Twitter’s Unique Strategy with Super Follows
Twitter has had its fair share of corporate-level challenges, from investors criticizing its leadership style to legislators criticizing its content policies. However, the product itself is very sticky — many people who use it can’t get enough of it. On the monetization front, while other social media businesses are known to be fast-moving, Twitter has been relatively slow in launching new products focused on monetization. Given this history, it was refreshing to see the company announcing a slew of new features at the 2021 #TWTRAnalyst Day. Interestingly, the main thrust behind these announcements was revenue diversification — moving from relying on Ads as the primary source of revenue to monetizing users directly. While it may take years for the company to realize this goal, I think one of the new features, Super Follows, can be a real differentiator in the long term.
For context, Twitter has ~300 million active users, of which~192 million are monetizable (who contribute to Ad-driven revenue). The company has begun rolling out such new features as Spaces (Clubhouse-like live conversations on Twitter), Fleets (Snap-like ephemerality on Twitter), and Super Follows (Substack-like subscriptions on Twitter). In addition to these features, the company also acquired a newsletter subscription service, called Revue, which will likely play a role in Twitter’s longer-term revenue diversification plans.
Not all of these features will hit the mark, for example, early user reaction for Fleets has been less than enthusiastic. While the exact details of Super Follows are unclear, the company has indicated that the feature is meant to provide a way for content creators to get paid for their tweets. In a Twitter thread last year, I proposed how Twitter could leverage the stickiness of its platform to diversify revenue via subscriptions, and Super Follows looks like a move in that direction. Here are some of the unique factors at play:
Tweets are far more effective than blog posts: Text is generally not as engaging a medium as photos or video, so platforms such as Instagram, YouTube, and Snap have proven to be far more effective at acquiring and engaging audiences than blogs. However, what makes Twitter more effective at text-based content creation than blogs is the character limit. The limit encourages a high signal-to-noise ratio by acting as a forcing function for content creators to use each word judiciously, which effectively helps capture the short attention span of their audience.
Covid, the accelerator: While the value of Twitter was already established among its long-time users, the platform has been rather slow at acquiring new users — monetizable daily active user-base (a.k.a. mDAU) increased by only ~10% YoY in 2018. Covid has certainly played a major role in giving Twitter the boost it needed to start monetizing at scale — mDAU increased by ~30% to 192M during Covid. Since stickiness is one of Twitter’s forte, it’s likely that these newly acquired users will continue to use Twitter going forward.
A unique advantage for tweet creators: Traditional products predominantly incur two types of costs — cost of acquiring users (getting users to notice your product), and cost of distribution (getting the product in users’ hands). Stratechery correctly captures that for internet businesses, distribution is essentially free, while acquiring users is hard. Businesses today need to earn the attention span of their customers, thanks to the abundance of information and choices competing for it. This is why, for products that rely on content creation and consumption, getting relevant and engaging content in front of the right users at the right time is the formula for success. This is precisely what Twitter feeds and designed to do. The way Twitter feeds work is that the followers primarily see the followee’s content, so Twitter has already simplified acquiring user attention for tweet creators by design. From a content (tweet) creators perspective, twitter provides an engine of attention acquisition of the right audience and all that’s left to do is to create great content that the followers will pay for.
These factors collectively, particularly simplifying user acquisition by design, make Super Follows an interesting feature for content creators on Twitter. It’d be interesting to see how Twitter expands further into blog based subscriptions with the Revue acquisition.
A note on other forms of content: just as Fleets was a largely futile attempt to foray into ephemeral image and video content, so too might Twitter Spaces be an attempt to foray into the audio world. One problem with Spaces, and with platforms like Clubhouse, is that they have a very low signal-to-noise ratio i.e. long discussions for relatively less substance. Given the popularity of Clubhouse, it’s clear that the product is useful for many, but what remains to be seen is how congruent such content is with Twitter’s DNA — logging the pulse of society with a high signal-to-noise ratio.
