X’s $1 Fee Initiative is Likely to Further Erode the Relevance of the Platform

What to make of X’s new move to charge users $1 to access basic functions in the app?

To recap, yesterday, X announced that it’s launching a trial, in New Zealand and the Philippines, which will see new users required to pay a $1 annual fee to post, or engage with posts, in the app. New users will still be able to sign up to read X posts for free, but if they want to actually interact, they’ll have to pay.

Which is not entirely unreasonable. But then again, paying for a service which has long been available for free, and which makes 99% of its money from ad exposure, seems like a backwards step.

But is there actually method to the seeming madness at play?

Members of the X team have further explained the move, outlining the aims of the new initiative, which, ostensibly at least, is to combat bots.

According to X engineer Eric Farraro, the development of advanced AI models will soon enable bot farms to create increasingly human-like entities, that are able to solve CAPTCHA tests, and engage in social apps in virtually undetectable ways.

As such, detection methods need to evolve, otherwise a new service, like X, will be overrun by scammers looking to manipulate discourse.

“At X, we’re exploring using payment & phone verification, as well as ID verification, as part of a larger strategy to fight bots. We of course use more traditional heuristics and models to detect fake accounts & engagement on the platform. These two things are not mutually exclusive. In the next few years, many similar networks will follow suit. Perhaps less so for ‘friends & family’ focused networks, where you personally know your contacts. If I only talk to my family on a network, then I’m not so worried about bots.”

Which is the view that X chief Elon Musk has long held, that it’s essentially “inevitable” that all social apps will eventually move to paid models, in order to ensure human interaction within their networks.

Musk says that this is “the only way” to do this, with payment and phone number ID creating at least some friction in the process, and greatly increasing the cost of bot creation at scale.

X also notes that it’s aware that this approach will not stamp out bots completely.

Various high-profile, government-funded influence programs, for example, will likely see value in paying $1 per account, and having them appear legit. But by adding some form of payment, and a link to a human entity (in theory at least), X believes that it will help rid the platform of many of lower-level offenders, particularly bot farms originating from developing regions.

Which is where most of the biggest bot operations originate, and any additional cost will potentially make it more difficult in this respect. But then again, they could just up their prices, especially at such a low lever, but X says that they would also need a new credit card for every account, which is another potential impediment in their process.

Though that does also lead to another challenge, in eliminating anonymity within the app. X users have long been able to create accounts without a link to their real world identity, and this process would essentially remove that option, if it’s rolled out to all regions.

That’s another factor that X will need to assess, but really, linking social profiles to real world identities does also have a lot of potential benefits, and could also lessen toxic behaviors.

Another consideration is X’s broader payments push, as part of Elon’s “everything app” vision. With people connecting their credit cards to their accounts, that could streamline the connection of payment processes to X, which may hasten the adoption of its upcoming commerce and banking initiatives.

Maybe that’s another factor, but clearly, direct revenue isn’t it, as the combination of app store fees and credit card transaction charges are likely to see X net only a fraction of each dollar that users submit through this new process. In fact, it may end up costing X money in back charges for failed transactions.

So what does this mean, and what’s likely to be the benefit or impact of this new process for X usage?

In principle, there are some logical elements to X’s approach, which, presumably, it’s planning to roll out to all regions sometime in future, (otherwise it’s not much of a bot deterrent).

Adding fees is one way to potentially impact bot peddlers, but for regular users, it’s more likely to push people away from the app, as opposed to driving increased sign-up.

X is simply not that valuable as an informational tool to request a fee, when every other app doesn’t. Indeed, only around 9.4% of New Zealanders use X at all, and just 10% of people in the Philippines.  

At such low penetration rates, it’s hard to see anyone feeling the need to pay to use the app, especially when they have many, many other options vying for their attention.

I suspect, then, that the impact will simply be fewer new sign-ups for X, while if the same program is implemented more broadly, and expanded to existing users, I would predict that Threads will see a lot more attention as a result.

X is losing value for many users, and is becoming a bigger source of frustration, due to various product changes, and a relative rise in misinformation in posts.

Implementing a charge right now, with no value add at all, seems like a flawed approach, which will only open the door for Threads to gain more momentum, amid a steady flow of users away from the app.

And while X keeps saying that usage is reaching record highs, and that people are loving its updates, external analysis suggests the opposite, while the fact that it’s taking such extreme measures to combat bots clearly suggests that bots remain a significant problem in the app.

How many of X’s current 550 million users are actually bots?

When he was trying to get out of his $44 billion takeover deal, Elon Musk said that 20% of profiles in the app were fake, but since taking over, he’s made virtually no mention of this when reporting X’s user stats.

The various factors don’t add up, and in the end, I don’t think that users are going to warm to X charging to engage in the app, in any form.

The most successful social media subscription offering thus far is Snapchat+, which offers value-add elements to entice payment.

X is offering nothing, but is simply asking for money to contribute to the cause.

It is only $1, but still, it’s going to limit X take-up, and potentially reduce its relevance as a result.

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