Musk needs 10 million more Twitter blue subscribers to pay off his loans
Since taking over Twitter, the world’s second-richest person Elon Musk has struggled to sell subscriptions. Musk took over Twitter in October, but subscriptions have been slow. He promised to revamp the company’s subscription revenue strategy. In 2021, Twitter Blue was introduced, but at $3 per month and with limited features, it didn’t make a significant dent in the revenue of the largely advertising-supported website.
It doesn’t seem like Musk’s most recent model is doing well either. Musk barely added any features to Twitter Blue beyond selling blue check marks. Yet Musk settled on a significantly higher price point for Twitter’s premium service based on public talks with novelist Stephen King. Musk’s pricey paid subscription model isn’t popular with Twitter users.
Based on Musk’s revised model, Twitter has added $27.8 million in increased annual subscription revenue. Musk won’t have enough money to keep Twitter running or even to pay the interest on his loans. To buy Twitter, Musk needed $12.5 billion in loans. Even Musk, the world’s second richest person, couldn’t buy Twitter outright for $44 billion without $12.5 billion in outside financing. To finance his debt, Musk will need to pay about $1 billion annually. That’ll require a lot more Twitter Blue sign-ups.
$27.8 million in new subscription revenue is less than 3% of what he owes in interest. According to Quartz‘s back-of-the-napkin math, Musk needs to sell 10.4 million subscriptions to cover that $1 billion. He’s short of 10.1 million subscriptions. Musk cut Twitter’s costs by laying off (or inspiring) most of its staff. According to CNBC, only 1,300 employees remain out of 7,500. His lax content moderation policies have also scared off advertisers.
Advertisers were already cutting back on their spending when this revenue loss occurred. So far, Musk hasn’t replaced that lost ad revenue with subscriptions. In order for Musk to make Twitter profitable long-term, and recoup the investment, he will need to convince 10 million more people-about 4% of Twitter’s 238 million monthly users.