A Wall Street Journal report noted that Musk might take the social network public again within three years of taking it private. There might not be an easy answer to how Elon Musk wants to achieve “free speech absolutism” on Twitter. But there’s another issue he has to tackle with his new purchase: making money. Musk has taken hefty loans from banks with his Tesla shares as collateral. Some of these loans have interest rates as high as $1 billion per year. So he’ll likely want the social network to mint more money toot-suite, and help repay these debts.
Cutting down on ads
The upcoming Twitter owner has had a few ideas before he made a bid to acquire the social network. In a string of now-deleted tweets, he explored things like slashed subscription prices and no ads for paying customers. In the financial results for Q1 2022, Twitter noted that its advertising revenue was $1.1 billion out of a total of $1.2 billion for the quarter. So the company heavily relies on ads to make money. There’s already some worry amongst advertisers about Musk’s free speech model and how it could impact a brand’s image when associated with it. Musk will have his work cut out for him in convincing marketers it’s all good — or decrease Twitter’s reliance on ads. In the last few days, the Tesla CEO has had many discussions with bankers — whom he met to secure loans for the buyout — on potential paths for increased Twitter revenues.
Layoffs
A report from the Washington Post noted that one of the potential money saver schemes is layoffs at the company. Earlier this week, after the announcement of the buyout, Twitter CEO Parag Agrawal reportedly told staff that there are no job cuts planned “at this time.” However, according to a Reuters report, even Agrawal’s future is uncertain as Musk might look for a new chief executive under his direction. For those keeping scores, Agrawal took on the role at the end of last November.
Influencers and paid tweets
Musk has also floated ideas like paying ‘influencers’ to create content — just like TikTok and Instagram. But those models have had problems, like irregular payouts and unclear conditions for creators to be eligible for such programs. Notably, Twitter already has a “Super follows” program that allows creators to offer access to exclusive content to their fans. One of the most bizarre ideas Musk is said to have discussed with bankers for profitability was to make third-party websites pay for quote tweets and embed tweets. It is common for news sites to embed tweets to build context for a story, but paying for that service could be rather expensive. And like CPO Julie Bestry tweeted, people would just start screenshotting tweets to use them.
— Julie Bestry, CPO® (@ProfOrganizer) April 29, 2022 Plus, this could kick off a complex process to determine ownership of tweets, and if the company should pay the creators of said tweets. Sounds like a sticky situation from the get-go. Musk could throw all kinds of ideas on the table, but execution will be very hard. Don’t forget, he also has to handle other companies like Tesla and SpaceX. So he might not be able to give his full attention to Twitter all the time.
