June 17, 2024


Like All Trades

If Elon Musk Alters Twitter’s Algorithm, Sports Entities Could Cash In

Elon Musk has said little about his long-term vision for Twitter, but he has indicated an interest in allowing users to edit posts and eliminating content moderation algorithms. Doing the latter could make the microblogging site an increasingly important audience builder and revenue driver for athletes and sports properties, because right now, not all posts are treated equally. Nakisa Bidarian (founder of BAVAFA Sports, co-founder of Most Valuable Promotions) explained that if content generators and rights owners see their content “is going to be able to thrive [on Twitter], irrespective of what the content is, it will be that much more of an attractive platform to be on.” It stands to reason that the more athletes and sports properties engage with Twitter (and their followers), the more attractive it will become. Drawing more individuals on to the platform would provide teams, athletes and leagues a wider audience and greater opportunities.

JWS’ Take: As we explained in September 2021, unless a content creator or rights owner is spending money with a platform to promote a piece of scripted content (which can be expensive to create in the first place), it will typically receive fewer views and less engagement than a comparable piece of unscripted programming.

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Theories differ on why the top social platforms started burying sponsored content two-plus years ago, but the approach has made it more challenging—and costly—for athletes and sports properties to deliver views to sponsors and generate direct revenue. For perspective, Bidarian said Jake Paul reaches ~20 million people on Instagram. “He will put up a video that is unscripted, and it will do 3 to 5 million views. He’ll put up a scripted/branded video, that we’re not putting ad dollars behind, and it’ll do a fraction of that. That same dynamic exists on Twitter,” albeit on a lesser scale because he has fewer followers.

But Bidarian believes “if Musk is being genuine and he’s going to focus on free speech, then that [should] translate to organic, non-algorithmic content delivery, where the platform doesn’t elevate or suppress reach.” The fans would be the ones deciding what content goes viral.

A pivot away from the existing algorithmic advertising model would give Twitter a “big competitive advantage” over the other social platforms in the eyes of content creators and rights holders (though, it could cost the company revenue in the short term and turn away users if they feel like they’re constantly being sold). “[The athlete or sports property] will be able to increase the size of [their] fan bases, particularly with some of the best content that helps to engage new audiences being scripted,” Bidarian reasoned. “And those calls to action that come through scripted will be seen by a wider audience size, which should translate into [more] revenue eventually” for both the content creator/rights holder and the sponsor. Twitter declined to comment on the subject.

For most athletes and sports properties, Twitter is one piece of a broader social media strategy designed to build brand, facilitate communication with fans and fulfill sponsorship obligations (i.e. sponsors now see social engagement and follower counts as table stakes). But as Bidarian explained, “the truth is those numbers are never accurate because when you put up a branded piece, the social channels suppress it.” Eliminating content moderation would in theory help content creators and rights owners to deliver the metrics promised to brand partners (which should provide them with better ROIs and inevitably result in more direct revenue for the athlete or sports property).

The platform, as currently structured, is not having a meaningful direct impact on the P&Ls of most rights owners. “It’s not [a revenue stream] most have focused on,” Bidarian said. We heard the same from a well-respected sports banker.

But Musk’s takeover could change how athletes and rights owners generate revenue on Twitter. “I could see him figuring out a way to have a more structured approach with crypto, NFTs and [with] how people monetize on the platform, versus today where Twitter is [primarily] used as a speculative hype machine for blockchain offerings,” Bidarian said.

Of course, if Musk removes the guardrails in the name of “free speech,” it is possible an already contentious platform (see: harassment, bullying) will morph into pure anarchy. Should that occur, brand-conscious individuals and sports properties may decide to part ways with the platform and invest their resources elsewhere. That assumes the user base and advertiser pool does not flee first.

Bidarian does not see that as a real concern. He says harassment and bullying exist now “nonstop, across all platforms. Social media is a toxic environment. That is just what it is and will be.” FWIW, Musk has stated his intent to eliminate the spam bots that have plagued Twitter.

In mid-late 2010s, Twitter began to dabble in live sports rights. Rich Greenfield (partner, LightShed partners) said the company came to “realize it didn’t have the stomach” needed to compete for live rights, that simulcasting games was not generating enough new users or time spent on the platform, and subsequently pulled back. (Twitter, again, declined to comment.) It does still work closely with sports leagues and networks to deliver a strong second-screen experience for sports fans. According to a November ’21 Twitter Insiders survey, 49% of people agree that they see highlights on Twitter before any other social media platform.

In the short term, Twitter’s approach to live rights is unlikely to change. But Yatin Patel (a strategic advisor across professional football and motorsports) says if Musk is successful “making Twitter a compelling property for the 80%, if he can make it really sticky and get people to buy back into some kind of branded content, then [live rights] can become a utility play a la the Amazon thesis.” Getting athletes and sports properties to further engage with the platform is the first step to making that happen.

Greenfield doesn’t think Twitter should go down that route. He says the platform is “better suited to [be] the modern day version of sports talk radio than the place to watch long-form sports media.”

It’s possible, maybe even likely, that Musk has greater ambitions for Twitter than he has let on simply based on how much he spent to acquire the asset. The sports banker who asked to remain anonymous reasoned: “It is one thing for Jeff Bezos to buy the Washington Post for $250 million to protect [the newspaper]. When you spend $44 billion, you’ve got to have some sort of grand plan.” Right?

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