Twitter is considering introducing a subscription model following decline in ad revenue since the first quarter of the year. The move was brought to limelight after the social media platform posted a job vacancy for a software engineer who would help develop the aspects for the platform.
The opening was advertised under the codename “Gryphon” which quickly drew a lot of media attention and was removed.
Twitter founder and CEO, Jack Dorsey said the new version will be tested this year, but there is no timeline as to when it will be implemented.
“There’s really a high bar for when we would ask consumers to pay for aspects of Twitter. We want to make sure any new line of revenue is complementary to our advertising business,” Dorsey said
He did not disclose the aspects of Twitter that will be paid for but said the most important thing is to make the features complementary to the app’s advertising principles.
“We do think there is a world where subscription is complementary, where commerce is complementary, where helping people manage paywalls… we think is complementary,” he added.
Twitter has recorded slow ad revenue in the first quarter of the year, and it is expected to experience further decline in the year. Thus, the move is seen as an attempt to boost its revenue generation as 87 percent of it comes from ads.
The app has struggled to maintain growth in ad revenue and recent happenings are threatening to make it worse. Its 2019 annual revenue was $3.46 billion, but it falls short of profit. The platform only reported profit for the first time in 2018.
Analysts estimate on average that the app’s ad sale will see a decline of 19.8%, in the second quarter year-over-year. It is expected to lose about $126 million, far higher than the $8 million loss it posted in the first quarter.
“Twitter’s ad business was hit hard by the coronavirus pandemic in March, and it’s likely that losses continued into at least part of Q2” said eMarketer analyst Jasmine Enberg
Last week, Twitter experienced an unprecedented attack that saw prominent accounts soliciting for Bitcoin, in an apparent scam that swayed many users. The accounts of Barack Obama, Jeff Bezos, Elon Musk, Bill Gates, Joe Biden and Kanye West, were all begging Twitter users to send Bitcoin to the wallet IDs they shared.
The development took a toll on the bird app, jeopardizing some of its future plan. Dorsey said they feel terrible about the security incident and would work to secure the systems.
“We feel terrible about the security incident. Security doesn’t have an end point. It’s a constant iteration… we will continue to go above and beyond here as we continue to secure our systems and as we continue to work with external firms and law enforcement,” he said.
However, the incident has put the social media platform on spotlight especially as the hackers claimed that they paid employees with access to internal systems.
“We used a rep that literally done all the work for us,” the hackers said.
This means that Twitter has to reconsider some of its revenue generation plans as it would pose security risks to the platform. Twitter was planning to introduce a new API that would expand how third-party services can use its data, but that has to be suspended due to the security breach.
APIs contribute about 15% to the company’s growth and it’s fast becoming a bigger source of revenue than ads. The hack has forced Twitter to suspend the launch citing timing which it said does “no longer make sense or felt right.”
But then it poses more challenge to find alternative means of revenue generation for Dorsey as his position as the CEO depends on meeting some revenue target.
Activist Investor Elliott Management had earlier in the year tried to oust Dorsey from his role in the company. But a deal to push Twitter’s growth to a certain target bought Dorsey some time. The development has centered on his ability to run two companies, as he doubles as the CEO of financial tech company Square.