Technology

Twitter plans subscription model for access to some content and features

The company reported a steep decline in ad revenues during the second quarter, and a total loss of $1.2 billion

Jack Dorsey, Twitter's CEO. Photo: Shutterstock
  • Jack Dorsey, Twitter’s CEO, mentioned the idea of new monetization models during an investor call;
  • Daily active users increased 34% year over year to 186 million, driven by social isolation requirements and increased conversation around the pandemic.

Twitter is planning to test a new monetization method, based on monthly subscriptions, so that its users have access to certain content and features of the social network. Jack Dorsey, Twitter’s CEO, mentioned this to market analysts during an investor call to discuss the second quarter financial results. 

Currently, Twitter’s only stream of income comes from ads on the social network; however, the executive commented that “there is a world” in which the platform can also use complementary sources of monetization. As a result, Dorsey guarantees that tests with “different approaches” will be carried out this year.

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“You will likely see some tests this year”, Dorsey told analysts. The executive added he has “a really high bar for when we would ask consumers to pay for aspects of Twitter,” but confirmed that the company is seeking to diversify its sources of revenue in what are “very, very early phases of exploring.”

Twitter’s average monetizable daily active users (mDAU) increased 34% year over year to 186 million, above analysts’ estimate, driven by social isolation requirements and increased conversation around the pandemic.

But ad sales, which make up 82% of Twitter’s revenue, sank 23% to $562 million, a drop the company attributed to brand spending pauses tied to the pandemic and U.S. civil unrest.

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According to Reuters, The company reported a second-quarter loss of $1.2 billion, largely driven by the reversal of a tax benefit established last year, when the company transferred intellectual property to Ireland. Because of the second quarter’s steep coronavirus-related losses, Twitter did not make enough money to take advantage of the tax benefit.