Elon Musk’s Impact on X: Tackling Four Persistent Issues a Year Later
In the span of a year, Elon Musk’s acquisition of Twitter and subsequent rebranding as X has triggered a whirlwind of unpredictable changes. From offbeat antics like carrying a sink into the company’s headquarters and making mass staff layoffs, Musk has left an indelible mark. Despite facing competition from established and emerging rivals, X has managed to survive.
However, the platform is not without its challenges. With advertisers growing cautious and user engagement metrics showing signs of instability, the question arises: What lies ahead for X?
The Declining User Base
While precise figures on X’s user base remain undisclosed by the company, several analytics firms indicate a downward trend in usage compared to the past. “Essentially, all metrics have declined year over year,” remarked David Carr from web analytics firm SimilarWeb.
Ross Gerber, an investor in Twitter and a vocal critic of Musk’s leadership, goes so far as to claim that the platform is “dying.” He believes that Twitter needs saving, differentiating between the realm of fantasy and the harsh reality of the situation.
Prominent figures, including Elton John and Gigi Hadid, have departed from the platform in the past year. Madeleine Dunne, a former journalist now working for a digital marketing agency, has significantly reduced her usage due to the introduction of paid blue tick verification by Musk. She laments the lack of trustworthiness on X and describes the ‘For You’ page as a disaster, dominated by verified users on X Premium and leaving little room for content of personal interest.
Monetization Methods: Subscriptions vs. Advertising
The foremost challenge for X, as it was for Twitter, lies in generating revenue. Musk has pursued cost-cutting measures through layoffs, a process that has taken a toll on the staff members affected.
Melissa Ingle, a former moderator, recalls her distress when her company logins suddenly ceased to function. “It was a very, very bad time for me,” she shared with the BBC.
While Twitter has traditionally relied on advertising revenue, Musk introduced a separate subscription-based revenue stream, allowing users to pay for a blue tick and additional features. Recently, he announced the introduction of two new tiers of premium subscriptions. Nonetheless, these innovations have not substantially altered the situation. X remains heavily reliant on advertising revenue, which is worryingly declining.
Third-party data indicates that monthly ad revenue in the United States has experienced a year-over-year decline of at least 55% each month since Musk’s acquisition. Even before Musk’s involvement, Twitter struggled to achieve profitability, having only recorded two annual profits since its launch in 2006.
Musk himself acknowledges the critical nature of this issue, stating earlier this year that positive cash flow must be achieved before any other luxuries can be pursued.
Hopes for Rebound as an ‘Everything App’
The appointment of Linda Yaccarino, former head of advertising at NBCUniversal, as X’s CEO was seen as a positive milestone, creating a sense of separation between Musk and the platform.
Dr. Ben Marder, senior lecturer in marketing at the University of Edinburgh Business School, believes that Yaccarino has not been given the necessary freedom to innovate and has instead been pressured by Musk to focus on quick revenue fixes, such as the subscription model. Musk envisions X as more than just a social media company, aiming to transform it into an “everything app.”
When asked about this vision, Musk cryptically replied that the details would be revealed in due time. Ms. Yaccarino offered the most specific description of X’s potential expansion in July, envisioning it as the future state of unlimited interactivity, encompassing audio, video, messaging, payments/banking, and creating a global marketplace for ideas, goods, services, and opportunities. She emphasized the role of AI in connecting people in ways that are yet to be fully grasped.
Musk has already diversified X’s offerings, such as live-streaming himself playing computer games and launching a new audio and video calls service that operates without a phone number.
Furthermore, Musk has expressed his banking plans for X, aiming to generate $15 million from a payments business in 2023, growing to approximately $1.3 billion by 2028, according to a pitch deck obtained by the New York Times.
Gerber, who initially invested in X due to Musk’s involvement, now finds himself confused by Musk’s plans for the company. He wonders if Musk will compromise his staunch stance on freedom of speech to attract advertisers, as that seems to be the crux of the matter.
The Challenge of Moderation
Addressing the issue of filtering out extreme content remains an ongoing struggle for X. The Centre for Countering Digital Hate conducted research showing that X continued to host nearly 86% of a collection of 300 hateful posts a week after they were reported to moderators. The group is currently embroiled in a legal battle with the platform regarding these claims.
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