X Increases Premium+ Price by 30%

Despite X Premium (formerly Twitter Blue) failing to catch on the way that Elon Musk had hoped, the platform’s keen to find new ways to boost its revenue intake, as it looks to integrate more AI elements, which come at a significant cost, while also offsetting its ad revenue losses.

Along that line, just before Christmas, X announced that the price of its X Premium+ subscription tier, the most expensive X subscription option, would be increasing by 30%, in order to fund the ongoing expansion of its offerings.

As per X:

“We’re updating the X Premium+ subscription price on December 21, 2024. New subscribers will pay the updated price starting that day. If you’re an existing subscriber and your next billing cycle starts before January 20, 2025, you’ll be charged at your current rate; otherwise, the new rate will begin with your first billing cycle after that date.”

The new price adds an additional $6 per month to the X Premium+ price, rising from $16 to $22 per month, or $229 annually.

X says that the higher price point will enable it to offer a completely ad-free experience for its top paying users, while also enabling higher usage limits for its Grok AI models.

It’ll also give X more capacity to pay creators via its updated revenue share model:

“We’ve shifted our revenue share model to reward content quality and engagement rather than ad views alone. Your Premium+ subscription fee contributes to this new, more equitable system where creator earnings are tied to the overall value they bring to X, not impressions of ads.”

X announced this change back in October, with the program shifting from providing creators with a cut of ad revenue for the ads displayed in their post replies (and seen by X Premium subscribing users), to paying creators based on engagement from paying users.

The added cost of X Premium+ will now contribute to this, by giving X a little extra income to share, while also, as noted, funding its ongoing AI development.

Though, technically, that’s conducted via xAI, which is a separate company to X itself. xAI, which is in charge of the models and systems that power its Grok AI chatbot, just closed a Series C funding round of $6 billion, adding to the $6 billion that it also raised back in May, enabling it to expand its operations.

xAI has used the majority of that funding to build its “Colossus” AI data center in Memphis, which incorporates 100,000 Nvidia H100 GPUs into the xAI operation. That puts it on par with the AI systems currently being operated by Meta and Google, though both of them have significantly more capacity, and capability, to expand further at this stage.

But for now at least, the new AI computing cluster has propelled xAI into a position of legitimate competition on AI development, as it looks to gain a foothold in the space, and cash in on the expected AI boom in the years ahead.

How an increase in X Premium+ pricing might directly contribute to this isn’t clear, but X has continued to pump out new updates for its Grok chatbot (the latest being improved image generation), while it’s also launched a standalone Grok app in some regions.

And it’s using X to promote this:

So there’s an intertwining there, though where the lines are drawn between the two is not clear, so it’s impossible to say how each contributes to the other in this respect.

Regardless, that’s one place that X says the extra subscription intake will be going. Though as noted, the price increase could also be an attempt to cover up for the shortfall in X Premium subscribers, which has left another hole in X’s revenue projections.

According to analysis conducted by TechCrunch and AppFigures back in October, X Premium currently has around 1.3 million subscribers in total, which incorporates all tiers of the offering. Of that, only a fraction would be paying for X Premium+, and as such, a price increase of $6 in this category isn’t going to be a major needle-shifter in this respect.

But those who are paying for the top tier are also less likely to cancel, so maybe, X is just cashing in where it can. Yet, the chances of X Premium ever becoming a major revenue driver, as Elon Musk had originally projected, seem to be very unlikely at this stage.

In his original business strategy plan for Twitter, which he shared with potential investors shortly after he took over at the app (and before the “X” re-brand), Musk predicted that Twitter Blue (now X Premium) would reach 69 million paying subscribers by 2025, and 159 million by 2028.

It’s a long, long way off that, and outside of price increases like this, it’s hard to see how X will be able to generate any real revenue traction from its subscription offerings.  

Unless it comes out with some mind-blowing add-ons to sweeten the deal. I’m not sure what they could even be, but it seems likely that AI will play a part somehow.

Personally, I maintain that social platforms are over-valuing the utility of features like AI image creation to regular users. But maybe Elon and Co. have something else up their collective sleeves.