A Paid Twitter (TWTR) Service Could Succeed, But It Won't Solve the Company's Biggest Problems - TheStreet

For all the many legitimate complaints that people have about its main services, Twitter (TWTR) - Get Reportstill has a sizable base of devoted, hardcore users. This base includes not only consumers who use Twitter for news and entertainment, but also many professionals in fields such as media and marketing who find it an indispensable resource for getting information and commentary, and gauging public sentiment, in real-time.

It's easy to see why a premium service that caters to such professionals would be well-received if it does a good job of building on the fairly limited tools that Twitter currently provides for power users. It's also easy to see why the effort isn't going to solve many of the biggest issues that have led revenue growth to crawl to a halt.

After sending out surveys to users that pointed to such a move, Twitter has confirmed that it's thinking of launching a subscription service for pros, via its Tweetdeck web app. Tweetdeck currently lets users (such as yours truly) view multiple columns of tweet streams at once, including ones for lists and individual followed accounts. It also lets users dedicate columns to things like notifications, searches, direct messages and tweets related to trending topics.

Twitter's beaten-up shares rallied in morning trading following the news, but have since pared their gains. They closed the day up 1.6% to $TK.

Twitter says the premium version of Tweetdeck will "offer extra features such as advanced audience insights & analytics, tools to monitor multiple timelines from multiple accounts and from multiple devices," including mobile devices. It also says the experience will be ad-free, but then again, Twitter still hasn't gotten around to showing ads on the free version of Tweetdeck.

Screenshots shared by users who got Twitter's survey show a mockup of the service that features things such as:

  • An "Analytics" column that provides detailed information and charts about how a user's tweets are performing.
  • A tool for simultaneously publishing tweets via multiple accounts, as well as scheduling them.
  • An advanced search tool that lets users search for terms that were tweeted from a specific location, accompanied by a certain type of media, or were within tweets that received a certain amount of engagement.
  • An "Alerts" column that keeps users up-to-date on what users in general, as well as one's followers and those one is following, are tweeting about.

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A service like this is arguably overdue, considering how many third parties have licensed Twitter's data "firehose" to help provide subscription services that surface useful information and sentiment data from public tweets. Examples include IBM's (IBM) - Get ReportInsights for Twitter service for businesses, and the Dataminr service for financial pros. Twitter's "Data Licensing & Other" revenue totaled $282 million last year, up 26% from 2015.

But while a premium Tweetdeck service could boost that line in Twitter's income statement, it won't do anything to boost an ad business whose sales grew a modest 13% last year to $2.25 billion, and are forecast on average by analysts to drop 8% this year to $2.08 billion. Nor will it do much to boost Twitter's monthly active user (MAU) count, which grew just 4% annually last quarter to 319 million (less than one-fifth of Facebook's (FB) - Get Report 1.86 billion MAUs).

These trends, which various incremental changes to Twitter's core service haven't done much to reverse, stem from issues such as a lack of ad scale and data relative to Facebook and Alphabet/Google (GOOGL) - Get Report , poor execution for direct response ad products, ongoing problems related to abuse and -- partly because many users feel that posting such content is necessary to gain followers -- the promotional and/or repetitive nature of a lot of the content that users see.

Twitter also struggles with providing new users with a compelling set of accounts to quickly follow, particularly for ones that aren't from major celebrities or institutions/brands, and in making users with small follower counts feel as if their material is being noticed. And many features that feel like no-brainers, such as the ability to edit tweets or attach a longer piece of text to one -- the latter was reportedly being mulled in early 2016 -- are still missing.

Instead of forcefully addressing the issues that limit its mass appeal, it seems as if Twitter, which has seen multiple layoffs and considerable brain drain over the last two years, is looking for ways to get more revenue and higher engagement rates from those who have stayed loyal to it in spite of its flaws. Here, it's telling that the company has begun de-emphasizing MAUs as a growth metric, and instead highlighting the growth seen in daily active users (DAUs) and total time spent. DAUs rose 11% annually last quarter, but Twitter declined to give a user count.

Launching a subscription Tweetdeck service certainly fits with the apparent near-term focus of a Twitter workforce that has been diminished both in terms of size and top-level talent. And as is the case with other incremental moves that Twitter has made, investors should keep their expectations in check.

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Editors' pick: Originally published March 24.