Twitter CEO and Co-Founder Jack Dorsey addresses students at the Indian Institute of Technology (IIT) on November 12, 2018 in New Delhi, India.
Amal KS | Hindustan Times | fake images
Twitter has been in a creator-centric tear.
The company announced its first subscription service earlier this month, called Twitter Blue. It now allows people to tip selected users through the app, and the company acquired the Revue newsletter platform to allow creators to publish and monetize newsletters. It is also rumored to be close to launching its Super Follows feature, which would allow some users to charge others for selected content.
All of this comes after the company set an ambitious goal of doubling its revenue by the end of 2023 and growing its user base to 315 million daily active users. But it appears that the creators’ cuts will not have a material impact on the company’s revenue anytime soon.
All current Twitter bets on the creator space can be considered as a type of insurance or coverage, in case there is a smart way to make money through creator cuts (in addition to advertising), he told CNBC. Head of the Laundry Service, Jordan Fox.
“Every platform CEO thinks: what if the direct monetization of the creator facilitated by the platform exploded as a market? What if you go from a niche offering to a massive income generator comparable to or larger than current advertising? What happens if we lose it? ” Fox added later in an email. “Putting rate structures around these things now is hedging against that scenario.”
Look at Instagram. The social media company said it would temporarily waive fees for its creator monetization products. However, Fox said there is a reason it was not framed as a free product.
“What if the market becomes huge and Instagram wants or needs to participate financially? They need to be prepared for that, as unlikely as it sounds today, ”Fox said. Currently, more than 50 million people around the world consider themselves creators, according to a report by the risk firm SignalFire, and it is the small business segment. fastest growing.
It is a world of creators
All the social media giants have started betting on creators.
Instagram chief Adam Mosseri recently told CNBC that its parent company, Facebook, wants millions of creators to make a living through its family of apps. Snapchat will allow users to tip some of its most popular creators, and the company regularly pays people to post popular content on its short-form video service. Pinterest also introduced a creator pool for a small group of users.
Even though the subscription business model serves as a way to diversify Twitter’s revenue streams, the company still makes most of its money from ads. According to its first quarter earnings report, advertising accounts for more than 86% of Twitter’s revenue.
“Twitter’s main source of income will continue to be its ad business for the foreseeable future. Any money made from the creators’ cuts will be supplemental income for the company, ”Jasmine Enberg, senior analyst for eMarketer at Insider Intelligence, told CNBC in an email.
EMarketer said it expects Twitter’s global ad revenue to grow 28.7% to $ 4.03 billion in 2021, after traffic acquisition costs. A social media company’s ad inventory is only valuable when people voluntarily spend hours a day on the platform. And people do that primarily to view content posted by creators.
“Twitter’s value proposition for advertisers is its highly engaged user base. Creators are the main drivers of user engagement on social media, and new creator-centric Twitter features can help your business attract and retain creators. The ultimate goal is to drive user engagement in order to incentivize advertisers to invest more in the platform, thereby increasing Twitter’s ad revenue, “Enberg added.
Social media companies still need creators. And they need them more than artists need social media companies.
“You see a lot of experimentation right now where platforms are flirting with trying to directly monetize creators, but they don’t want to outrun and alienate them either,” Fox said.
That means that while these social media companies want to generate additional revenue through creator cutbacks, they must exercise caution. If a business, for example, takes too much of a stake, a creator might decide to focus their time on other applications. The social media company could, in turn, lose that person’s content stream and not cut back on revenue and lose money on advertising.
“For creators whose business value is words and ideas, Twitter has always been the center of the universe and they are making smart strategic decisions to keep it that way,” added Fox.