Twitter, a company well acquainted with choppy waters, is having an especially difficult time. First, there was last week’s brutal hack of high-profile accounts. Then there was a disappointing earnings report today, along with the company’s admission that it needs new sources of revenue, including subscriptions.
The panorama: Twitter has only grown in importance to politics and culture in the US even as the company’s business fortune has stagnated.
Driving the news: Twitter said Thursday that it is considering a subscription product offering to help offset advertising losses during the pandemic.
- CEO Jack Dorsey told analysts about the company’s earnings call that they can expect to see the company experiment with some approaches this year, but did not specify more.
Twitter continues to increase its user base even when advertising suffers.
- The company added 20 million new monetizable active users daily in the second quarter, an increase of 34% year-over-year, but its advertising revenue decreased 23% over the same period.
Yes, but: Dorsey made it clear that he does not want any new subscription business to affect the company’s ability to sell and serve ads.
- Many large media companies, from broadcast companies to newspapers, have recently taken similar approaches, to help offset advertising losses.
- The advertising market, which tends to grow at approximately the same rate as GDP, tends to shrink during economic recessions.
In the meantime, Twitter continues to grapple with the consequences of being hacked last week.
- Earlier this year, more than 1,000 Twitter employees had access to the kind of administrative controls that hackers hijacked last week to take over the accounts of Bill Gates, Joe Biden, Barack Obama, Michael Bloomberg and others, according to a Reuters report.
- That despite the company’s agreement with the Federal Trade Commission for a similar disaster almost a decade ago.
In the midst of all this, Twitter CEO Jack Dorsey also received letters from the highest-ranking Republican member of the House Judiciary Committee, Representative Jim Jordan, demanding that he join the CEOs of Google, Apple, Amazon and Facebook at the antitrust hearing scheduled for Monday (and now it is likely to be postponed).
There is no sign that Dorsey has any intention of showing up. No one has accused Twitter of having a monopoly on anything. But the secondary display was a reminder of just how out of place Twitter would be in that really rich and powerful company.
Our thought bubble: Facebook, Apple, Google and Amazon have discovered, in different ways, how to reap huge profits from the digital revolution. Twitter has not. If anything, it’s less like those big tech giants than the smaller, troubled media companies whose employees find their service so fascinating.
The bottom line: Twitter’s greatest strength has been its ability to serve as an open common good, and while it has often failed to maintain a civil and secure environment, that openness is what makes it valuable to committed journalists, politicians, and citizens. A subscription model could strengthen the company’s finances but limit its public value.
.
