Tech

Twitter is considering adding a paid tier to make up for lost ad dollars

It's unclear what it might charge for.

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Twitter CEO Jack Dorsey confirmed today during the company's earnings call that it is weighing the possibility of offering a premium subscription option. He said there will likely be some tests this year, without specifying what the premium offering would look like.

The company was believed to be considering a subscription option after a job listing was discovered on its website that mentioned an internal team called "Gryphon" that is building a "subscription platform."

Today's news doesn't mean Twitter will charge for access to its main service. Dorsey said that any subscription offering will be complementary to its advertising business. That suggests a subscription offering might unlock access to premium tools or drop advertisements for those who don't want to see them. The CEO said he has "a really high bar for when we would ask consumers to pay for aspects of Twitter."

Advertising sucks — The coronavirus pandemic has shined a light on how fickle advertising can be as brands quickly cut advertising spend in order to save money. Twitter's revenue fell 23 percent over the same period a year ago, to $562 million. The stock somehow still managed to rise 4 percent after it announced the poor earnings, however — who knows, maybe the subscription announcement was an opportunistic way to blunt a crash. Subscription models are attractive to investors because they're more predictable than advertising.

It's unclear exactly how much advertising revenue Twitter makes off each user, but for comparison, Facebook has reported it makes about $7 per user every quarter. For power users, it's not unheard of that Twitter might be able to charge $5-10 per month in order to remove ads and end up making more money.

Twitter is a unique product — Twitter has to constantly compete for ad dollars with its much bigger rivals like Google and Facebook. It might make more sense for Twitter to offer a premium product than those two because its service is heavily relied on by professionals to converse with others and stay up on breaking news developments. It's not nearly as popular as Facebook, but people who love Twitter absolutely love it. Since Facebook and Google are so large, it's unlikely a subscription offering would make an impact on their revenue in the way it would for Twitter.

Twitter is, however, kind of a hot mess — It was just last week when Twitter was taken down by a 21-year-old who managed to gain access to an internal tool and take over any account he wanted. More than 130 accounts were hijacked to promote a bitcoin scam that netted the hacker $130,000. Twitter also said 35 accounts had their private DMs accessed. That might hurt its ability to sell a premium product.

Twitter has recently introduced new features including the ability to record audio tweets and schedule tweets to be published later. The company might be able to find some set of "premium" features it could hide behind a paywall. Complement that with an experience free of any intrusive ad tracking and you could have something loyal users are willing to pay for.