to Gab, where the promise of free speech allows misinformation to spread even more than it already does, brands might choose to invest their dollars somewhere else,” she said.
Makenzie Holland is a news writer covering big tech and federal regulation. Before joining TechTarget, she was a generalist journalist for the Wilmington StarNews and crime and education reporter Wabash Plain Dealer.