In early July, a rumor spread that Twitter was working on a subscription offering. People had noticed a Twitter job description that mentioned a subscription and payments project, code named “Gryphon”. The job description indicated that the subscription platform they were designing was meant “to be reused by other teams in the future”.
Twitter CEO Jack Dorsey confirmed the rumor, saying that Twitter was exploring additional revenue streams beyond advertising, which was down over 20% in the second quarter of 2020 vs the same quarter in 2019. He also mentioned there’d be a “high bar” for any paid consumer subscription offering.
I understand why Dorsey would want subscription revenue. Subscriptions would reduce the company’s dependence on other revenue streams, like ads. Subscriptions might be better for brands and advertisers too, by getting better data from users. And of course, executives and investors love the higher multiples given to recurring revenue, as we saw with Twitter stock surging after word got out about the Gryphon subscription project.
Questions Twitter Should Be Asking
The questions I hope they’re discussing at Twitter though are these:
- How can we use subscriptions to improve the experience for our best members, and for our ecosystem overall?
- What is the forever promise we want to make to our subscribers, on an ongoing basis?
- How do we layer in so much value that the offering becomes better over time, driving deep engagement and high lifetime customer value?
- How do we do all of this while maintaining the integrity of the platform?
1.How can we use subscriptions to improve the experience for our best members, and for our ecosystem overall?
The first thing they need to determine is who is the subscription for, and what is the forever promise they are making to that subscriber. Twitter is a platform where the members have access to a huge and unedited volume of content created by other members. Some of the members are acting on their own behalf, while other accounts represent organizations or brands, often with multiple people managing them.
So is this new subscription for the creators or the consumers or both? Is it for individuals or organizations, or both?
They have a tricky question to answer here, because if they optimize the subscription for the content creators, they risk hurting the experience for the consumers of the content. After all, if you’re a content creator, you want to reach the right people, and reach more people, and gain insights about who those people are. But if you’re a consumer, you don’t want to be limited to seeing only the content of people paying; you want the most relevant content. And if Twitter creates a subscription for the consumers, the kinds of benefits consumers would want might be frustrating for advertisers–things like ad blocking, or algorithms that favor organic metrics.
If Twitter chooses to have two subscriptions, one for consumers one for creators, or a hybrid offering, they will need to balance the needs of both groups.
2. What is the forever promise we want to make to our subscribers, on an ongoing basis?
The second thing Twitter needs to do is figure out what promise they’re making–are they promising consumers access to great and customized content, delivered in the most efficient way possible? Or are they offering creators the tools and analytics to build reach and engagement with their ideal audience? Every business that wants to justify an ongoing formal relationship with subscribers needs to have a promise they make to their subscribers that justifies that trust.
Whatever this promise is, it needs to be an ongoing one. And over time, Twitter will need to layer in additional features and benefits to deliver on it.
3. How do we layer in so much value that the offering becomes better over time, driving deep engagement and high lifetime customer value?
Figuring out the billing, identity management and initial features for their subscription are just the beginning for the Twitter subscription. Acquisition of new subscribers is important, but retention is the key metric in any subscription. And engagement metrics are the leading indicators of retention. Twitter will need to track whether or not their subscribers are getting value from the subscription they’re paying for.
Having a subscription business is very different from having an ad-driven business. It’s less about eyeballs, and more about engagement and deepening of relationship. In transactional businesses, each transaction is its own entity. In the Membership Economy, the moment of transaction is only the starting point. The organization has to continue to invest in the relationship over time, and that may drive them further from advertisers.
News organizations know that when they move to subscription, the nature of their content changes–from content worth clicking on to an experience worth paying for. How will Twitter transform its culture to be focused on the known relationships rather than the volume of “transactions”? Would there be an opportunity to subscribe to “paid content” or for content creators to put their content behind a paywall and monetize their influence?
4. How do we do all of this while maintaining the integrity of the platform?
I think this is the hardest question. Twitter is an open platform that attracts all kinds of people–from presidents to philosophers, from artists to entrepreneurs to fans and corporations. Part of what has made it work has been its openness and anonymity. Subcriptions limit both, for better or worse. Whatever subscription they offer will favor some members over others.
When people have been part of something for awhile, have been members, they feel a sense of belonging, even ownership. It doesn’t matter if they pay or not. And if the organization starts putting up paywalls, and charging for things that used to be free, or putting up a “velvet rope” providing a better experience to some members based on payment to the company and not contribution to the community, they run the risk of backlash.
Beyond backlash, Twitter risks throwing the ecosystem out of balance, and removing some of the “secret sauce” which has made them so large and so powerful.
Conclusion: Any business can be a subscription business, but it requires commitment.
Nearly any business can build subscription revenue. But it requires more than just slapping subscription pricing on pre-existing features and benefits. The subscription offering needs to be designed with attention to both acquisition and engagement.
I wish Twitter all the best in this new model. There’s lots of opportunity to improve the consumer experience for sure. Protecting the community from anonymous trolls, doing a better job of surfacing interesting content, ensuring that consumers see the most relevant tweets in a timely way. And there’s lots of opportunity on the creator side as well–to edit or pull back tweets, to connect with the right people, and to learn more about how their content is being consumed so they can improve their offering.
But balancing the needs of subscribers with the needs of advertisers is tricky. And building the kind of trust that will make the subscription revenue meaningful requires ongoing commitment.