The social network X, which is owned by billionaire Elon Musk, who is also CEO of SpaceX and Tesla, founder of The Boring Company, and co-founder of Neuralink and OpenAI, announced the testing of three levels of premium service.
The relevant information about the intentions of the virtual platform, formerly known as Twitter, became known during the company’s report to bankers on efforts aimed at stimulating business growth. The new premium services, according to representatives of the social network, will provide an opportunity to charge users different amounts, the amount of which will depend on the number of advertising materials shown.
Currently, the virtual platform offers consumers a single premium tariff plan, which provides for a monthly fee of $7.99. This solution of user interaction with the social network within the framework of the company’s innovations will be divided into three separate offers, including Basic, Standard, and Plus. Representatives of X informed the holders of debt obligations about this during a briefing held last Thursday, October 5.
The company also stated that currently there is an interest in interaction with the social network from advertisers. At the same time, firms and individuals, are ready to cooperate and intend to spend less money on placing advertising materials on this virtual platform than before.
During the briefing, the Chief Executive Officer of X, Linda Yaccarino, was very optimistic about the current state of affairs of the social network, in which she began working in June of this year. According to her, revenue growth is currently being recorded in areas such as advertising, subscriptions, and data licensing. She stated that the growth is expressed in single digits and is observed quarter by quarter.
Linda Yaccarino says that the company has a positive cash flow, if you do not take into account the cost of servicing debt X. She predicts that the landmark financial milestone of profitability will be overcome by the social network by the second half of 2024. According to her, debt will not become a barrier on this path.
The head of the company says that the three-tier tariff plan will allow the virtual platform to attract those users who may not be ready to pay full price for premium service. Elon Musk supports the idea of charging a small fee to everyone who interacts with the social network. In his opinion, this decision will stop the activity of bots.
Elon Musk acquired Twitter for $44 billion last fall. For the San Francisco-based company, this transaction ended not only with a change of ownership but also with the appearance of $13 billion in debt. Also, the unpredictable decisions of Elon Musk and the relaxation of content security rules became factors that provoked a large-scale refusal of advertisers to cooperate with the social network. Before the change of ownership and obtaining a new name, the company had an annual income of about $5 billion. Almost 90% of this amount consists of advertising revenues. Currently, the company is forced to win back that revenue. According to experts, every year the social network has to pay about $1.2 billion in interest on its debt.
Linda Yaccarino reported that to date, about 90% of the 100 largest advertisers have resumed cooperation with the virtual platform. In June, the so-called return rate was 75%. At the same time, advertising expenses did not approach the historical record. According to Linda Yaccarino, firms increase advertising budgets conservatively.
Experts predict that the virtual platform still has to fight for what can be conditionally described as appeasement of investors. After the acquisition of the social network by Elon Musk, some banks tried to repay the debt for as little as 60 cents on the dollar. Data from Fidelity, a financial services holding company, shows that the cost of the virtual platform has decreased by about a third of its purchase price.
From the moment Elon Musk became the owner of the social network more than 75% of the staff was laid off. Also, the virtual platform stopped providing services and launched a premium subscription as part of efforts to restore the financial situation. Elon Musk announced the transformation of X into an app for everything. He noted that this conceptual transformation of the platform will allow the introduction of new financially beneficial functions such as payments and purchases.
Linda Yaccarino worked before being appointed CEO of X Head of the advertising department at NBCUniversal Media. In the summer, she and Elon Musk presented to investors plans to gain celebrities and politicians to the social network. They also announced their intentions to expand trade and payments between users.
The new concept already has results. This week, the company agreed with Paris Hilton and 11:11 Media to promote the company’s online shopping and video products.
Signs of a new three-tier service were first noticed in the Twitter app code. The code indicated that the basic tariff plan would provide for the usual amount of advertising. The average tariff plan will offer users half as much of such materials. As part of the most expensive offer of interaction with a social network on a commercial basis, there will be no advertising.
As we have reported earlier, Elon Musk Blames Anti-Defamation League for X’s US Ad Revenue Slump.