A Proposal to Save Social Media and Twitter

Back in May of 2014, 30 months ago, I penned the piece What Happens if Twitter Goes Away? It was a provocative look at the decline of one of Social Media’s darlings and suggesting potential value between free and paid services. Has the Social Media industry reached an inflection point where “free” services need to switch to paid? What are the pros and cons to doing so?


At the time I wrote that piece, Twitter’s (NYSE: TWTR) stock price had settled to $31.85/share. Twitter’s IPO was at $26./share. Shortly afterwards, the stock climbed to their all-time high of just over $60./share. Fast forward 30 months and today price of $17.49/ share…well below their $26./ share IPO. For almost a year now, the stock has trended below their IPO price and stayed there.



In their 2016 Q3 earnings call, Twitter reported $616 million in quarterly revenue with 317 million Monthly Average Users (MAU).


Annualized, that equates to $2.5 billion per year. But is there a way to increase revenue and provide greater value to users at the same time? I think the answer is yes.


There are a number of paths that Twitter can take. By taking the current path, they continue to face an uphill battle of grinding out revenue numbers with lagging MAU figures. In contrast, there are a number of other scenarios that may present a potential opportunity to both Twitter and users.


The fundamental changes offer the suggestion of Twitter charging a nominal amount per account. There are pros and cons to this approach. Note that none of the scenarios include Twitter’s existing revenue streams. Here’s a breakdown of the scenarios:

  • CURRENT: This is the current situation at Twitter. $2.5 billion annualized revenue with 317 million MAUs.
  • ALT 1: This scenario suggests that the MAUs remain constant at 317 million , however, each account is charged a nominal $4/yr for individual accounts and $20/yr for corporate accounts. The increase adds $2.3 billion in annual revenue.
  • ALT 2: This scenario takes into account a conservative figure that 50% of MAUs would disappear if Twitter charged for accounts using the ALT 1 figures. This still adds $1.1 billion in additional annual revenue.
  • ALT 3: This scenario suggests a 50% decrease in MAUs, but charges individual accounts $12/yr ($1 per month) and corporate accounts $20/yr. The assumption is that 20% of accounts are corporate accounts. Annual revenue increases by $2.2 billion.
  • ALT 4: This scenario is similar to ALT 3, but increase corporate charges to $50/yr/account. Even with 50% MAU reduction, annual revenue by more than $3.1 billion…more than double current revenue.

The big con would be that users would not pay for the service and MAUs would drop precipitously. Today, users are accustomed to using social media services for free. However, what if services charged a nominal amount per user. Would users pay?

The pros are that Twitter revenue would increase significantly. If Twitter used that revenue to reduce/ remove ads and/ or change the value model, the value would greatly outweigh the nominal costs. One of the big cons to Twitter today is the noise from bogus accounts, bots and the like. By charging, there is an upside that many of these bogus accounts would go away and therefore reduce the overall noise to the data stream. That would be a huge plus for those looking to monetize the Twitter data stream.


The next steps are in Twitter’s hands. However, as a user of Social Media that understands its value to enterprises and their customers, a change is needed. From an economic standpoint, if something is valuable, we should pay for it. Even at $4/yr/account for individuals and $20/yr/corporate account, the costs are really nominal. Unfortunately, free services skew the market and user base in artificial directions. It is time we consider a change.

What are your thoughts? Would you pay? Why or why not? How about for corporate accounts that you may manage? Add your thoughts to the comments section below.

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