Is Twitter Exploring a Subscription Platform?

Is a subscription platform really in the works, or were job postings premature in discussing the company's plans?

Twitter may be exploring a subscription platform, if a job posting for a senior full-stack software engineer is any indication. According to the job description, Twitter is forming a new, global team called Gryphon that is building a subscription platform that can be used by other teams in the future. Twitter says this project is a first for Twitter. Specifically, Twitter wants a full-stack engineer to lead their payment and subscription client work. It is not clear what Twitter’s plans for a potential subscription platform are. The Verge speculates the social media platform might be looking to supplement its advertising revenue with subscription revenue.

Here is an excerpt from the original job posting, which is still accessible online:

According to The Verge, since their article was published on July 8, Twitter has since updated its job posting. Casey Newton posted this tweet with the revised listing July 8.

On the same day, Twitter shares rose as high as 12% on July 8 amid speculation that a subscription product might be coming to Twitter, says The Detroit News. On Friday, July 10, Twitter stock was valued at $35.40 per share, an increase of $2.41, or 7.3%, per share between Tuesday and Friday.

A second job posting on LinkedIn indicates that Twitter is looking for a backend Scala software engineer to work on a subscription management project. The posting shows that it is no longer accepting applications, but the job listing is still accessible online.

Twitter’s Finances and How Subscription Revenue Could Help

In its first quarter letter to shareholders dated April 30, 2020, Twitter shared highlights of the company’s financials:

  • Monetizable Daily Active Usage (mDAU) hit 166 million, an increase of 24% year-over-year. Twitter attributes this to seasonal changes, product improvements and increased usage of the platform during the COVID-19 pandemic.
  • At 24%, mDAU for Q1 2020 saw the biggest year-over-year increase to date. Twitter added 14% million average mDAUs since Q4 2019.
  • Revenue was $808 million, a 3% increase year-over-year. Twitter said this was impacted by the “economic disruption” caused by coronavirus.
  • Of the $808 million, $682 million, or 84.5%, came from advertising revenue. The remaining $125 million, or 15.5%, came from data licensing and other revenue.
  • Twitter reduced expenses to make up for some of the revenue shortfall, but the company still had an operating loss of $7 million and a net loss of $8 million for the first quarter.

In the shareholder letter, on page 3, Twitter states, “In light of the current operating and economic environment, we have shifted resources and priorities to increase focus on our revenue products, particularly performance ads beginning with MAP*, with the goal of accelerating our long-term roadmap. We have also reduced our company hiring and non-labor expense plans to lower our expense growth while continuing to focus our investments on Engineering, Product and Trust & Safety, ensuring our resources are allocated against our most important work.”

*MAP is Twitter’s next-generation Mobile Application Promotion ad format.

In addition to sharing its plans to focus on revenue generation, Twitter explained that first quarter results can be separated into two distinct periods of performance. The first period from January through early March was as expected. However, early March through the end of the quarter, the pandemic hit globally in full force and the company’s total advertising revenue dropped 27% year-over-year.

Though it is difficult to imagine how Twitter could turn its platform into one that is subscription-based, an additional revenue stream would help it to be less ad dependent, particularly during a volatile economy. That assumes that Twitter would turn its current offerings into those that are subscription-based. Twitter could be thinking globally – developing a platform to support other subscription providers or a platform to support its advertisers.

Insider Take:

Despite the speculation by media outlets, based on the job descriptions, it does not look like Twitter is ready to roll out a subscription program any time soon. It looks like the word “subscription” in two job descriptions created an unexpected stir, and someone in HR is probably in the doghouse. That doesn’t mean a subscription platform isn’t in the works, but it seems unlikely that Twitter will share its plans until it is good and ready.