Twitter Is Building a Subscription Platform
By: Neville Lahiru
Tags: Twitter, Technology, Social Media, News

Twitter Is Building a Subscription Platform

Will it help solve the company’s problems?

Photo by Morning Brew on Unsplash

It's official. Twitter is finally building a subscription platform, codenamed ‘Gryphon’. This was following the company’s recent two job postings for a Backend Scala Software Engineer and a Senior Full-stack Software Engineer.

As per the two posts, “The team will be collaborating to rebuild some of Twitter’s services to produce a subscription management platform. The Payments platform is a cross-organizational collaboration between different teams at Twitter.”

Not much else is known about Gryphon so far. But the idea for a subscription service is not a new one. It is believed that the platform will offer a premium version of the current Twitter landscape. The expectation is that Gryphon will be ad-free and include customizations not available on the free version. Editable tweets anyone?

But why is Twitter even trying to build a subscription platform? One possible reason is the company’s lackluster performance with its advertising platform.

Twitter’s monetization problems

Twitter’s primary source of revenue has been its advertising platform. But it has had more than a few problems during the past few years. Furthermore, the coronavirus pandemic has only made things more challenging. Following Twitter’s Q1 2020 earnings report, CFO Ned Segal stated that Twitter was affected by cancelled/postponed events.

By the end of March, the company saw a further dip in ad spending, especially in the US. But with the coronavirus situation ongoing, advertising revenue may continue to keep low over the next few months. This, in turn, might spell more trouble for Twitter.

The platform has long been plagued by monetization issues. But its continuous issues around hate speech and misinformation have also attributed to Twitter’s problems. For example, issues around Donald Trump’s tweets.

This is why despite its value proposition, Twitter has failed to snatch up a buyer even today. Look no further than Salesforce and Disney cases.

Nobody wants to buy Twitter

By 2016, several companies were reportedly interested in buying Twitter. However, Google, Apple, and Disney all dropped out amid speculation.

For a brief moment, Salesforce was keen on acquiring Twitter. At the time, the company’s CEO Mark Benioff saw Twitter as an apt integration to the existing Salesforce business.

A deal was in the works and as Salesforce was getting ready to secure financing, Benioff backed out. His reasons were identical to that of Bob Iger. Benioff has been a critic of social media companies, particularly Facebook. In 2018, he even compared Facebook to a cigarette addiction. He viewed Twitter at a similar angle.

In the same year, Benioff also criticized Dorsey for his refusal to support Proposition C, a tax measure that imposes a tax on wealthy San Fransisco companies. The proposition essentially raised more funds for fighting homelessness.

Disney almost said yes

Apart from Salesforce, Disney was also interested in Twitter and it almost acquired the platform.

Photo by freestocks on Unsplash

It’s true. Back in 2016, the media giant was considering adding Twitter to Disney’s portfolio. The idea was to expand the company’s reach more effectively via a social network of its own. Modernizing the company’s distribution channels would have meant a stronger offering for its products. Particularly sports channels like ESPN.

The deal almost went through by 2017. Both boards of the two companies came to terms with the acquisition. But then CEO Bob Iger backed down and abandoned the idea at the last moment.

According to Bob Iger, the reason was mainly due to the many complications that come with acquiring a social media network like Twitter. “There were Disney brand issues, the whole impact of technology on society. The nastiness is extraordinary,” said Iger in an interview with The New York Times. He further stated that “Like a lot of these platforms, they have the ability to do a lot of good in our world. They also have an ability to do a lot of bad. I didn’t want to take that on.”

Disney went from old media to new media

Pivoting from Twitter ambitions, Disney would later go on to acquire BAMTech, a sports streaming site for over $2 billion. In case the name sounds unfamiliar, BAMTech was originally the in-house IT division of Major League Baseball. Before becoming BAMTech, it was MLB Advanced Media. Over time, companies started hiring BAMTech for streaming services including big names like NHL, WWE, and even HBO.

By 2015, the division spun off to become an independent entity. Two years later, Disney bought the company to power up its streaming ambitions. Following the Disney acquisition, the company was renamed to Disney Streaming Services and gave birth to Disney+ and ESPN+.

Photo by Mika Baumeister on Unsplash

But despite BAMTech’s reputation, Disney+ crashed on launch day. The service faced several outages as it tried to accommodate 10 million subscribers.

But a few months in, the company started seeing dividends on its investment into streaming. By April 2020, the service crossed 50 million subscribers even though it is only available in 15 countries so far. This might have turned out very different for Disney if the company went ahead with the Twitter acquisition.

Will Twitter’s subscription platform be its rocket fuel?

If the Disney and Salesforce stories illustrate anything its that monetization issues, topped with hate speech and misinformation problems are a chaotic combination for a tech company’s sustainability.

While not a fix-all solution, Gryphon may help Twitter address some of its key issues. Currently, advertising accounts for over 80% of the company’s revenue. A subscription platform would diversify Twitter’s revenue stream. Depending on the set of features included, it could also entice users with a far better experience than what Twitter could currently offer.

The news of Twitter’s potential subscription platform has sparked interest in the stock market. Twitter shares jumped more than 8% following the news.

Whether this will end up powering the company place in the tech space is still unsure. After all, much of what to expect is speculation at this point. Time will tell how this subscription platform will really turn out for Twitter.