Elon Musk needs more money.
When the billionaire many times over took over Twitter in late October, he vowed to revamp the company’s subscription revenue strategy as a way to make ends meet. Twitter had previously introduced Twitter Blue in 2021, but priced at $3 per month and with limited features, it did not make a sizable dent in the largely advertising-supported website’s bottom line.
Musk’s new model doesn’t seem to be having much success either.
In his overhaul of Twitter Blue, Musk barely added any features beyond selling verified blue check marks to eager users. Yet after negotiating in public with the novelist Stephen King, Musk settled on a significantly more expensive $8 per month price point for Twitter’s premium service.
Twitter users, apparently, are not seeing the value of Musk’s pricey new subscription model. As of mid-January, two months after it launched, only 290,000 people worldwide have signed up, according to new reporting by The Information.
I subscribed to Twitter Blue for a year. The undo tweet feature—which let you delay sending a tweet for 30 seconds—was a helpful way to avoid typos and make sure I really wanted to send that tweet. The service also let me customize the app’s design: I was relieved to no longer see a Twitter Spaces tab at the bottom of my screen.
But I can’t say it was worth the $3 per month that I paid, let alone the $8 per month under Musk. And no, I won’t pay to keep my blue check mark when the moment comes. I unsubscribed last month when Twitter told me I’d finally have to pay the higher price.
Assuming that each Twitter user that has subscribed for Musk’s new model is paying $8 per month, Twitter has added $27.8 million in new annual subscription revenue. That’s well short of what Musk is going to need to keep the lights on at Twitter, or to even pay the interest on his loans for that matter.
Musk may be the world’s second-richest person, but he couldn’t afford to buy Twitter outright for the $44 billion he offered without securing $12.5 billion in outside financing. That means Musk will need to pay about $1 billion annually just to finance his debt. He’ll need far more Twitter Blue sign-ups to do that.
The estimated $27.8 million in new subscription revenue is less than 3% of what he owes each year in interest. In order to pay that $1 billion per year, Musk needs to sell 10.4 million subscriptions, according to Quartz’s back-of-the-napkin math. That means he’s 10.1 million subscriptions short.
Musk cut costs at Twitter by laying off the majority of Twitter’s staff (or inspiring them to quit). Only 1,300 employees remain out of 7,500 before Musk’s takeover, according to CNBC. But in the process he has also scared off advertisers who were spooked by lax content moderation policies. This loss in revenue came at a time when advertisers were already pulling back their spending. And Musk has so far failed to replace that lost ad revenue with subscription revenue.
Far from making Twitter profitable long-term, and recouping the expense of buying the company, Musk will need to make the case successfully to about 10 million more people—about 4% of Twitter’s 238 million monthly users.
That won’t be easy.