BOTW: The incineration of Twitter; the gambling backlash; Netflix pricing and Nine gets into product reviews
Welcome to Best of the Week, written on a golden morning at Sisters Beach, Tasmania.
With the situation at Twitter moving so fast, there was no point writing this week’s BOTW any earlier. We’ll come on to that in a moment. Also today: Media’s gambling addiction and the Netflix pricing strategy.
Happy Fountain Pen Day. Today’s writing soundtrack: Fleetwood Mac - Tango in the Night.
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I’d assumed Mark Zuckerberg would get there first, and kill Facebook with his expensive metaverse obsession. But we woke up in Australia today to discover that after a chaotic first week as owner, Elon Musk has taken the express elevator to wiping out Twitter’s business model.
Advertisers have run for the door. A week on from his acquisition, his advertising offering is a smoking pile of rubble.
Even executed with a modicum of competence, things were always going to look messy this morning. In the early hours, Australian time, The Snap was due to occur, with Twitter staff around the world finding out which half of them have been deleted from the Twitterverse, Thanos style. It’s been a brutal process, as layoffs at this scale usually are, with staff being shut out from systems, then receiving good or bad news via email.
It wouldn’t surprise me if the Australian operation is mostly shut down. That’s been the pattern when US headquartered digital companies have to cut costs. Buzzfeed, Huffington Post and Pandora Radio all pulled back from their Australian operations when things got tough. Indeed, Twitter’s office in Australia had already closed, even before the Musk acquisition was finalised, as the lease expired a few weeks back.
But brutal (and possibly illegal) as they are, Musk’s layoffs could have been seen as rational. Having been forced to buy the unprofitable company for $US44bn, he was always going to need to cut costs. Almost every big company goes through mass layoffs at some point.
But that wasn’t the wildest thing.
Nor were the gyrations around trying to force people to pay $20 per month (or maybe $8, depending which Musk tweet you looked at) for blue tick verification - that was just the midweek distraction. Yes, Twitter needs a better subscription strategy, but removing blue ticks from those who won’t pay for them is a recipe for further disinformation on the platform. Not to mention that signing up for the service now will look about as cool as wearing Google Glass.
The existential threat for Twitter has been the growing advertiser exodus.
Musk’s tweet promising advertisers that Twitter would try to be “the most respected advertising platform in the world” (was that just a week ago?) was contradicted less than two days later by his own actions.
In another chilling moment for democracy, a far right terrorist broke in to the home of US Speaker of the House Nancy Pelosi and put her husband Paul Pelosi in hospital after attacking him with a hammer.
Musk responded to the attack by retweeting (and later deleting) a link to a weird conspiracy theory that Paul Pelosi had been drunk and fighting with a male prostitute. And Musk is the person in charge of the platform.
The trickle of advertisers cautiously pausing their campaigns became a flood.
Two days ago, Musk responded by creating a bullshit poll on advertisers and freedom of speech.
From the comment thread beneath the poll, it was taken as a dog whistle by the extreme right, who piled in, encouraging him to stand up to those wokerati advertisers.
Combined with Musk’s own behaviour, many advertisers have rightly concluded that, for now at least, Twitter is not brand safe. News of layoffs in the content moderation teams and those charged with preventing disinformation on the platform, sent a signal that the advertising environment will be a dice roll.
So of course, more advertisers backed away. Why wouldn’t they? They’ve got plenty of other choices, and Twitter offers no better return on investment than many other options. When Facebook was at its lowest point during the Cambridge Analytica scandal, at least stepping away was a difficult choice for advertisers addicted to its highly effective targeting. There’s no such stickiness with Twitter.
Which brings us to this morning’s tweet.
It’s reminiscent of the style of the - likely soon to return to the platform - Donald Trump (“Extremely messed up!”).
There was no acknowledgement from Musk that spreading disinformation about something that may well have been an assassination attempt on a senior politician was a bad error - particularly just two days into his ownership.
By Monday morning, every media agency in the world will be talking about whether they should pause their Twitter spend until things calm down.
Well done, Elon.
Behavioural economics of Netflix
The new advertising-supported tier of Netflix kicked in this week.
The pricing strategy is an example of behavioural economics in action.
Put yourself in the mind of a customer. Looking for a discriminatory pricing strategy? That $6.99 price point is enticing enough to bring in those who really want to see a particular show and are on a tight budget. And for those with greater discretionary spending power, that premium tier helps frame the standard plan - which is where I suspect Netflix expects most customers to land - as better value.
The Australian media is addicted to gambling and it’s struggling to kick the habit, even as the ill effects become obvious.
That advertising trope of four blokes having fun with a beer in their hand has become four blokes using an app to bet together.
Deep down, even as they fill their schedules with those lucrative ads, media executives know there’s too much gambling on their airwaves and in their newspapers.
The ad revenue is what helps pay for all those expensive TV sports rights.
The wider Australian public has a problem with the sheer quantity of betting ads, and its habit of normalising betting as part of the sports experience. A generation is growing up seeing gambling as part of the ritual around sports watching and friendship.
In the long term that’s no good for the media either - if it doesn’t step back, it risks restrictive legislation of the sort that eventually outlawed cigarette ads.
But the competitive dynamic of media means that unless something helps break the pattern, the risk is that everyone will keep chasing the gambling dollars.
This week there were a couple of developments.
Most significantly, the federal government has found some consensus with the states around tighter rules about the warnings that must be placed on ads.
The insipid “gamble responsibly” message will be replaced by rotating warnings like “Chances are you’re about to lose” and “Imagine what you could be buying instead?” It’s reminiscent of those cigarette packet warnings.
The gambling lobby is an effective one though. PM Anthony Albenese’s interview on The Project was fascinating to watch. Public pressure is being balanced with those lobbyists talking in the government’s ear.
In the short term, gambling is becoming more, rather than less, part of the media business model. As the ABC’s Media Watch highlighted this week, News Corp’s sizeable stake in new gambling operation Betr (good brand, by the way) is a conflict of interest in covering gambling as a social issue.
However, bookmakers are beginning to recognise the backlash. The Sydney Morning Herald revealed yesterday that Ladbrokes and Neds are going to drop out of jersey sponsorship.
So far the industry has been unable to find an acceptable balance on its own. Rather than treating the new rules as the end point, it should take them as a warning. If media companies do not find a way of dialling it back, public pressure will eventually force politicians to crack down - lobbyists or not.
Nine dives into the reviews game
Nine launched a new offering this week.
If done properly, 9Product Reviews could help solve a genuine problem - where to get unbiased, authoritative advice on new products.
One route is a subscription to consumer organisation Choice. But not every consumer is willing to pay at least $84 per year to subscribe for the content.
Everybody who offers such a service needs a business model and that means potential compromises for the consumer.
For Nine, the model is affiliate marketing. The site is full of affiliate links to Amazon. For consumers that means the advice on products might well be great (we’ll see), but they’re not necessarily being sent to the cheapest place to make the purchase.
I wonder, also, what it says that the organisation has chosen to launch the offering under the Nine brand, rather than the more journalistically trusted news mastheads of the SMH, Age and AFR
Much of the technology content is being put together by tech commentator Trevor Long.
Long has made a couple of appearances on Media Watch, which raised questions about the journalistic rigour, or lack of it, around disclosures of conflict of interest when brands paid for Long’s travel to launch junkets.
I suspect 9Product Reviews will be a decent SEO play, but I doubt Choice will necessarily have too much to worry about.
Time to leave you to your weekend.
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In the meantime, Abe Udy and I will be back on Monday with Start the Week.
Have a great weekend.