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Twitter Considers Subscription Models After Ad Revenue Drops
- Twitter CEO Jack Dorsey has announced that the company is considering plans to integrate a subscription model on the platform.
- Reportedly, that would likely be in the form of an ad-free version of Twitter.
- The news, which was speculated earlier this month after a job listing from the company appeared, comes amid a 23% decline in the platform’s ad sales compared to this time last year.
- It also comes one week after what is now arguably Twitter’s most alarming data breach ever. The company revealed Wednesday that hackers targeted 130 high profile accounts and even accessed the private messages of one elected official in the Netherlands.
Twitter Could Launch a Subscription Model This Year
Amid a sharp decline in advertisement sales, Twitter CEO Jack Dorsey has now said that the company is actively exploring adding a subscription-based model to the platform.
“You will likely see some tests this year” of different models, Dorsey said.
Dorsey revealed the plan on Thursday as Twitter reported its second-quarter earnings report. Notably, ad revenue accounted for $562 million, and while that might sound like jackpot-equivalent figures to the everyday person, it’s actually 23% dip in ad revenue for Twitter compared to the same quarter last year.
That’s also despite attracting a record 20 million daily active users to the platform during the same time period.
Part of the reason why Twitter is seeing slumping ad sales is due to many companies struggling to stay afloat—let alone to maintain ads—in the current COVID-19 pandemic. In fact, Twitter’s drop in ad sales are in line with the U.S. market as a whole, which saw a 25% decline in ad spending for Q2.
Another factor that could play into the drop off involves recent ad boycotts by some companies. Those boycotts have largely been driven by ongoing protests calling for racial justice and criticism that social media platforms are not doing enough to silence hate speech.
Rumors that Twitter executives might be considering such a move already began to circulate earlier this month after the company posted a job opening seeking a senior software engineer that would join a “new team.”
According to the posting, that team would be focused on “building a subscription platform,” codenamed “Gryphon.” It’s unknown if that name will be used in the future.
Following this news, Twitter stocks surged—particularly because a subscription model would open up new revenue streams and raise the company’s value. After Dorsey’s official announcement, Twitter shares again rose on Thursday.
“First and foremost, we have a really high bar for when we would ask consumers to pay for aspects of Twitter,” Dorsey said in justification of the potential model. “We have focused majority of our attention on increasing revenue durability, meaning that we have multiple lines of revenue to pull from. But most importantly, we want to make sure that any new line of revenue is complementary to our advertising business.”
Essentially, don’t expect to start having to pay to post that tweet that you just know is going to explode with likes; reportedly, Twitter’s subscription model will likely be an ad-free version of the platform.
“The prospect of a paid version of Twitter—free from trackers, annoying ads and irritating algorithms which meddle with the clean chronology of the timeline—has been a holy grail for certain Twitter addicts since (basically) forever,” Natasha Lomas wrote for Tech Crunch. “So plenty of its most fervent users will be watching keenly to see exactly what Dorsey cooks up.”
Some social media platforms, such as YouTube, have already launched subscription services; however, YouTube’s model is more closely aligned to that of streaming providers. Twitter’s most direct competitors—Facebook and Instagram—are completely free and devoid of subscription models. Like Twitter, both platforms rely on ads.
The Extent of That Massive Twitter Hack
Twitter’s stunted earnings follow what Dorsey called a “tough week” for the platform. In fact, it was arguably one of Twitter’s worst weeks ever as a massive bitcoin hack compromised dozens of high profile accounts.
The victims of the hack include of a wide scope of public figures, ranging from reality star Kim Kardashian-West to former President Barack Obama and presumptive Democratic presidential nominee Joe Biden.
Twitter revealed the further extent of that hack Wednesday and just how deep its security breach is believed to have stretched.
“We believe that for up to 36 of the 130 targeted accounts, the attackers accessed the DM inbox, including 1 elected official in the Netherlands,” Twitter said in a tweet. “To date, we have no indication that any other former or current elected official had their DMs accessed.”
To recap:— Twitter Support (@TwitterSupport) July 23, 2020
🔹130 total accounts targeted by attackers
🔹45 accounts had Tweets sent by attackers
🔹36 accounts had the DM inbox accessed
🔹8 accounts had an archive of “Your Twitter Data” downloaded, none of these are Verified
“We feel terrible about the security incident,” Dorsey said Thursday. “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.”