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"This is why tech companies keep pivoting to ads" I think another factor is the paradox that the user who has enough money to be willing to pay to not see anot

"This is why tech companies keep pivoting to ads" I think another factor is the paradox that the user who has enough money to be willing to pay to not see another ad is exactly the most valuable user to advertisers— they've pre-qualified themselves on multiple axes. So there is always going to be an enormous moral hazard here with the ad-driven-freemium model— always a temptation to run an occasional high-value ad to the paying users, or to disguise the ad as a "recommendation" or position it instead as a "sponsorship", or whatever else. Other than users reacting swiftly and decisively against this kind of thing, it's hard to know how else to keep companies away from it.

akhilpotla 4y ago
One of the problems is price point. They are charging $10/month. While increasing the price will certainly decrease the number of users, a much higher price point could select for "power users" that will churn less and pay substantially more. In the long run that could lead to greater revenue. Of course this depends on how the supply demand curve looks like for their specific business.
- nottorp 4y ago
  Catering to the whales, in casino speak.
random314 4y ago
This showed up at an internal Twitter meeting this week. Mr. Musk proposed making Twitter ad free for 8$ accounts before being politely informed that 8$ accounts actually produce 50$ per month in ad revenue. An angry bird informed me about this :)
- auggierose 4y ago
  How do they know that, given that $8 accounts must be still pretty rare given they were just introduced?
  - mikepurvis 4y ago
    Because it's a pattern that manifests everywhere and can be extrapolated. Though in this case, it's likely that Twitter has repeatedly run internal studies about what a paid-tier would look like, and each time concluded exactly what the GP is passing on: that it would be a net loss because the most-valuable-to-advertiser accounts would be the first ones to pay. Even just psychologically, it would be a major blow to their sales pitch, going from "pay $X to put your name in front of the top movers and shakers in the world" to "pay $Y to put your name in front of all the Twitter users too cheap to cough up $8/mo to not have to see you." Not hard to see that $Y is going to be less than $X... probably a lot less.
  - random314 4y ago
    I think the analysis was for pre existing blue check accounts.

akhilpotla 4y ago

One of the problems is price point. They are charging $10/month. While increasing the price will certainly decrease the number of users, a much higher price point could select for "power users" that will churn less and pay substantially more. In the long run that could lead to greater revenue. Of course this depends on how the supply demand curve looks like for their specific business.

nottorp 4y ago
Catering to the whales, in casino speak.

random314 4y ago

This showed up at an internal Twitter meeting this week. Mr. Musk proposed making Twitter ad free for 8$ accounts before being politely informed that 8$ accounts actually produce 50$ per month in ad revenue. An angry bird informed me about this :)

auggierose 4y ago
How do they know that, given that $8 accounts must be still pretty rare given they were just introduced?
- mikepurvis 4y ago
  Because it's a pattern that manifests everywhere and can be extrapolated. Though in this case, it's likely that Twitter has repeatedly run internal studies about what a paid-tier would look like, and each time concluded exactly what the GP is passing on: that it would be a net loss because the most-valuable-to-advertiser accounts would be the first ones to pay. Even just psychologically, it would be a major blow to their sales pitch, going from "pay $X to put your name in front of the top movers and shakers in the world" to "pay $Y to put your name in front of all the Twitter users too cheap to cough up $8/mo to not have to see you." Not hard to see that $Y is going to be less than $X... probably a lot less.
- random314 4y ago
  I think the analysis was for pre existing blue check accounts.