In a just world, social platforms like Twitter and Facebook should be paying us a monthly dividend for all this free labor, but as the old saying goes, if you’re not paying for it, you’re not the customer — you’re the product being sold. The real customer is the advertiser. Last week Twitter reported that its quarterly revenue was down 23% year-over-year.
The reason is screamingly obvious — an advertising industry in free fall due to COVID-19. Forrester predicts that advertising spending will decline by 25% this year, and won’t recover until 2023. That’s not a surprise. Advertising is the first budget to get axed during tough times.
Investors love this idea so much that when Twitter posted a vaguely worded job description that mentioned subscriptions a few weeks ago, the stock popped 7%! There’s nothing like a pandemic to speak to the stability and predictability of recurring revenue! And a subscription product might make sense for Twitter’s hard-core users. As TechCrunch notes:
““The prospect of a paid version of Twitter — free from trackers, annoying ads and irritating algorithms which meddle with the clean chronology of the timeline — has been a holy grail for certain Twitter addicts since (basically) forever.””
First, this is a reaction to plunging advertising revenue. It’s not a standalone initiative. It’s not a pure subscription play. It’s a fallback plan. It’s about patching a revenue hole, not creating a great new service for people. That’s never a good sign. Lately, I’ve noticed some other companies jumping on the subscription bandwagon because of faltering finances, and it never seems to go well. It’s a poison pill. Users feel extorted. The whole thing feels desperate.
Second, why would I want to subscribe to a service that is fundamentally based on advertising? I subscribe to news services because I trust them: I feel like they do good work, I want to support their voices, these are journalists that are dedicated to their craft, and I know that they have editorial standards and a reputation to protect. And now Twitter wants me to think that they’re The New York Times? It doesn’t make sense. Social media may have won the advertising war, but they won’t win the subscription war. Why? Because subscriptions only work when there’s trust involved. And people don’t trust advertising platforms.
Successful subscription-based media companies focus on their users, not their advertisers. They invest in a relationship with them. Every day they ask themselves: How can I improve my subscriber experience? What else can I do for them? How do I continue to earn their trust? Right now, Twitter doesn’t have my trust.