Elon Musk vs. His Own Business Model

Attacking Substack harms the business that pays Twitter's creators.

Image: Royal Society CC BY-SA 3.0

This post is in part about how creators get paid. In that spirit, consider becoming a paid subscriber! The takes, they do not write themselves.

Over the weekend Elon Musk prevented anyone from interacting with new links to Substack. He also sent all those links to a warning screen, suggesting that Substack is a spam site.

Musk reversed himself, as he often does. But he took the actions in the first place because Substack introduced a new social media feature, Substack Notes, which will supposedly look and act a lot like twitter. Musk announced that Substack is “the company trying to kill Twitter.”

There’s a lot to unpack here.  Musk, king of free speech and business entrepreneurship, decided to stifle discussion on his site because he thinks that business competition is illegitimate. Twitter’s strategy seems to be driven by tantrum and terror; Musk is spiraling after his effort to get someone—anyone!— to pay for Twitter Blue failed. He’s looking down the barrel of financial losses at Twitter that could force him to sell more Tesla stock, and potentially cause him to go from world’s richest man to world’s most pathetic bankrupt.

Leaving Musk’s future problems aside, though, the attack on Substack is especially bizarre because Twitter and Substack aren’t actually competitors. They’re complementary services. And that shows how thoroughly Musk doesn’t understand his own business.

Who pays Twitter creators? (Hint: Not Twitter)

Twitter is an ad-based platform; it provides a forum for journalists, academics, politicians, fans, youtubers, celebrities, brands, and passersby to talk to each other; then Twitter sells ads to sit next to the conversations of all those famous and less famous people.  Twitter offers a space for conversation; the conversation then becomes the product Twitter sells to advertisers.

Twitter relies on people providing it with free content. People are more or less willing to do that  in exchange for everyone else’s free content; politicians can go on twitter to see top pollsters analyze upcoming elections, for example. For a lot of creators with stuff to sell, Twitter is also a way to promote your record or tv show; people advertise themselves on Twitter, and Twitter can then sell ads against those ads.

Twitter’s weakness, though, is that it doesn’t have any way for creators to monetize their content on the platform. Creators on YouTube or Spotify or even TikTok get paid for their content—people put video and words and music on those platforms in part in the hope that they will get a return. Twitter doesn’t have that; it’s just relying on people being interested in the conversation.

Which works to some extent. But Twitter would also obviously benefit if it could get some creators more invested in the site. People only have so many hours in the day and only so much time for free labor. You’ll get more committed creators on Twitter if you pay them.

Twitter was never willing to commit to paying creators. It didn’t have to, because other platforms paid its creators instead.

That includes Medium and Patreon. But most recently the big, hot platform that’s been boosting Twitter has been Substack. Creators like Elon’s fascist propaganda bro bot Matt Taibbi, progressive journalist Aaron Rupar (whose site I write for), and cultural critic Ted Gioia can go on twitter and share content, informing readers and promoting themselves. Then they add a Substack link, and get some portion of their readers on Twitter to hop over to the platform that actually has a payment processor. Twitter promotes their Substack, Substack essentially pays creators to be on Twitter. It’s not a competition; it’s a synergy, even if Musk is too dim to realize it.

Substack’s owners, who are kind of horrible, are nonetheless not as dim as Musk, and they realized that they could benefit if they could cut twitter out of the equation and just synergize all by themselves. That’s why they’re released Substack Notes.

But under normal circumstances, where Twitter wasn’t self-immolating, Substack Notes would have no real chance to compete.

Twitter has a huge advantage, since everyone is already there—including government bodies and media institutions. No Twitter competitor has emerged from the pack because Twitter’s advantage is that everybody is already on Twitter. You’d need to get everyone to move all at once to the next big platform—and how do you know what the next big platform is until everyone moves there?

If Musk left Twitter right now, and if his successr was even marginally competent, the platform would swiftly crush all of the competitors, just because it’s so much easier to stay with or return to the place where all the people are already chatting.

The Future of Twitter in the Alternate Timeline Where Musk Died in A Firery Tesla Crash Circa 2020

But let’s look at it from the other end. What if rather than Substack making itself into Twitter too, Twitter turned itself into Substack?

Before Musk took over, this was a logical next step for Twitter. Twitter could have created a allowed creators to take paid subscriptions—paywalling some content, just as Substack does.

A Twitter Blue that allowed for subscriptions and payments directly through Twitter—lots of people would actually pay for that. It would be a real threat to Substack and other platforms like Patreon whose creators use Twitter to advertise. Why create a second account for payments when you could pay through Twitter directly? Though the logistics would have been a little tricky, Twitter could also have plausibly become a major center for adult content, threatening OnlyFans.

Musk has sort of babbled about developing a Twitter payment processor. But he fired basically everyone at the company, so there’s no one left to navigate the complicated roll out, negotiate with advertisers about adult content, or really make any part of this plan a reality. He also alienated all his advertisers by being an erratic fascist dipshit, so he has neither Twitter’s traditional income source, nor a Twitter Blue product anyone is willing to buy. And now he’s attacking Substack—a direct attack on creators who rely on the site to pay them for giving Musk free content.

In short, Musk’s targeting of Substack isn’t really an attack on a competitor. Like the deverification debacle, it’s an attack on Musk’s own business model. Musk keeps picking up a large ax, swinging wildly, and hitting himself in the face. Eventually, no matter how much money you have, if you keep hacking at your neck, you’re going to bleed out.

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