- Elon Musk has said he wants to change Twitter's approach to content moderation, which could scare off advertisers.
- Advertising makes up most of Twitter's revenue, generating speculation on how it could br replaced.
- An MBA professor and another expert shared a few ideas.
The drama that's already enveloped Twitter in the wake of its sale agreement with Elon Musk last week offers a peek as to what the platform might look like under Musk — a future that could force the company to find other ways to boost profitability that would take a hit by fleeing advertisers who become skittish about using Twitter to reach audiences.
"What we saw from his own tweets is, to say, a more toxic environment. And that is not positive for advertisers," said Brian Wieser, global president of business intelligence at GroupM.
Musk — who CNBC reported Thursday said could appoint himself temporary CEO upon closing the acquisition — has offered some clues as to how he might boost Twitter's revenue, considering his views on content moderation and debt-financed acquisition, as well as Twitter's enormous reliance on advertising and negative cash flow last year.
If advertisers get spooked, here are a few things the company could do.
The "fire everyone who works there" Twitter
Musk has said layoffs could be on the table, per the Washington Post and Bloomberg.
"You could cut half the headcount and barely notice," one Twitter investor told Insider last week of the company's 7,500 full-time employees, regarding its count at the end of last year.
After laying off or losing employees and cutting costs, Musk could restructure Twitter, and then take it public again in three years, as the Wall Street Journal reported Wednesday that Musk told investors he was considering.
The "freemium Twitter"
Many have suggested Twitter could expand its freemium or subscription-based offerings.
But CEO Parag Agrawal said in February that Twitter Blue was "not critical" to the company reaching its revenue goal of $7.5 billion in 2023, per the WSJ.
Musk has suggested that:
- Twitter Blue members could get verified checkmarks and not see advertising according a now-deleted Musk tweet, according to a New York Times report.
- Twitter would always be cost-free for "casual users" but "maybe a slight cost for commercial/government users," Musk said Tuesday.
- "Monetizing tweets" in some fashion, per Reuters, the Washington Post, and Bloomberg.
You could see a "segmented" version of Twitter without ads or even spam bots if Musk were able to increase the price and bring more users onto it, which is an open question, said Joshua White, former financial economist at the SEC and assistant professor of finance at Vanderbilt University.
"It's like interacting with Netflix without the ads or Hulu without the ads," he said.
These ideas might make Twitter more like Discord, where users can set up paid membership communities or pay to subscribe to creators in a pilot program, White noted.
"You can imagine people pay for the right to tweet and then anyone can consume for free," Wieser said.
But, "it's almost certainly a worse business than the one they have today," he added.
Mark Weinstein, the founder of MeWe, a freemium-based social media network, thinks Musk could bring in new users with his ideas about how to run the platform (though one analyst was dubious about content moderation changes bringing in users, according to The Hollywood Reporter).
"He's an innovator," Weinstein added. "He may come up with a freemium model that hasn't been done before."
The wild cards
Last week, White said he kicked around various business models with his MBA students at Vanderbilt
"Twitter's the No. 1 referrer to OpenSea, which is the largest marketplace for non-fungible tokens, and of course students are very interested in that," White said, adding that his students proposed Twitter partnering with OpenSea and monetizing it somehow, especially considering Musk's interest in cryptocurrency.
White also mentioned possibly trying to capture revenue on Twitter's role as a news source, and his students hypothesized Twitter could also partner with companies to release information publicly.
Finally, White's students said Twitter could use artificial intelligence to identify influencer-promoted products and create affiliate links where users could purchase them.
Twitter and Musk did not respond to a request for comment.