![]() ![]() Musk’s first big idea to make Twitter more profitable was to charge users for having a blue check mark next to their name through Twitter Blue. One Twitter lawyer, quoted by The Verge in an internal company post, claimed that Musk “has shown that he cares only about recouping the losses he’s incurring as a result of failing to get out of his binding obligation to buy Twitter.” I am skeptical that this is true! If it were, Musk would have probably not spent the last two weeks wrecking Twitter’s only two feasible revenue streams. He paid roughly $44 billion for a company that he is now demolishing at every turn. I explain all of this not because I think you, dear reader, don’t understand basic economics, but because it’s an open question whether Elon Musk does at the moment. Twitter wasn’t the only internet company that had a rough time this year, of course, but it also just came off a decade of having very few good quarters. That quarter, it also had $1.52 billion in operating costs and expenses, leading to a $344 million operating loss. I said “keep the lights on” instead of “make a profit” because Twitter was only occasionally profitable over the last decade or so. In its second quarter of 2022, the last one that the company publicly reported before Musk took it private, Twitter brought in just over $1 billion in advertising revenue and about $101 million from its Twitter Blue subscription service. For most of its existence, it relied on ad sales and investor capital to keep the lights on. ![]() Or they can monetize the users’ attention by selling digital space and personal data to advertisers. They can charge users for access, either directly with subscriptions or indirectly by taking a cut of any real-world transactions that happen on the website. ![]() Those sites, such as Twitter, which don’t sell products or otherwise have other revenue streams, have two options. If the website has investors, it must provide some sort of return. If the website’s owner pays workers to help run it, they also need to pay for those workers’ salaries and health insurance. Its owners need to pay for server space to host the website’s data at a bare minimum. The biggest one is that it requires money. But there are some fundamental forces that any website must obey. Since it is no longer a publicly traded company after Musk’s purchase of it, nobody else outside of Twitter does either. I don’t have any special knowledge of Twitter’s current balance sheet. Given that importance, it’s also been strange that it never really made money. It is also a place where former President Donald Trump organized a coup attempt two years ago and where ordinary users have organized protests, uprisings, and revolutions over the last decade. It is a place where people share jokes and comment on live sports and interact with their friends. If you follow the right people, it is arguably the best news source in the English-speaking world, albeit one that is built on the backs of news outlets and their journalists. This was always strange because Twitter also happens to be one of the most important websites on Earth. There is a tendency in some circles to view Twitter as frivolous. At this rate, however, it’s worth wondering how much longer Twitter will exist. Musk’s ownership has led some users to consider whether they should abandon Twitter. All of this is on top of the other havoc that Musk has wrought since taking over Twitter late last month: laying off more than half of the staff and then begging some key personnel who’d been fired to come back, immolating the company’s relationships with existing advertisers by issuing vague threats of retaliation, alienating half of the country by endorsing Republicans in the midterm elections, and abolishing its verified user program as part of a grievance-driven cash grab. ![]()
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