Elon Musk miscalculated: paid subscription brings X too little income

Elon Musk’s plan to reduce social network X’s dependence on advertising revenue has yet to take full effect. The first paid subscription, which at that time was called Twitter Blue, was launched in 2021, and during all this time the platform received $200 million from it, TechCrunch writes, citing Appfigures statistics.

Image Source: Kelly Sikkema / unsplash.com

The indicator is given with some reservations. This amount is based only on purchases made through the mobile app, not the mobile or desktop web versions. That is, actual revenue is likely higher because web subscriptions are cheaper. Then there’s app store fees, which add up to at least $140 million in mobile subscription revenue. But that’s likely to be higher, as Apple and Google are cutting fees from 30% to 15% in the second year.

In December 2022, the Twitter Blue subscription was relaunched, and over the next three months, revenue from it through mobile applications amounted to $11 million. A year ago, the social network, by that time renamed X, launched two additional tariffs – Basic and Premium Plus. This results in three plans: Basic for $4 per month via the app and $3 via the web, Premium for $11 via the mobile app or $8 via the web, and Premium Plus for $16 via the web only . At the end of September 2024, X earned $14.7 million through in-app purchases on mobile devices, according to Appfigures data.

Since X is a private company, it is not required to disclose the number of its users and subscribers. But if we assume that these funds came only from the most expensive X Premium subscription available in the application, then the number of paying users of the platform is 1.3 million; Assuming that these are just X Basic users at the $4 rate, then the number of paid subscribers is 3.7 million. In fact, the most popular plan is Premium, followed by Premium Plus, and Basic is the least popular. Assuming 70% of revenue comes from Premium, 20% from Premium Plus and 10% from Basic; then paying users are distributed respectively as 940 thousand, 134 thousand and 368 thousand. With this breakdown, as of September, X has 1.4 million users of paid subscriptions. Interestingly, from Q2 to Q3, the volume of purchases in app X jumped by 30%, according to statistics from Appfigures.

Image source: appfigures.com

Other in-app purchase options besides premium subscriptions to the platform are subscriptions to top bloggers. As of last year, the most popular user of X was the owner of the platform, Elon Musk, with 155 million followers, of which 40,000 people or 0.025% signed up for a paid subscription. Today he has 200 million followers; if we assume that the percentage of paid subscribers is the same, then there are 50 thousand of them, which, with a subscription cost of $4 per month, gives $200 thousand in profit.

Last week, X said it would begin paying bloggers based on the engagement of premium subscribers, rather than sharing advertising revenue with them, in an effort to increase the number of such subscribers. Considering that users of the Premium Plus plan are not shown ads at all, this can increase income for bloggers; although the platform administration will have to do something about the threat of clickbait or dubious content.

Against the backdrop of all this, it is worth remembering that for the first half of 2024, X’s total revenue was $1.48 billion – the amount the company disclosed to regulators. This means that the subscription program still remains only a small share of X’s income. Finally, certain actions of the platform’s administration forced some advertisers to refuse to cooperate with it, and now the company’s management has to negotiate with them about their return – they recently managed to restore relations with Unilever.