So after week two of the Elon Musk Twitter drama, we’re left in a state of limbo, as we await the final approvals for the deal, which will eventually make Musk the head honcho at a private Twitter; which may or may not run ads anymore, may or may not allow all types of racist, homophobic and abusive speech, and may or may not be able to, one day, actually make money, despite these changes.
And we have little to go on right now as to how it will impact the company, and the platform as we know it. What we do know is that Twitter employees are increasingly nervous about their jobs, and the business that they may end up working for under Musk, while we’ve also had some slight hints as to how Musk plans to change the app.
To be clear, Twitter is not a charity, and after spending $44 billion on the app, Elon Musk will be looking for ways to maximize Twitter’s revenue intake, and recoup at least some of that cost. In a recent interview, Musk said that doesn’t care about the economics of the deal at all, and that his driving mission is to run “a public platform that is maximally trusted and broadly inclusive”.
But with huge debt, and accumulating interest, Musk has to make money too, and the bull case for the acquisition is that Musk, being the visionary that he is, sees something that others don’t, and can clear a pathway to optimal success for the platform – even though most market analysts see no viable pathway to turning any significant profit from the app.
So how will Musk do it?
Here are the areas that Musk is reportedly looking at right now – and to be clear, Musk has come up with these proposals without internal knowledge of the company and its current make up.
- Increasing subscriptions – Musk is reportedly looking to build Twitter Blue into a registration layer, of sorts, with users paying a monthly fee to get a verification tick that confirms that they’re an actual, real person. That could better enable Twitter to tackle bots (as it would make running bot farms cost prohibitive), while it would also ensure a level of transparency in the app, because you would know, based on these new forms of authentication tags, that you’re interacting with a real person, who’s registered their contact and payment details in the app. The economics could be difficult – if Musk were to charge $1 per month for this, that would bring in $229m per month/$2.7b per annum, if the current number of active users stick around, and aren’t all bots. You’d have to assume that quite a few won’t end up paying, which brings this down a lot, and would reduce Twitter’s revenue intake significantly, if this were the only way Twitter could make money in future. For reference, Twitter made $5.08b in revenue in 2021.
- Taking Twitter private – Of course, some of that revenue pressure is lessened if Twitter goes private, as it would no longer be beholden to shareholders who expect to see revenue rise by a defined, acceptable amount. Musk’s view is that Twitter needs to go private to ensure that it can make decisions free from the pressure of outside forces, enabling it to truly become a platform of free speech. The problem with that, of course, is that advertisers will be less comfortable placing ads alongside potentially offensive content – but that then leads into the next stage of Musk’s grand Twitter plan.
- No more ads – This would obviously be the biggest impact from a social media marketing perspective – Musk has said that Twitter should no longer run ads at all to remain truly independent. That then also means that Twitter would need to rely on alternate sources of income, and with ads making up 98% of the company’s revenue, that’s a big hole to fill. Part of Musk’s thinking here may also be that Twitter can cut costs by also removing all of the staff that work on its ad elements, which would be a major cost saving – but even so, if Musk wants to get close to making Twitter profitable, when factoring in its operating expenses versus income, it’ll be a big shortfall to make up. It’s difficult to see how this would be possible, but maybe, Musk knows something that we don’t.
- Charging for tweet embeds – This seems like a bit more of a stretch, but Musk has also reportedly floated the idea of charging websites for embeds of tweets from verified users, with the money potentially going back to the users themselves. That would align with Musk’s push to get more high profile users tweeting more often – maybe, if they can make a few bucks from tweeting, that could act as a motivator to get them sharing more in the app, which could spark more engagement with their fans, and generate more in-app activity overall. Of course, the counter is that people could just screenshot tweets instead, though there are ways that Musk could make tweets copyright protected, which would be even easier if he were to take this next step.
- Make Twitter ‘Pay to play’ for users – This is a more radical move – and to be clear, Musk himself has not proposed this idea, as such, just yet. But aligning with the concept of charging users for a verified user tick (different to the current blue tick for high profile users), Musk could look to make all users pay, or they simply wouldn’t be able to use the app. Your first instinct to this is that no one will pay, right? People can just use Facebook or Instagram or Snapchat instead – so why would anyone pay to simply log on and read tweets? I thought that too, but upon further reflection, I do think that Twitter is a critical platform for many journalists, political and other media types that use tweets to stay up with the latest news. That’s why Twitter is so influential, despite having only a tenth of the active users that Facebook does – while its audience may be smaller, the people that do use Twitter are generally among the most active in their respective industries, and following the latest tweets enables them to lead trends, re-distribute the latest news to their audiences off-platform, remain in-the-know, etc. As such, I suspect that many of them would pay, and if Musk were to lock tweets down, that would mean that they’re no longer publicly accessible, making it much easier to implement charges for tweet embeds, as well as any other re-use of on-platform content.
- Cost-cutting – The other key area that Musk is exploring is cost-cutting, which again aligns with the above points, in that Twitter could cut costs significantly if it no longer ran ads. Twitter spent $1.7b last year on sales and marketing and general admin costs, while it also spent an additional $1.2b on research and development, and $2b on infrastructure. Without ads, those costs could come down a lot, and if Musk can reduce those outgoings in a big way, he could, theoretically, make enough money from his subscription proposals to generate positive cash flow for the app over time, while also enabling it to remain independent, and therefore better able to run with a ‘free speech’ approach.
CBK to Interlink Safaricom and Airtel through Lipa na M-Pesa
The Central Bank of Kenya (CBK) plans to introduce a national payment system that will enable Safaricom’s Lipa na M-Pesa system to accept cash from rival firms like Airtel, allowing a smooth transfer of money in business setups.
Currently, with continuously expanding Airtel subscribers, Safaricom’s Lipa an M-Pesa system cannot accept payment for goods and services by Airtel subscribers, a hurdle the new system will remove.
The CBK plans to introduce the system by 2024.
The CBK said the increased use of mobile money through platforms like Lipa na M-Pesa at agents and merchants lacks interconnection among the telecommunications operators, something that looks awkward in this era.
“This trend is expected to continue increasing once initiatives such as interoperability are fully rolled out, allowing customers to seamlessly transact across the ecosystem irrespective of their provider,” the CBK said.
According to the banking regulator, the value of mobile money transactions through agents as a share of gross domestic product (GDP) has increased to 60 percent in 2021, from 23 percent in 2010.
In 2021, the mobile money transactions were worth over Sh6.9 trillion with over 2.2billion transactions in number.
The ability of different IT systems to communicate and exchange data is called interoperability.
Through interoperability, the CBK will replicate the linkage between M-Pesa and Airtel Money, which was introduced four years ago.
The system will see Airtel deepen in financial inclusion as it will be offered a larger share of the mobile money payments made through merchants.
Safaricom’s M-Pesa is a lucrative mobile money platform which the tech company has been uncomfortable with the campaign to interlink it to rival firms, on stiff competition fears.
“The emergence of a fully integrated ecosystem that is seamlessly interoperable is critical. A strong foundation has already been laid with the rollout of P2P [peer-to-peer] interoperability in 2018 and the industry engagement that culminated in the proposal for a single integrated solution with multiple functionalities (national switch),” the CBK said.
As of September 2021, Safaricom had 258,000 mobile money agents, leaving rivals with the remaining 31,255 outlets. For instance, more than 30 million Kenyans use M-Pesa, not just for sending cash and making payments, but also doing savings and borrowing.
Safaricom’s Lipa na M-Pesa holds 85.8 percent market share of non-cash payment for ordinary goods and services, displaying the depth of the mobile money platform in daily transactions.
“There is limited competition for merchant acceptance in mobile money space. This is also due to limited acceptance of competitor payment instruments,” the CBK said.
“Limited interoperability in the mobile money merchant acceptance space limits payment options available to customers as well.”
The system has overtaken the card payments system managed by banks and their global payments partners like Mastercard and Visa that have largely focused on serving formal customers.
After its launch in 2013, Lipa na M-Pesa has actively recruited both large and small merchants across the country, including supermarkets, fuel stations, corner shops, and hotels.
Other than eliminating risks and costs of handling notes and coins, the use of cashless payments has the advantage of reduced revenue leakages.
Due to increasingly growing digitization and reduced transaction fees by payment service providers, Cashless payments are expected to grow in the coming years.
However, many Kenyans still settle more than 90 percent of their transactions through hard cash. With continuous changes in the digital sector, the percentage will slightly reduce by 2024 when the new system will be in operation.
List of services suspended by the NTSA.
The National Safety and Transport Authority (NTSA) has announced the suspension of seven key services following a High Court ruling delivered last month.
In a public notice published in the local dailies, NTSA said it has halted licensing of driving schools, renewal of driving school licenses, licensing of school instructors as well as renewal of driving school instructor licenses.
Other services affected by the latest disruption include the application of Provisional Driving Licences by driver trainees and test booking for driving school instructors and driver trainees.
A declaration was made by the NTSA after the High Court pronouncement that the 2020 traffic rules were unprocedurally adopted.
On January 27, 2022, Justice Anthony Mrima delivered a ruling ordering the Ministry of Transport to ensure the rules are regularised by the National Assembly and the Senate before implementation.
The Judge directed Transport CS James Macharia to resubmit a copy of the rules and explanatory memorandum to parliament within 14 days.
The court further ruled that in the event that any of the Houses is unable to finalize on the rules, then the rules shall be dealt with under the next term of Parliament.
The case was filed in court by the Driving Schools Association. The association wanted the laws annulled on grounds that there was no public participation.
However, the court found out that there was sufficient public participation and declined to quash the rules.
Shock as Host Governor Snubs Uhuru’s Sagana3 Meeting
For the first time, Nyeri Governor Mutahi Kahiga, will not be attending the Sagana State Lodge meeting, despite being the host governor.
Sagana meeting happening today will be presided love by the head of state, President Uhuru Kenyatta, which is the third meeting in the same lodge ‘sagana 3’, will take place in his absence of the governor.
The governor, unlike this time around, was highly involved in meeting arrangements and was the one who received the head of state in the previous two sagana meetings.
Information from the governor’s office indicated that the governor will not attend since he ditched the Jubilee party to UDA.
“That is a Jubilee meeting. The governor is in UDA, and so he will not be attending the meeting,” they stated.
Jubilee party supporters have flocked Sagana State Lodge in thousands, from various parts of the Mt Kenya region to listen to their de facto leader.
Earlier in the day, Police had a rough time trying to culminate hundreds of supporters who were not on the list of attendants.
Supporters had staged protests causing mayhem after police tries to block them, from entering the Sagana State Lodge due lack of invitation cards. A section of the fence and gate was vandalized as a result of the commotion
The meeting attendees are dominated by MPs and dignitaries allied to the Jubilee Party and Azimio La Umoja, who started streaming in at around 9 am. However, it was shocking to learn that Mt. Kenya residents started arriving at the State Lodge as early as 2 am due to the high numbers of attendees that were being expected.
Among MPs present include local MPs Ngunjiri Wambugu (Nyeri Town) , Kanini Kega (Kieni), and Gichuki Mugambi (Othaya).
Others are nominated MP Maina Kamanda, Jeremiah Kioni (Ndaragwa), former Gatanga MP Peter Keneth, Embu senator Lenny Kivuti,Jude Njomo (Kiambu town), former Mungiki leader Maina Njenga former, among others.
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