Elon Musk announced the introduction of a priority subscription for everyone: in addition to the verified profile icon (with a “blue checkmark”), users will have access to longer audio and video messages and will see half as many ads.

Twitter’s current lords & peasants system for who has or doesn’t have a blue checkmark is bullshit.

Power to the people! Blue for $8/month.

— Elon Musk (@elonmusk) November 1, 2022

The Twitter Blue subscription will now cost $8 per month in the US (in other countries the price will be adjusted according to “purchasing power parity”) and will be available to every user of the social network.

Musk also says that Twitter Blue will provide users with:

• Priority in replies, mentions and searches, which Musk believes is “essential to defeating spam/scams”;
• Ability to host long video and audio;
• Display half as many ads.

You will also get:
— Priority in replies, mentions & search, which is essential to defeat spam/scam
— Ability to post long video & audio
— Half as many ads

— Elon Musk (@elonmusk) November 1, 2022

Previously, Twitter Blue was offered only to VIP users – for example, celebrities or politicians could get a blue tick. The updated “check” means that the profile is not fake and all users who have paid for the service and passed a special check will be able to get it.

Up to this point, Twitter Blue was a completely different service, not tied to verification. The service cost $4.99 per month , its main offerings were the ability to read articles ad-free, unfollow or edit tweets (in some countries), customize the navigation bar, and set NFT as profile picture. However, some ad-free articles were removed on Tuesday, although Musk seems to want to work with publishers in some way, given the intention to allow Blue users to bypass paid ads.

Musk has made clear his intention to reduce Twitter’s reliance on ads for profit in favor of subscriptions. The plan, which was discussed internally, was to charge $20 a month for a review – with employees given about a week to implement these changes.

Musk hasn’t announced when the new pricing and feature set will go into effect, but so far the documentation for Blue is still being shown under the old terms.

The Twitter CEO also says that Blue will allow the company to generate “a revenue stream to reward content creators,” but did not share details of what those rewards might look like in practice.

This will also give Twitter a revenue stream to reward content creators

— Elon Musk (@elonmusk) November 1, 2022

Musk hinted at the $8 price tag in a reply to writer Stephen King, who expressed dissatisfaction with the previously reported $20 per month price .

“We have to pay the bills somehow! Twitter cannot rely entirely on advertisers. How about $8?” Musk told him.

Debt, cost cuts and… employees

Last week, after months of litigation, Musk finally acquired Twitter for $44 billion . And NYT journalists directly connect this amount with the upcoming changes that await the company.

The acquisition was the largest leveraged buyout of a tech company in history – to close the deal, Musk, the world’s richest man, dumped about $13 billion in debt on the company (which hasn’t made a profit for eight years).

Lol we’re fucked https://t.co/obO3GvojLy pic.twitter.com/pvyYhutBiT

— Jason Schreier (@jasonschreier) November 1, 2022

Last year, Twitter’s interest expense was about $50 million. With the new debt taken on as part of the deal, they will now rise to around $1 billion a year. This means that the company makes less money per year than it owes to its creditors.

The company no longer has additional funds – before the Elon Musk buyout, Twitter had about $ 6 billion in cash and most of this amount probably went to close the deal.

To make ends meet, Musk will likely have to cut costs significantly. He is reportedly set to do so by the weekend, ordering job cuts on Twitter. One investor who invested about $1 million in the company buyout said that about 50% of Twitter’s 7,500 employees would be laid off.

If that doesn’t help, Musk may have to raise more money from outside investors throughout the year. Elon already has about $13 billion in debt from creditors, while other investors such as venture capital firms Sequoia Capital and Andreessen Horowitz have contributed about $7.1 billion in cash. Musk was personally responsible for the remaining $25 billion, and it remains unclear whether he brought in more investors to ease that burden.

Finding new investors can be a daunting task given the company’s economics. Even Musk himself has acknowledged that his original investors in the $44 billion deal “clearly overpaid.”

With a net worth of over $200 billion, Musk himself could theoretically help cover Twitter’s additional cash needs. He could also try to buy back some of the company’s loans and reduce its debt burden. But most of his fortune is in Tesla stock (which has also fallen by about 40% this year).

Source: The Verge , The New York Times