By: Denny Jacob
Twitter Inc. (TWTR) announced the complete rollout of Tips on Sept. 23, a way for users to send or receive money or bitcoin through one central location on their profile.
The move comes as the company looks to make users conducting financial transactions a key component of the platform. It builds on the addition of Ticketed Spaces – which gives creators a way to generate revenue when they host on Spaces – and Super Follows – a way for users to earn revenue from subscriber-only content.
Tips is the fourth product feature Twitter introduced this year, part of the company’s desire to take bigger chances with the app.
“Along the way, we’re going to try things that end up not being a fit,” said CEO Jack Dorsey, referencing the recently shuttered Fleets feature – posts that disappear after 24 hours – during a conference call for Twitter’s second quarter earnings report. “Expect us to start and stop many more features than we have in the past.”
But it also signals that Dorsey – a staunch advocate of bitcoin – believes access to the cryptocurrency is key to growing the tipping feature.
During the conference call, Dorsey said the company intends to build an ecosystem of connected features and services focused on news, discussion and helping people get paid – with bitcoin playing a key role in the last endeavor.
Shares of Twitter edged up nearly 4% in the two days following the announcement. But they reversed course the following week, falling 7% to $61.98 on Oct. 1. The downtown was partially tied to broader market concerns due to the COVID-19 pandemic and inflationary pressure, with the S&P 500 Index ending 4.9% lower for the month of September.
Twitter’s share price following the announcement of Tips. (Photo: Yahoo Finance)
Despite the company’s embrace of bitcoin, some analysts say the true growth driver will likely depend on people making payments through the platform and not what currency they’re using.
“Are people willing to pay or tip and or subscribe to people that they’ve followed in the past that they historically haven’t had to pay for? That to me is not dependent on the currency necessarily. It’s dependent on one’s budget or appetite to pay for following people,” said Mark Zgutowicz, senior research analyst at Rosenblatt Securities Inc.
It’s unclear how many people will be willing to pay Twitter users for their commentary or exclusive content after years of free access. Additionally, only a small fraction of the platform’s overall user base can potentially make money based on their reach right now through a subscription. And early indications show that adjusting user behavior on Twitter will take time. TechCrunch reported last month that Super Follows contributed approximately $6,000 in U.S. iOS revenue during the first two weeks the feature was live.
Twitter’s push to provide a central payment option is part of a broader trend of companies going after creators and influencers in order to drive more users to their platform. The company is competing against the likes of TikTok, Facebook-owned Instagram Reels and Snapchat’s Spotlight feature.
”I think for now that user factor is really going to be the biggest thing, but you want to keep an eye on the product efforts and initiatives also,” said Ygal Arounian, senior equity analyst at Wedbush Securities Inc.