Revamping Revenue: X Experiments with Three New Paid Service Tiers

Elon Musk’s X Corp. has shared updates on its growth initiatives during a briefing with bankers, revealing that it is experimenting with three paid tiers of premium services. This approach would allow the company to offer varying prices to customers based on the number of ads they are willing to view.

The existing premium plan, which is priced at $7.99 per month, would be divided into three variations: Basic, Standard, and Plus, according to information shared during the briefing. Additionally, X noted that while advertisers are returning to the platform (formerly known as Twitter), their budgets are smaller than in the past.

Revamping Revenue: X Experiments with Three New Paid Service Tiers

During the briefing, CEO Linda Yaccarino provided an overall positive outlook for the company, reporting that revenue is experiencing high single-digit growth quarter-over-quarter across advertising, data licensing, and subscriptions. Yaccarino also mentioned that the company is cash flow positive, excluding debt servicing costs, and anticipates achieving cash flow positivity, including debt, by the latter half of 2024.

The introduction of the three-tiered plan aims to attract consumers who may not be willing to pay the full premium service price. Musk has also floated the idea of imposing a small fee on all X users to combat bots.

Elon Musk’s $44 billion acquisition of Twitter resulted in the company inheriting $13 billion in debt. Musk’s unconventional decision-making and relaxed content safety rules have raised concerns among some advertisers. Prior to Musk’s acquisition, Twitter generated approximately $5 billion in annual sales, with nearly 90% coming from advertising. Now, X must work to regain that revenue while managing around $1.2 billion in annual interest payments on its debt.

Yaccarino stated that about 90% of the company’s top 100 advertisers have returned, up from 75% in June. However, ad spending has not returned to historical levels, and companies are approaching budget increases more cautiously.

X still faces challenges in reassuring its lenders. After the acquisition, some banks attempted to sell the debt for as little as 60 cents on the dollar. Earlier this year, the company’s value had plummeted to just a third of its purchase price.

Elon Musk’s $44 billion acquisition of Twitter resulted in the company inheriting $13 billion in debt

Since Musk’s takeover in October 2022, X has undergone significant changes, including staff reductions, service discontinuations, and the introduction of a premium subscription. Musk has expressed his vision of transforming X into an “everything app” capable of generating revenue from features like shopping and payments.

Yaccarino, formerly the Chief Ad Officer at NBCUniversal Media LLC, has been instrumental in courting big brands. She and Musk presented plans to investors over the summer to attract celebrities and political figures to the platform and facilitate more user commerce and payments.

Recently, X secured a new partnership with Paris Hilton and 11:11 Media to promote the company’s live shopping and video products.

Clues about the new three-tiered service initially surfaced in the Twitter app’s code. According to the code, the entry-level plan will feature the standard number of ads, the standard plan will display half as many ads, and the top-level offering will be ad-free.