Regardless of X Premium (previously Twitter Blue) failing to catch on the way in which that Elon Musk had hoped, the platform’s eager to search out new methods to spice up its income consumption, because it seems to be to combine extra AI components, which come at a big price, whereas additionally offsetting its advert income losses.
Alongside that line, simply earlier than Christmas, X introduced that the value of its X Premium+ subscription tier, the most costly X subscription possibility, could be rising by 30%, with a view to fund the continuing growth of its choices.
As per X:
“We’re updating the X Premium+ subscription worth on December 21, 2024. New subscribers can pay the up to date worth beginning that day. Should you’re an present subscriber and your subsequent billing cycle begins earlier than January 20, 2025, you’ll be charged at your present price; in any other case, the brand new price will start along with your first billing cycle after that date.”
The brand new worth provides an extra $6 per 30 days to the X Premium+ worth, rising from $16 to $22 per 30 days, or $229 yearly.
X says that the upper worth level will allow it to supply a very ad-free expertise for its prime paying customers, whereas additionally enabling greater utilization limits for its Grok AI fashions.
It’ll additionally give X extra capability to pay creators through its up to date income share mannequin:
“We’ve shifted our income share mannequin to reward content material high quality and engagement reasonably than advert views alone. Your Premium+ subscription payment contributes to this new, extra equitable system the place creator earnings are tied to the general worth they bring about to X, not impressions of advertisements.”
X introduced this transformation again in October, with this system shifting from offering creators with a reduce of advert income for the advertisements displayed of their put up replies (and seen by X Premium subscribing customers), to paying creators based mostly on engagement from paying customers.
The added price of X Premium+ will now contribute to this, by giving X somewhat additional earnings to share, whereas additionally, as famous, funding its ongoing AI growth.
Although, technically, that’s performed through xAI, which is a separate firm to X itself. xAI, which is in control of the fashions and programs that energy its Grok AI chatbot, simply closed a Sequence C funding spherical of $6 billion, including to the $6 billion that it additionally raised again in Could, enabling it to develop its operations.
xAI has used nearly all of that funding to construct its “Colossus” AI knowledge middle in Memphis, which includes 100,000 Nvidia H100 GPUs into the xAI operation. That places it on par with the AI programs at the moment being operated by Meta and Google, although each of them have considerably extra capability, and functionality, to develop additional at this stage.
However for now at the very least, the brand new AI computing cluster has propelled xAI right into a place of authentic competitors on AI growth, because it seems to be to realize a foothold within the area, and money in on the anticipated AI growth within the years forward.
How a rise in X Premium+ pricing may instantly contribute to this isn’t clear, however X has continued to pump out new updates for its Grok chatbot (the most recent being improved picture era), whereas it’s additionally launched a standalone Grok app in some areas.
And it’s utilizing X to advertise this:
So there’s an intertwining there, although the place the traces are drawn between the 2 is just not clear, so it’s not possible to say how every contributes to the opposite on this respect.
Regardless, that’s one place that X says the additional subscription consumption might be going. Although as famous, the value improve is also an try to cowl up for the shortfall in X Premium subscribers, which has left one other gap in X’s income projections.
In line with evaluation performed by TechCrunch and AppFigures again in October, X Premium at the moment has round 1.3 million subscribers in complete, which includes all tiers of the providing. Of that, solely a fraction could be paying for X Premium+, and as such, a worth improve of $6 on this class isn’t going to be a serious needle-shifter on this respect.
However those that are paying for the highest tier are additionally much less prone to cancel, so perhaps, X is simply cashing in the place it might. But, the probabilities of X Premium ever turning into a serious income driver, as Elon Musk had initially projected, appear to be most unlikely at this stage.
In his authentic enterprise technique plan for Twitter, which he shared with potential buyers shortly after he took over on the app (and earlier than the “X” re-brand), Musk predicted that Twitter Blue (now X Premium) would attain 69 million paying subscribers by 2025, and 159 million by 2028.
It’s an extended, great distance off that, and outdoors of worth will increase like this, it’s arduous to see how X will be capable of generate any actual income traction from its subscription choices.
Until it comes out with some mind-blowing add-ons to sweeten the deal. I’m unsure what they might even be, but it surely appears seemingly that AI will play an element in some way.
Personally, I keep that social platforms are over-valuing the utility of options like AI picture creation to common customers. However perhaps Elon and Co. have one thing else up their collective sleeves.