Good morning! The Musk-Twitter saga is coming to an end now that the deal is somewhat settled and the social media company's earnings are out. The plan by the technology mogul to buy and reform its service is in danger of being hampered by the fact that the company is dependent on advertising revenues.
For clarity, I am a free-speech advocate. I think that governments shouldn't control the speech of private citizens. I am in favor of a platform posture that allows the maximum of user speech while maintaining a market position that allows it to also run a business.
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There are two sides to the issue of being able to run a business. Users want a platform where they can spend a lot of time. Why? Advertising opportunities are created by the time spent on the social networking site. Advertisers don't want their brand associated with the muck if it has too much toxic content, and that's why it must operate a platform that advertisers are willing to spend money on.
For example, YouTube has faced similar issues.
Will advertisers flee a ‘free speech’ Twitter?
I share all of that because Musk seems to think that the platform has done too much to control it, though it's hard to say whether he's joking or serious. He thinks users should have more white space to write. I don't care if I agree with Musk or not, what matters is how advertisers view the changes. Because if they don't like them, it's hard for them to make up for the lost income.
The company’s earnings results this morning make that plain. And with Twitter already looking to placate advertisers ahead of its sale, it’s not hard to see where Musk’s plans for the social media giant could run into a financial reality that is anything but salubrious.
If there is a surge of toxic bullshit, advertisers could walk. Sarah Perez was interested in this recently.
If Twitter were to turn back the dials on content moderation, it could allow more bullying, violent speech, hate speech, misinformation and other abusive content to gain ground. This may make Twitter less palatable to newcomers who were already wary about posting in a “public square” — an area that impacts Twitter’s ongoing concerns with flat user growth. But it could also disincentivize advertisers from investing their budgets with the platform.
We spitball business dynamics on Slack all day, and this is not an unimportant concern. Not a single bit. Ahead of the sale, there is work being done to assure advertisers.
Today's earnings report shows why the company is so focused on preserving its advertising incomes. The company generated around $1.2 billion in total top-line revenue in the first quarter.
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