Elon Musk, whose bid to acquire Twitter was just approved by the company’s board of directors, has proposed a new income stream for the company: charging its business users, Bloomberg reported.
When Elon Musk announced his plan to acquire the social media site last month, he said that he was not concerned with the economics of the acquisition but rather with restoring the network’s confidence. He recently underlined the modifications he intends to make to Twitter in another tweet.
Musk, though, said in a subsequent tweet that offering the service for free would result in its demise.
Present me with the money by Elon Musk
While the service’s yearly operating expenses are a few billion dollars, which Elon Musk, as the world’s wealthiest person, can undoubtedly afford, Musk’s purchase is also backed financially by Morgan Stanley and other financial institutions. For all the good that Twitter may achieve in terms of promoting free expression and establishing itself as the world’s de-facto Town Square, bankers are more concerned about the return on their investment.
Clearly, Musk was aware of this and mentioned it in his presentation to banks, Bloomberg said. Now that the sale seems to be closing, Musk is gradually revealing what Twitter users might anticipate in the days ahead, including compensation for using the network.
Musk also gave an explanation for this change in his tweet, writing,
The well-known Freemium Model
Musk’s proposal should come as no surprise to the technology sector, which has been working on a similar model for years – where a tiny percentage of users pay for the expenses of maintaining the services, but the majority of users enjoy the majority of features for free.
Facebook has fought this move several times throughout the course of its existence but has opted to stay free for users while making cash from ads. Twitter created a membership service called Twitter Blue in order to mitigate advertising’ impact on the site.
What Elon Musk is proposing today is that some users pay a price to use the site, while ‘casual users’ do not. This is more of a targeted freemium approach, in which you are accountable for payment whether you are a business company or a government authority. This is expected to generate criticism from government groups, who utilize the platform to disseminate information but do not profit from it, in contrast to commercial enterprises.
It remains to be seen how Musk and Twitter would execute such a regulation. According to Bloomberg, sources familiar with the subject told the Wall Street Journal that Musk intends to reintroduce the firm to the public market within three years. As a result, we should expect a frenzy of changes at Twitter once the company’s ownership changes.