Elon Musk’s Twitter needs to make a ton of money very quickly. Here’s why

It is hard to believe he has been on the job for just a week.
Ameya Paleja
Elon Musk pondering.
Elon Musk pondering.

Getty Images 

On October 26th, Elon Musk was basking in a photo-op moment as he walked in through the doors of Twitter headquarters, holding a sink.

Hardly could anyone have guessed that a week away from this "hilarious moment", Musk would open up all doors possible to bring in money to the social media site and even haggle with author Stephen King to get the latter to sign up for a subscription plan.

A week of upheavals at Twitter

Soon after Musk signed the dotted line, he fired the then-CEO, Parag Aggarwal, and the top brass at Twitter, reducing the board to just one member: himself. With the company going private with his acquisition, Musk was to report to no one and ordered a string of changes at Twitter.

With fears of massive layoffs looming large, Musk asked engineers and managers at his company to put in 84-hour workweeks to bring his ideas to reality, Business Insider said in a report. Musk's idea of monetizing the verification status met some serious opposition on the social media site, and the CEO by default publicly considered reducing the subscription fee, which was then finalized.

Additionally, Musk is also looking at a reboot of the short video sharing service Vine, and has proposed a paywall for videos and an option to pay and get into people's direct messages, The Verge reported.

Interestingly, earlier this year, as a potential buyer of Twitter, Elon Musk had a ton of problems with the number of spam/ fake accounts on the platform. However, as the CEO, he seems the least bit worried about them and is focused on human users and making money off them.

Why is Musk so bent on monetizing Twitter?

Back in April, Musk told a TED audience that his Twitter acquisition was never about the economics and that he believed in the platform's ability to be the town square of the digital world. So have the six months between his initial offer and actual acquisition changed his mind?

More than a free speech absolutist, Musk is a capitalist, and under no circumstances would he use his riches to run a platform for the public good. His desperation to acquire Twitter at a premium price was proof that he saw multiple ways of monetizing the platform better than what Dorsey or Aggarwal managed to do during their times at the helm.

His actions in the past week have also been a step in this direction, whether appreciated or not. While the employees at Twitter have the sword of layoffs on their heads, Musk has a different worry. In the quarter prior to the acquisition, Twitter posted a loss of $344 million. Musk's takeover has added an additional debt of $13 billion to Twitter's books, which according to The New York Times means an annual interest payout of nearly $1 billion at Twitter. This is more than what Twitter made in 2021.

Interesting Engineering reported recently that tech giants like Google and Facebook have seen their ad revenues drop last quarter and Musk knows very well that spiking advertising revenues at Twitter, which enjoys a much smaller market share, cannot make up the deficit to make these payments.

If Musk's umpteen monetization attempts do not work out, he will end up paying Twitter's bills out of his own pocket, and that's where headcount will be shrunken to keep the out-of-pocket expenditure to a bare minimum.

As The Verge pointed out, even if all the verified accounts at Twitter sign up for the subscription fee of $8 a month, their small numbers would mean that Twitter can only bring in a maximum of $38 million with this route. With $1 billion in payments due every year, Musk needs many more ideas and options for monetizing the Twitter experience.

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