How Elon Musk launched Twitter Blue and why a subscription can actually be unprofitable

Amid the chaos that has engulfed Twitter, company employees continue to share insights about how the company is currently organized, how the layoffs went and why Elon Musk’s touted Twitter Blue paid subscription may actually be losing more money for the social network than it is bringing in, writes The Verge.

All of this comes amid the fact that the company still hasn’t heard anything official from Musk, either via email or at the company’s AGM. On Monday, after losing thousands of their colleagues days earlier, many employees did not know who their bosses were. Meanwhile, Musk’s increasingly erratic leadership, combined with his habit of tweeting with a goofy flavor, has left many current and former employees feeling uneasy about their company’s future.

Friday’s layoffs were brutal for everyone involved, including those involved in planning them — many of whom lost their jobs themselves. Some managers were asked to submit two sentences about each of their direct reports to Musk’s team: one sentence explaining what the employee was doing and one sentence justifying his continued work on Twitter.

“You were like, this better be a fucking good sentence,” said one person who was asked to write such a list.

Managers agonized over decisions and bargained with their colleagues in an effort to save jobs for the most vulnerable among them. Some collectives were reduced more, others less, and some were completely destroyed.

Some employees are nervous that if Twitter can’t get them to return voluntarily, the company will formally rescind the notice they received Friday laying them off. Under the Worker Adjustment and Retraining Notification (WARN) Act, businesses with more than 100 full-time employees are required to give 60 days notice if they lay off 33 percent or more of the staff. At Twitter, that notice included a promise to pay people for the next 60 days and give them a month of severance.

Now workers fear that if they refuse to return voluntarily, Twitter will fire them for abandoning their jobs, depriving them of what otherwise would have been three months’ pay.

Some workers have begun consulting with lawyers about their options if they are recalled. Others are in open rebellion, publicly discussing various aspects of the organization that have been disrupted since the layoff process.

In fact, two groups have formed in the company: those who work on projects in which Musk is deeply involved, for example, on the updated Twitter Blue subscription, and everyone else.

The launch of Musk’s first signature project, a new version of the Twitter Blue subscription that would allow anyone to get a verification badge, was a disaster.

The company released a new version of Twitter Blue on Saturday, with release notes saying the new service was already available. The problem is, it didn’t work, and those who followed found that they just got access to the regular version of Twitter. Then, after internal debate over the potential ramifications of thousands of new verified accounts appearing on the platforms in the midst of the US midterm elections, the company delayed the launch.

But the new Blue is likely to face more problems. The current version had just over 100,000 active subscribers. The new subscription will be 37.5% more expensive and its value seems incomprehensible to most regular users of the platform. It’s unclear how the company will convince enough people to sign up to justify the effort.

Twitter employees have tried to sell Musk and his adviser David Sacks on the idea of ​​asking business accounts to pay for additional features, as many of them use the social network to reach large audiences. But their comments were dismissed in favor of monetizing the Blue subscription with a verification badge.

Other employees pointed to a secondary feature of the new Blue that Musk added at the last minute: half the amount of advertising for paid subscribers. Calculations showed that Twitter would lose about $6 in advertising revenue per US user. Given the share that Apple and Google take from in-app purchases on their platforms, at $8 a month, Twitter will lose more money on the subscription than it will make. Of course, if the plan to show Blue’s Twitter followers more ads goes ahead..

Musk was actively involved in Blue’s chaotic launch, attending meetings and exchanging regular emails with Esther Crawford, the company’s director of product management.

“There is one decision-maker and that is me,” Musk told employees, according to meeting minutes shared with employees on Slack.

But all of this could be a prelude to the biggest change of all: the transfer of all users for a paid subscription.

Both Musk and Sacks have discussed the idea in recent meetings, according to a person familiar with the matter. One such plan might allow each user to use Twitter for a limited period of time each month, but require a subscription to continue viewing.

Given Twitter’s massive debt burden, Blue’s unprofitable subscription economics, and the recent freeze on ad placements by several major companies, it’s clear that Musk and his team will have to do something to significantly increase revenue or cut costs even more. And whatever they choose, it’s becoming increasingly clear that Twitter will never be the same again.