One Social Media Giant is Trying to Revolutionize the Way it Makes Money
For years, the biggest social media companies have relied on one form of revenue. But one intrepid platform is aiming to change that.
Since the first social media websites began popping up in the late 1990s, all the biggest names in the space have always relied on a similar business model.
Users are allowed to create a profile and use the site and all of its features free of charge, and the social media platform earns revenue from advertising.
And thus far, that game plan has worked incredibly well. In 2020, Facebook, Inc. (FB) raked in more than $84 billion in ad revenue – which accounts for nearly 98% of its total revenue.
But yesterday, one of the biggest players in the social media game made the first move in breaking that mold.
And it could have major repercussions for the industry.
Where’s the money?
On Thursday, Twitter, Inc. (TWTR) became one of the first of the major social media platforms to begin offering a subscription option for additional benefits on its platform.
The $2.99 per month subscription, dubbed Twitter Blue, will allow users to better organize and manage content, revise tweets before they go live, turn long threads into easy-to-read text, and will offer several new customization options.
Twitter Blue is being released first in Canada and Australia. No date has yet been announced for the rollout in the U.S.
The advent of a subscription service gives Twitter a way to diversify from the ad revenue model – from which 86% of its revenue is earned.
While the new features seem to be aimed more at content creators than casual users, if early returns are positive, we could see a wave of new features and benefits, as well as different subscription tiers across different social media platforms.
TWTR gained as much as 2.64% by early afternoon trading yesterday after the announcement.
So, should you be jumping into TWTR stock as it tries to usher in a new era of social media business models?
Here’s what I think…
How do I get some?
While Twitter isn’t technically the first social media site to offer subscriptions – platforms like Substack and Patreon offer users content-for-pay – it is by far the largest platform to attempt it.
But if I’m being honest, I do not think that this will change anything for TWTR in the short-term.
Don’t get me wrong, I like the idea of them starting to charge, and the model could lead to significant revenue sources when fully built out.
But is $2.99 per month for benefits that won’t really entice everyday social media scrollers really going to move the needle? I don’t think so.
So, while TWTR is still trading significantly lower than its all-time high from February, I would not be looking to buy off the high created by the hype surrounding subscriptions.
In the long-term, I like this move a lot, but wait for the dip before jumping in.
The Dirty Truth about 5G
Forget AT&T, T-Mobile, or Verizon – the truth is, you’re too late to profit by investing in 5G directly. But what happens next will be huge.
I’m talking about the $1.4 trillion aftershock market that 5G will create – and the 20 companies Michael Robinson has identified.
Each is projected to return 10X by the end of the year and could dwarf the 5G gains we’ve seen already.
Get the details on this backdoor 5G market here.
In the Spotlight: Come Fly the Speedy Skies
Ever since the last major airliners retired the Concorde jet in 2003, supersonic flights have been a thing of the past.
But one major carrier is looking to bring the trend back in the coming years.
Yesterday, United Airlines Holdings, Inc. (UAL) announced that it has agreed on a deal with Boom Supersonic to produce 15 of its Overture supersonic aircraft.
While the planes are not yet certified for flight and early estimates say consumers will have to wait until 2026 to book a commercial supersonic flight, the move represents a change of direction for the airliner industry.
For years, travelers have consistently been looking for ways to fly cheaper. But UAL is betting on a market that is fed up with long flight times.
While it will take a number of years to see if this venture will pan out, it’s one of the most interesting stories in the flight industry in years.
I’ll be keeping a close eye on UAL stock to see how investors react, and I’m sure I’ll have more to share with you on this story in the future. Stay tuned.