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Expect a Subscription Service from Twitter

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Jun. 26 2017, Updated 10:36 a.m. ET

Dorsey talks about premium service

At the end of its annual investor meeting in May 2017, Twitter (TWTR) left no doubt that it had been seriously considering a premium service that it could charge its members a fee to access.

Twitter’s chief financial officer, Anthony Noto, addressed the matter of the premium service during the company’s 1Q17 earnings results in April. CEO Jack Dorsey offered more details about its plans for the service at the company’s investor event, saying that the idea had been kicked around. However, he didn’t say when Twitter might launch this premium service. He only reiterated the need to keep Twitter a free service for all.

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Charging for access to enriched TweetDeck feature

Twitter’s premium service talks have largely revolved around its TweetDeck feature, which has garnered a sizable and loyal audience. The company could enrich the TweetDeck with more features and offer it to power users on paid subscriptions, allowing it to fetch additional revenue outside of its core advertising business. An enriched TweetDeck could draw interest from marketers, journalists, and researchers.

A paid TweetDeck could boost Twitter’s non-advertising business, where its sales rose 17.0% year-over-year to $74.5 million in 1Q17. The company’s non-advertising sales come mostly from revenue tied to data licensing. Twitter’s overall revenue in 1Q17 was $548.0 million, a fall of 7.8% compared to a year earlier.

Fierce competition in advertising market

Twitter needs to grow its non-advertising operations as a hedge against fierce competition in its core advertising business. The company is battling escalating competition for online advertisers from Facebook (FB), Snap (SNAP), Microsoft’s (MSFT) LinkedIn, and Alphabet’s (GOOGL) Google.

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