X, formerly known as Twitter, is gearing up to test three tiers of its X Premium service, as per a recent briefing by X CEO Linda Yaccarino to X debt holders. The move is aimed at diversifying revenue streams and countering the loss in advertising earnings experienced since Elon Musk’s acquisition of the platform last year. Bloomberg reports that Yaccarino shared plans to split the current $7.99 Premium subscription into three different plans, namely Basic, Standard, and Plus, each at varying price points.
Key Takeaway
X is planning to test three tiers of its X Premium service and may introduce an ad-free tier. By diversifying its revenue streams, X aims to counter the decline in advertising earnings seen since Elon Musk’s acquisition of the platform.
Code Hints at Ad-Free Tier
Although there is no clear timeline for the launch of the three-tier subscription plan, clues have been discovered in the X app’s code by @aaronp613. The code references a “Premium Basic,” “Premium Standard,” and “Premium Plus” plan, indicating that the current Premium plan will likely become the middle tier. The Premium Basic and Premium Standard plans are anticipated to offer full ads and half the ad load, respectively. The intriguing find in the code suggests the possibility of a Premium Plus plan that is completely ad-free.
Advertising Woes Post Musk’s Takeover
X has faced challenges in its advertising business since Elon Musk’s controversial changes following the acquisition. Major brands pulled their ads after their content was placed alongside hate speech and pro-Nazi posts. According to Reuters, X’s U.S. ad revenue has declined consistently every month since Musk’s takeover, with a staggering 60% year-over-year decline as of August.
Linda Yaccarino, who joined X from NBCUniversal, has been leading efforts to revive X’s advertising business. She informed the bankers during the briefing that advertisers were indeed returning to X, albeit with smaller budgets. However, the company’s debt of $13 billion poses obstacles, with an estimated $1.2 billion in yearly interest payments.
Uncertainty Surrounding Payment Model
Yaccarino’s announcement of the three-tier subscription plan raises questions about the recently introduced payment model proposed by Elon Musk. Musk had revealed plans to charge a small fee for platform usage to combat the presence of bots on X. When questioned about this plan, Yaccarino seemed caught off guard and unaware, indicating potential misalignment between her and Musk’s vision for X. The CEO’s response left uncertainty about whether the three-tier approach includes Musk’s payment model.
Furthermore, during a recent interview, Yaccarino’s lack of clarity on X’s numbers was evident. While she mentioned having “200 to 250 [million]” daily active users, X clarified later that it has 245 million. Discrepancies between Yaccarino and Musk’s figures also emerged, with Musk stating 100-200 million posts per day and Yaccarino claiming 500 million. It was later clarified that Yaccarino’s figure included a combination of original posts, replies, quote posts, and reposts, while Musk was referring exclusively to original posts.
X continues to navigate the challenges of reinvigorating its advertising business and exploring new revenue streams in an effort to secure a sustainable future.
