Squeezing The Last Penny: Elon Musk plans to have three subscription tiers for X, all users to pay

Elon Musk is planning to charge everyone to use X, the social media platform formerly known as Twitter, and he plans to offer subscriptions in three tiers, or three different price points.

In a recent meeting with the banks and other lenders who had financed Musk’s takeover of Twitter, X’s Chief Executive Officer, Linda Yaccarino revealed that they believe that they have a solid plan to ensure a growth in revenue. This includes a plan to experiment with three tiers of premium services, allowing variable pricing based on the extent of ad exposure for customers.

The premium subscription, presently priced at $7.99 per month, is set to be divided into three distinct variants: Basic, Standard, and Plus.

Additionally, Yaccarino believes that while advertisers are gradually returning to the platform, they are doing so with smaller advertising budgets.

During the briefing, Linda Yaccarino, who assumed her role in June, delivered a generally optimistic assessment of the company’s current state. She reported that revenue has been steadily increasing at a high single-digit rate on a quarter-over-quarter basis across advertising, data licensing, and subscription services.

Yaccarino also emphasized that, excluding debt servicing costs, the company is already generating positive cash flow. Furthermore, she expressed confidence that X is on track to achieve this milestone by the latter half of 2024, even when accounting for its debt obligations.

The introduction of the three-tiered subscription model is aimed at attracting a wider audience, particularly those who may be unwilling to pay the full premium subscription fee. Musk has also raised the prospect of implementing a nominal fee for all X users, a measure intended to counteract the presence of automated bots on the platform.

It’s worth noting that Elon Musk’s acquisition of Twitter, now rebranded as X, involved taking on a substantial debt burden, estimated at $13 billion. His unconventional decision-making and more lenient content guidelines have unsettled certain brands, most of whom were the top advertisers on the platform.

Prior to the acquisition and rebranding, Twitter was generating approximately $5 billion in annual revenue, with advertising accounting for nearly 90 per cent of this figure. Consequently, the company faces the challenge of regaining lost revenue, with an annual interest payment obligation of approximately $1.2 billion on its debt, according to earlier estimations by Bloomberg.

Linda Yaccarino reported that about 90 per cent of the company’s top 100 advertisers have returned, marking an increase from the 75 per cent reported in June. However, ad spending has not yet reached historical levels, as companies are returning to the platform with a smaller budget.

X may still encounter difficulties in appeasing its creditors, as some banks initially sought to offload the debt at a significant discount, valuing it at just 60 cents on the dollar. Earlier this year, the company’s valuation had plummeted to roughly a third of its purchase price, as indicated by Fidelity.

Since Musk’s acquisition of Twitter in October 2022, the platform has undergone significant changes, including staff reductions of more than 75 per cent, discontinuation of certain services, and the launch of a premium subscription in a bid to restore its financial health.

Furthermore, Musk has vocally advocated for transforming X into an “everything app” with revenue streams derived from features such as shopping and payments, although very few of Musk’s backers are aware of what that would actually entail.

During the summer this year, Yaccarino and Musk presented plans to investors to attract celebrities and political figures to the platform and facilitate increased commerce and user-to-user payments, as per a report by the Financial Times. These efforts resulted in X securing a new partnership with Paris Hilton and 11:11 Media to promote the company’s live shopping and video products.

The idea of the three-tiered service structure was first hinted at through the discovery of certain code within the X app. This code indicated that the entry-level subscription would include the standard amount of advertisements, the standard plan would display half as many ads, and the top-tier subscription would offer an ad-free experience. This information was uncovered by a user known as Aaronp613, an app enthusiast who specializes in dissecting the code of popular iPhone applications to identify forthcoming features.