Musk is right that he needs advertisers for X to ever expect to make money. Wu said that according to a Harvard analysis of Twitter’s financials, which were publicly available before the company was made private, “there’s no real way to keep the company afloat without some significant contribution from advertising.”
That means that without advertising, X will struggle to be a profitable company. But it doesn’t mean X will fail.
“It’s a time honored tradition that the global media industry is either run by governments or run by wealthy individuals,” Wu said, pointing to billionaires like Jeff Bezos (owner of the unprofitable Washington Post), Mark Benioff (owner of the unprofitable Time magazine); and Laurene Powell Jobs (owner of the unprofitable Atlantic).
“Those are situations where we don’t really expect them to turn a significant profit,” Wu said. “It’s totally fine if Bezos runs a loss at the Washington Post. If you view it in that lens, that this is really a matter of power and control and influence, then I think it makes complete sense for Musk to run the losses.”
[I’ve never been convinced otherwise. Musk bought Twitter for the same reasons Bezos bought the Post — influence rather than profit. Musk has already achieved far more relevance than Bezos in uncovering the Big Brother-esque combine of Big Tech and the federal government to suppress dissent. Musk will only run into trouble if his other businesses decline so far that he can’t carry Twitter’s debt without losing control of Tesla, SpaceX, and other holdings. But he has plenty of space and time to deal with that vulnerability. — Ed]
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