Elon Musk blames a number of things for Twitter’s financial woes – from older debts to faltering ad revenues. However, Musk, and his ardent followers often fail to see what really made advertisers pull out of Twitter – his own erratic policies and antagonising tweets
Elon Musk recently revealed that Twitter, despite all of his efforts, remains cash flow negative. Although Musk has blamed Twitter’s older debts and a 50 per cent dip in advertising revenue for this, there are several other factors behind Twitter’s increasingly worrisome financial health.
Unsurprisingly for anyone who has been following the developments of the platform since its acquisition by Elon Musk, most of these issues are the result of Musk’s own policy.
Twitter’s Monetary Woes
Twitter saw a massive advertiser pullout when Elon Musk took over the social media platform, terminated nearly 10,000 employees, including contractors, and changed content moderation policies in such a way that he got into soup with the EU, as well as several other governments.
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People have raised several questions over Twitter’s financials, all of which have stemmed from Elon Musk’s erratic and sometimes bizarre actions. Apart from getting evicted from several prominent offices for not paying rent, Twitter under Musk has been accused of not paying vendors, ranging from Google for their cloud services to basic staffing vendors.
Then there is the fact that Twitter had hedged a major bet on Twitter Blue. Musk had hoped that although not every daily active user would sign up for their premium verification service, the number would still run into the millions or tens of millions.
However, frustratingly for Musk, the number of people who actually subscribed to Twitter Blue has just managed to cross a million a few weeks ago. With an active user base of over 250 million people daily the number of Twitter Blue subscribers isn’t even a paltry 1 per cent.
Following Twitter laying off thousands of employees and cutting cloud service bills, Musk said Twitter was on track to post $3bn in revenue in 2023, down from $5.1bn in 2021.
Dwindling Ad Revenues
When Musk had taken over Twitter, there was a mass exodus of advertisers from the platform. Several reports suggested that of the top 100 advertisers, over 50 per cent had left within weeks of Musk taking over the social media platform. Although Musk had reported that most advertisers were back on the platform and that they were on track to close the deficit between their 2021 and 2023 earnings, that has not panned out the way Musk and his team had hoped for.
One of the biggest reasons why advertisers have pulled out of Twitter, is Musk himself. Fed up of what the American right-wing calls “Woke” culture, Musk took a few steps with Twitter that would antagonise the American left. In the process, however, he turned Twitter into a platform that even more toxic than it used to be. Studies have shown that in the months following Twitter’s takeover, hate speech on the platform grew substantially.
Things turned even worse for Twitter, when Musk stopped content moderation, and indirectly and inadvertently, let holocaust deniers post all sorts of ridiculous statements, denying the holocaust. What was even more egregious, however, was Musk’s refusal to suppress hate speech and holocaust deniers on the platform.
A New Challenge By Threads
Twitter’s dwindling revenue may not have been that big a concern for Elon Musk had Meta not launched Threads and got the response that it did. Within a week of its launch, it already had amassed over half of Twitter’s daily active users. And because Threads is so well integrated with Meta’s Instagram, it is only bound to grow exponentially more.
More than users flocking to Threads, Musk fears that more and more advertisers will flock to threads.
Having said that, we must remember who Musk hired as Twitter’s new CEO – Linda Yaccarino is an advertising veteran and will be vital in bringing back advertisers to Twitter. Given that she took charge of her position only recently, it remains to be seen how well she performs in her role and how much revenue Twitter make from advertisers going forward.