In 1973, a short art film titled Television Delivers People warned that “commercial television delivers 20 million people a minute,” and presented an idea that’s since become associated with today’s crop of Big Tech companies: If something is free, you’re the product.
On Tuesday, Twitter CEO Elon Musk closed the loop on this decade-spanning aphorism as he delivered his latest business pitch. “There are about 120 to 130 million hours of human attention per day on Twitter,” Musk told the audience at a Morgan Stanley conference in San Francisco.
The only problem, Musk went on to explain, is that Twitter isn’t getting a good return on this massive hoard of human attention. The company currently only generates “about five or six cents per hour,” Musk said. It’s worth much more than that, Musk said.
“We can probably at least get it to like 15 cents an hour, 20 cents an hour,” he said—perhaps even 25 cents an hour, he added.
The new performance metric, if that’s what it can be called, is classic Musk. The business model is no different than that of other consumer internet companies like Facebook, Snapchat, or Google, which sell advertising space to marketers seeking to reach their users. But Musk, who acquired Twitter for $44 billion in October, is looking for fresh new ways to stand out from the pack, even as his chaotic stewardship of the company leaves many observers dumbfounded.
Moments before taking the stage at the conference on Tuesday, Musk publicly feuded with a laid-off Twitter employee, dismissing the employee’s contributions and mocking the person’s disability (Musk later apologized for the comments and said the employee, who has muscular dystrophy, may remain at Twitter after all).
Musk’s appearance at a Wall Street investment bank conference was unusual in itself, given that Twitter is now a privately held company. The roughly hourlong onstage interview with Morgan Stanley star tech banker Michael Grimes represented some of Musk’s most extensive public comments about his vision for Twitter and the state of its business since he took over.
Twitter could break even on a cash-flow basis in the second quarter of the year, and even has a “shot” at being cash-flow positive, Musk said. The social media app currently has 250 million daily active users and 500 million “active” users, he said, without specifying the criteria for the latter category.
But Musk, who is also the CEO of electric car maker Tesla and aerospace company SpaceX, did not discuss (nor was he asked to by Grimes) some of the company’s controversial financial practices, such as media reports that Twitter is not paying rent for some offices and has refused to pay vendors for private jet flights that company executives took before his acquisition.
Twitter’s service has suffered several outages since Musk took over, something he has ascribed to the site’s “brittle” technical infrastructure erected by his predecessors but which critics say is the result of deep and haphazard layoffs that have eliminated roughly 75% of the staff. And Musk’s loosening of content moderation rules, as well as reinstating banned users including former President Donald Trump, have led to an uptick in certain types of misinformation, according to some studies.
Musk says Twitter is the “best source of truth”
Musk described Twitter on Tuesday as the “number one news app,” and said his goal is to make it the “best source of truth.” On top of that, he reiterated his plans to make Twitter an “everything app” with a “very powerful finance experience” that is better than PayPal, a financial company he founded and was subsequently ousted from at the beginning of his entrepreneurial career.
“I think it’s possible to become the biggest financial institution in the world, just by providing people with convenient payment options,” Musk said of Twitter.
Musk and prior Twitter management have had a notoriously hard time turning a profit. The platform was profitable in 2018 and 2019, but not in any other years since its inception. Musk’s first tangible attempt at monetizing users to turn a profit was revamping the firm’s $8 subscription service Twitter Blue, which only netted 180,000 U.S subscribers two months after its launch.
Musk claimed during the interview that the firm is profitable based on earnings before interest, taxes, depreciation, and amortization (Ebitda); he underlines that the “D” component is rather large and that they should concentrate on the “E” part. Again, he didn’t delve into financial specifics, which he isn’t bound to do since he took the company private.
While Musk has explored various revenue streams, including the $8 per month Twitter Blue subscription service, advertising appears to be the main lever with which Musk is thinking about to achieve the company’s “gigantic” revenue potential.
Twitter will stop serving ads that are “annoying, strident, or ugly,” he said, and is making it easier for marketers to bid on the best keywords to reach users.
The new Twitter will be a “win win situation,” he said, as advertisers tap into Twitter’s audience and pay the company more money for the privilege.
