During its Analyst Day on Thursday, Twitter announced "Super Follows," a feature through which users will be able to charge their followers for additional content. This content includes bonus tweets, community access, and supporter badges. Twitter also announced "Communities," similar to Facebook Groups, which will allow users to create and join groups on specific topics. The company hasn't confirmed a timeline for the new features' launch. It said that it plans to double its 2020 revenue to $7.5B by 2023. Further, it expects to grow its monetizable daily active users from 192 million in Q4 2020 to 315 million in Q4 2023.
Other social media platforms like Facebook, Snapchat, Pinterest, and TikTok, have started to offer tools and features to support social commerce. Examples include Facebook Shops, Snapchat and Pinterest's AR-based virtual try-on feature for makeup products, and TikTok's live stream for shopping. While these platforms are focusing on social commerce, Twitter is doubling down on products for the creator economy.
How does Twitter stack up against its competitors?
- Twitter's Clubhouse-like social audio feature Spaces was released in December. The feature is currently being tested with a small number of users. Clubhouse is thus far only available on iOS, but has more than 2 million users. It was valued at $1B in its funding round last month, but the app has yet to generate revenue. In comparison, Twitter has 192 million daily active users overall.
- When Twitter acquired Revue, a newsletter tool, in January, it said that the acquisition would provide a platform for its users, including those who have built a large social media following, to monetize their content. This functionality will apparently be wrapped into the Super Follows feature. During the acquisition, Twitter said that Revue Pro features would be made free, and the revenue share will be set at 5% compared to the 10% revenue share by its competitor Substack. Twitter added that it would continue to broaden revenue streams for the newsletter platform.
- In January, Forbes announced that it is launching its own paid newsletter platform where users can subscribe to receive content from individual journalists. The writers will receive a 50% revenue share from the subscriptions and ad revenue based on the number of page views, without any cap.
Twitter says its ad revenue currently comprises 85% brand and 15% direct response advertising, and it plans to bring it to 50/50 over time. Of its $3.7B revenue last year, ad revenue accounted for $3.2B. Its revenue from Mobile App Promotion (MAP) increased by 50% YoY in Q4 2020.
Twitter noted that the digital advertising market, which contributes 50% of global ad spending, was at $280B in 2020. The brand and direct response ads account for $150B of the digital ads, and Twitter expects to grow mainly in this area.
The company also mentioned that it is taking steps to handle the impact of Apple's upcoming changes to IDFA (identifier for advertisers). The changes would require users to get opt-in permission from users to track them across websites and apps. Facebook said that Apple's changes could lead to a 7% reduction in its Q2 earnings.
Twitter CEO Jack Dorsey admitted that Twitter has been slow in releasing new products and features. "First, we agree we’ve been slow," he said. However, he added that the company is working now to double its product development velocity by 2023.
Jack Dorsey noted in his remarks that Twitter is building "products that positively reinforce one another." He added, "It's easy to imagine starting with a tweet, moving a conversation to real-time audio, and recapping the conversation with the long-form text."
Twitter's new tools should open the doors for users to monetize directly. This can compete with platforms like Patreon, which enables users to generate revenue from exclusive content. Notably, Patreon’s valuation reached $1.2B in 2020, twice its 2019 valuation. Last year, a job listing on its website revealed Twitter was building a subscription platform under the codename "Gryphon." The listing said team members would work with both the Twitter.com and Payments teams.
Potential future updates:
In 2017, the company said that it is considering releasing a subscription-based feature for users, including marketers and journalists. The feature was reported to have customizable dashboards and signaling tools for alerts, trends, and activity analysis, but it never took off. In its Analyst Day remarks Thursday, the company said that it would begin experimenting with such features.
Of its last three acquisitions, podcast listening app Breaker, newsletter platform Revue, and Squad, products related to two of the startups – Breaker and Revue – have been released. The other startup, Squad, offered an app to make video/audio calls and screen-sharing. Twitter could release a tool soon where people can watch shows/streams simultaneously.
This month, Democrats proposed a new bill — the "Safe Tech Act" — to bring changes to Section 230 of the Communications Decency Act. The proposed changes will force platforms to assume liability if they accept payment for the content published. This would possibly apply to various content forms, including paid ads, platforms like Substack, and marketplace listings. It remains to be seen how the proposed changes in Section 230 will influence Twitter's moderation policies.