Elon Musk Says ‘Ad Free’ Version of Twitter Blue is Coming

I’m not exactly sure how Twitter’s current product mapping process is structured, but I’m pretty sure Elon Musk doesn’t consult anyone else before announcing future directions. Which I guess, when you own the app, you can do, though it seems to put Twitter itself in some tough spots with regards to keeping Elon’s promises.

Yesterday, amid discussions about resuming Twitter’s $8 verification program, Musk responded in a tweet, noting that:

So right now, Musk and Twitter are working on a version of Twitter Blue that will show half of the ads. It’s not available yet, but it’s coming, as Musk wants to go even further, with an ad-free subscription model, sometime next year.

Which can be good – some people hate ads and will pay to have them removed from view. YouTube Premium, for example, which currently costs $11.99 per month, reportedly has around 50 million subscribers.

But that could be challenging, economically, and will largely depend on how many people sign up for Twitter’s $8 (or $11 on iOS) plan — because if Twitter wants to make money, it needs to serve ads, or it needs a lot of people to join its new paid reporting programs.

For example, Elon’s stated target for subscription revenue, at this point, is half of Twitter’s revenue intake. If we look at what Twitter generated in the second quarter of this year, the last time it reported its performance, that means we’re looking at roughly $1.18 billion for the three-month period — or just over $393 million per month. Half of that is $196.66 million – so Elon is keen to make nearly $200 a month from subscriptions alone, reducing the app’s reliance on advertisers, thereby allowing it to operate with fewer brand safety restrictions and moderation rules.

Based on $8 subscription cost, this would require approximately 24.6 million paying subscribers, either $8 via the web or $11 on iOS (minus Apple’s 30% in-app transaction fees). That’s a lot, but given Elon’s popularity and presence, maybe it’s possible. Can be.

I mean, as mentioned, YouTube Premium has 50 million subscribers — but then again, YouTube has over 2 billion users, versus Twitter’s 238 million daily actives. Twitter’s monthly active activity will be slightly higher, but still, percentage-wise, it will require an unprecedented level of uptake for Twitter to reach the numbers needed to reach that half revenue goal.

But let’s say it does – it will also complicate things from an advertising perspective, because if 24 million Twitter users see half of the ads, it will mean that non-paying users will either have to see more ads, or Twitter will need to make even more money from Twitter Blue to make up for the potential shortfall in ad exposure.

For example, Twitter currently generates approximately $12 per US user, per month, based on ad exposure. For every person that ends up being shown half of the ads, it will eat into that revenue stream, which will mean that Twitter will need a lot more people to join Twitter Blue to make up for this loss as it goes.

This is why Twitter doesn’t roll it out at launch, because it needs to hit its first threshold (20m+ Blue subscribers) before it can even consider this element, or it will end up diluting the revenue benefits.

On top of that, providing an extra Twitter Blue tier, with no ads, would then either have to be very expensive, or Twitter would need many, many millions more people to join Twitter Blue to balance those losses.

Which is actually Elon’s optimistic goal.

Elon’s hope is that enough people sign up to pay $8 a month to then use it as a way to combat bots in the app – because if all the right people are ‘payment verified’ then the only accounts without a tick bots, which help people identify and avoid those accounts.

But again, this will require heavy usage, more than we’ve ever seen with any other subscription offering in any other social app.

Essentially, what I’m saying is that while Twitter is offering potential ad-reduced and ad-free models for Twitter Blue in the future, I wouldn’t hold my breath as those options will be dependent on widespread use of the initial $8 ticker offer . Which, I suspect, will eventually get a few million signups, maybe. But it won’t reach the levels needed to make it a viable revenue alternative for the app.

But again, it could. Musk’s followers are very passionate and are very eager to join his mission to liberate Twitter, and allow more open speech in the app. And there are a lot of them, so it’s possible that Twitter could reach the required levels to make it a viable offering.

Elon certainly seems to think he’s popular enough to inspire that level of support, but essentially that’s what he’s betting on – Elon is selling his popularity as a way to drive subscription adoption in the app, and he believes that indeed will be able to rack up 24 million plus subscriptions based on its fan base.

We’ll see how this plays out, but essentially you won’t see ad-reduced or ad-free Twitter Blue options form for a while.