Pricing and packaging analysis of Twitter Super Follow—the last shot in the war

Patrick Campbell Mar 4 2021

This article is a part of our Protect the Hustle series where we explore the truth behind the strategy and tactics of B2B SaaS growth to make you an outstanding operator. 

 

A couple of housekeeping notes and summary:

  • Twelve of you sent me something along the lines of, "I love your content, but what in the world does ProfitWell do?" I'll do a post on this soon, but it's also a good indication that we have a lot of work to do on our product marketing. In short, we have a free subscription revenue metrics product that plugs into your billing system (Stripe, Zuora, Recurly, et al.) and gives you access to all of your financial metrics. Used by 24k+ subscription companies. We then make money through a product that reduces your subscription cancellations (Retain), optimizes your pricing (Price Intelligently), or does your Revenue Recognition (Recognized).

  • Nine of you let me know that you love the content, but it's too long. My philosophy with this content is I want to give you diamonds. They're dense and sharp, but dagnabbit are they beautiful. I cut a lot of fat out of these and I don't mind making your brain hurt in a good way. If they're wordy—check out the audio version or follow me on twitter where I post a summary typically.

  • Keep the feedback coming. I reply to every single one. : )

  • The following post is on Twitter's decision to enter the subscription world. I've been talking about this for quite some time (as has Scott Galloway, and plenty of Twitter team members have been trolling those posts, so I hope I helped ;)), but to me this is the perfect move and it's not because of the obvious stock market reasons. Let's jump in.



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Twitter failing upwards

Twitter's a frustrating company. Sure, the immature cattiness amplified by 280 characters is quite disheartening. Yet, the inability to truly push their revenue and stock forward for years pushes Twitter into the realm of having everything going for them and then some (Trump made them even more relevant), and then still whiffing to capitalize. It's infuriating.

Tides seem to be turning though. Particularly with the new subscription functionality they hinted at recently in an analyst presentation known as "Super Follow."

Creators will soon be able to charge their followers a subscription for exclusive content, discounts on merchandise, and a whole host of other goodies. They're essentially taking what Patreon, Substack, and OnlyFans have been doing for a couple of years now and merging them all into the Twitter platform.

Some are saying this is a Frankenstein attempt at reviving the brand and copying and pasting the subscription playbook that other tech companies have been doing to juice their market caps. While I'm sure an impetus, this shows an elementary level of understanding of what's happening in the market. For truth, we must go deeper. Plus, none of you are idiots, so let's not treat you like one.

We're going to explore why the move from Twitter's actually brilliant in the context of the shift in the attention economy, as well as do a data dive on if they made the right moves from a pricing and packaging perspective.

Let's ride.

 

From Platform Centricity to Creator Centricity

We first need to understand what's been happening in the attention economy (the term used to describe monetizing eyeballs). While the internet provided the ability for everyone and anyone to start and build an audience to eventually sell something to them, certain sites amplified eyeballs.

Before Twitter, et al., you needed to run ads, optimize for google search, and hopefully build word of mouth and an email list. The relationship was very transactional, which is why commerce and research took off. Us humans wanted to connect though, so social media sites came into play and started putting our offline networks online. Discovery started to happen and now we're at the point where most of my friends I've met online, and some I've never met in person.

We all struck an unspoken and potentially dangerous bargain with these social networks though. We'd give up privacy and create content for the platform to monetize through ads in exchange for amplification and reach.

For most folks—including your mom in Wisconsin—this didn't really matter, because she didn't really want reach and she actually appreciated those quilting ads. For others this was a beautiful opportunity to get their art, comedy, business advice, writing, or simply whatever, in front of an audience that they could build. This created quite the value loop.

Creators create content and Twitter amplifies that content while selling ads. The more ad revenue they ended up getting, the more you got promoted, thereby building more audience. You could then convince your audience to go off platform to buy merchandise, sign up for a newsletter, etc.

PW2021.001

Everyone was pretty happy, until they weren't. There were a couple of big problems. You don't own your audience. Twitter does. Sure, some will go offsite and give you their email address, but Twitter has an incentive to not make that happen, so any links that lead off Twitter would get de-amplified. This created an impossibly difficult, high friction position to everyone.

Twitter trapped creators on Twitter and gave them no real way to monetize. Twitter still needed creators though, because they needed content to put ads on. Creators hated all this because their revenue creation kept going down and they couldn't communicate directly with their audience. Everyone's misaligned.

A lot of companies directly or indirectly started taking advantage of that misalignment.

      • OnlyFans—a subscription service for adult entertainers—gave adult creators the ability to monetize their audience through a subscription. Most of these relationships started on Twitter. Why build an audience on twitter, when I can just do it on OnlyFans AND get paid?

      • Patreon—a platform that allows creators to charge a subscription for their fans in exchange for exclusive content, merchandise discounts, etc.—gave creators the ability to monetize beyond ads and physical shows. Why even bother with Twitter when I can build my band's audience on Patreon and have a deeper connection?

      • Substack—a platform for writers to charge their subscribers for access to their writing—gave writers the ability to circumvent the freelance world where media publications made money and make money directly. Why drive readers to my New York Times articles where they get all the money when I get 1000 true fans who pay my bills like that Ben Thompson guy?

What do these platforms have in common? What was the opening? Well, it comes back to the adage we've said many times: Whoever is closest to the customer AND makes it easiest for them to purchase, wins.

Substack, Patreon, and OnlyFans put the creator at the center of the universe and value chain. Creators just need to create and monetize. These companies then just take a cut.

PW2021.002

Twitter's joining the party late, but they have such an enormous advantage over these other companies: amplification. Patreon, Substack, and OnlyFans are not built from the ground up for discovery. Some like Patreon have actively said, "We're not here to get you the fans, only to help you monetize them." Others just don't have the technology for this. Twitter's been in the game of amplification for over a decade.

Twitter can now be the place for creators by ensuring that you don't have to leave where you already are to support those you find entertaining, knowledgeable, etc. I'm already on Twitter. I don't want to have to go to Patreon, Substack, etc. You may think this isn't a big deal, but remember we're all in a game to reduce friction as much as humanly possible. This is exactly what Twitter is doing with Super Follow. One-stop shop for creators and their audience.

Funny enough it also solves their ad problem. It's hard to explain to Pepsi that their ad showed up on a porn star's videos or that of a politically incorrect comedian making fun of a public figure. Moving to a subscription model makes them less reliant on ads, but could also put the onus of ad selection on that of the creator, causing an opt-in phenomenon.

 

Takeaways for your business

Map your value path and reduce friction

You need to map out who's getting value, how aligned you are to them, and where you're going to monetize. Most of you aren't social networks or even serving the creator economy, but you'd be surprised at the amount of value you can extract from a market by simply reducing friction. I find it easiest to actually physically map the market and the relationships between all the stakeholders. This doesn't have to be complicated, but it's exceptionally valuable.

Once you've mapped out the market, find a way to align the way you make money with your customer as much as humanly possible. Put your value metric, your customer, your packaging all on top of one another, rather than stretching them out amongst stakeholders.

Put the customer at the center of your decision-making filter

Substack is Mailchimp with a Stripe account. I know that's trivializing what they're doing, but can you imagine how Mailchimp, Constant Contact, Medium, et al., missed this? If they were putting the creator at the center of the value path and asking even the most basic questions, they may not have become Substack, but they probably could've pivoted as soon as they started seeing what was happening in the market.

You must, must, must put the customer at the center of your decision-making filter. You don't have to do what they say or deploy what they want, but you need to pick a side when it comes to building. My favorite anecdote recently on this was in a conversation Ev Williams (Twitter, Medium, etc.) and Paul Davison (Clubhouse co-founder) were having about Clubhouse. Paul views every decision through, "What is best for the creator?" Ads aren't best for the creator, so they aren't going to do them. Trolls aren't best for the creator, so they have anti-harassment precautions.

It's scary to pick a side or a central filament in a filter, but it's ultimately the right thing to do and ironically makes all decisions easier. At ProfitWell, our central filter is "what makes our users and customers more subscription revenue." That's our filter.

 

Ok. Super Follow is good, but did they package it properly?

Right now we don't know all the details about Super Follow, but the released screenshots show that a creator will be able to charge $4.99 per month so that super followers can get:

      • Supporter Badge – to signal your patronage
      • Subscriber only newsletters – likely similar to Substack
      • Deals and discounts – rewards for being a super follower
      • Exclusive content – video/audio only for their audience
      • Community access – potentially similar to what Patreon does where Patrons can interact

It's a bit of a copy and paste job when looking at their, now, competitors, but let's actually collect some data on what this looks like from the market perspective. I put together a study on 4,791 current and prospective customers of Patreon, Substack, OnlyFans, and now Twitter Super Follow. The first analysis I ran is what's called a value matrix. Here we want to determine the relative value of the features included with Super Follow (X-axis) and cross reference it with willingness to pay (Y-Axis). Put another way, if we find a feature that the whole group likes, but the people who like the feature as their number one are willing to pay more, then that's a differentiable feature.

Matrix.001

In analyzing the data, we measured the affinity of each respondent and put them into two buckets—super fans and passive fans—to see if there was a difference in willingness to pay and preference for features. Here are the results.

3-01-B-sideGraphs.003

A couple of big takeaways:

      • Notice how the super fans all had much higher willingness to pay than the passive fans (they're responses are higher on the vertical, y-axis). This stands to reason, because they're super fans. : )

      • Supporter badges/producer credits don't seem to be a big driver of anything. Frankly, I bet that most folks don't want to necessarily show their support publicly for certain types of individuals (i.e. an adult entertainer). Others probably don't care much relative to the other features.

      • Deals/discounts also get interesting, because you're already supporting the creator, so you're not thinking about deals when it comes to supporting them.

      • Access seems to win out. This trends well with how people are thinking through having a relationship with someone that brings you joy or entertainment. It's not transactional.

Now let's look at willingness to pay on a number of axes. I hope Twitter puts this in the hands of creators to decide, because the $4.99 per month price point seems way too low across the board. First let's look at a cut of willingness to pay based on fan affinity.

3-01-B-sideGraphs.001

We expected super fans to have higher willingness to pay, but it's almost triple, which seems like a big jump. You're also seeing that overall willingness to pay is definitely trending above $4.99, even for the passive folks. Now let's look at willingness to pay based on the type of creator.

3-01-B-sideGraphs.002

I need to process this a lot more, but this is a good indication of why adult entertainment is lucrative and why OnlyFans has taken off. Education and news being #2 gives me hope here, but also shows how fractured media is becoming. This is higher willingness to pay than the studies we've done for mass news subscriptions. Overall though, this is another indication that Twitter will make more money by letting creators set their own prices.

 

Cool. What do I take away for my business?

Shift your market into adult entertainment.

I'm kidding. Please don't reply to this email berating me. It's a joke and obviously that market has a lot of controversy—some deserved, some not.

Anyways, what should you do? I think this really comes down to the fundamentals of pricing and packaging strategy.

Understand your packaging and pricing

Notice how Twitter is pretty spot on with their packaging. They do a lot of research, which is great, but they also know they have a widely fragmented market. Deals and discounts will probably be mainly for brands, whereas the rest of the features will be for creators. Sometimes you need to make these decisions for different constituencies and while you never want to be everything for all people, you do need to balance your biggest customer verticals.

For your business, you need to do your research, because I guarantee you have plenty of features you think are great for driving value, but in reality they're not great at all. Similarly, I'm sure you're underpriced. I'm assuming Twitter is going to let creators set their own prices, but you have the power, obviously, to set your own. You likely have never done the research. Do it and make sure you're pushing towards your pricing power.

Community and Freemium are the future of connection

You probably thought I'd get to the end of something without pitching you freemium. You were wrong. : )

If we learn anything from this move, it's that connection is on the rise. We see brands castigated for political communication missteps. We see brands taking advantage of political and cultural trends. There's some cynical perspective there, but I also think there's a lot of power in getting directly with your customer before and after they've officially paid you. Freemium allows you to warm up those leads and make a connection in a way that a sales interaction can't. Community does the same.

If you're in B2B, it may be time to consider a community strategy. Same for DTC. We want to make connections with our brands and the things we buy. Make that easy on your customers.

 

Enough? Everyone get some value?

Ok. That's all for this week. If you enjoyed this post, I'd really appreciate if you shared it on the ol' Twitter or LinkedIn - or forward it to someone you think would get value. 

Next week, I think we're going to go deep on some retention findings or value metrics, so until then—have a great end of the week.

 


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By Patrick Campbell

Founder & CEO of ProfitWell, the software for helping subscription companies with their monetization and retention strategies, as well as providing free turnkey subscription financial metrics for over 20,000 companies. Prior to ProfitWell Patrick led Strategic Initiatives for Boston-based Gemvara and was an Economist at Google and the US Intelligence community.

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