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How influencers fit into Twitter’s plans to double revenue

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Twitter CEO and Co Founder, Jack Dorsey addresses students at the Indian Institute of Technology (IIT), on November 12, 2018 in New Delhi, India.

Amal KS | Hindustan Times | Getty Images

Twitter’s been on a creator-focused tear.

The company announced its first subscription service earlier this month, called Twitter Blue. It now lets people tip select users through the app, and the company acquired newsletter platform Revue to allow creators to publish and monetize newsletters. It’s also rumored to be close to launching its Super Follows feature, which would allow some users to charge others for select content.

All of this comes after the company set an ambitious goal to double its revenue by the end of 2023 and grow its user base to 315 million daily active users. But it appears creator cuts won’t make a material impact on the company’s revenue anytime soon.

All of Twitter’s current bets in the creator space can be thought of as a type of insurance or a hedge, in case there is a smart way to make money through creator cuts (aside from advertising), Laundry Service head Jordan Fox told CNBC.

“Every platform CEO thinks: what if direct, platform-facilitated creator monetization explodes as a market? What if it goes from a niche offering to a massive revenue driver comparable to or larger than advertising is today? What if we miss it?” Fox later added in an email. “Putting fee structures around this stuff now is the hedge against that scenario.”

Look to Instagram. The social media company said it would temporarily waive fees on its creator monetization products. However, Fox said there’s a reason it wasn’t framed as a free product.

“What if the market becomes huge, and Instagram wants or needs to participate economically? They need to be ready for that, unlikely as it may seem today,” Fox said. Currently, more than 50 million people globally consider themselves creators, according to a report from venture firm SignalFire, and it’s the fastest-growing small business segment.

It’s a creator’s world

Every social media giant has started making bets on creators.

Instagram chief Adam Mosseri recently told CNBC that its parent company, Facebook, wants to have millions of creators making a living through its family of apps. Snapchat will allow users to tip some of its most popular creators, and the company regularly pays people for posting popular content on its short-form video service. Pinterest also introduced a creator fund for a small group of users.

Despite the subscription business model serving as one way to diversify Twitter’s revenue streams, the company still makes most of its money from ads. According to its first-quarter earnings report, advertising makes up more than 86% of Twitter’s revenue.

“Twitter’s core revenue stream will remain its ads business for the foreseeable future. Any money made from creator cuts will be supplementary income for the company,” Jasmine Enberg, eMarketer senior analyst at Insider Intelligence, told CNBC in an email.

EMarketer said it expects Twitter’s worldwide ad revenue to grow 28.7% to $4.03 billion in 2021, after traffic acquisition costs. A social media company’s ad inventory only has value when people voluntarily spend hours a day on the platform. And people do that, mainly, to view content posted by creators.

“Twitter’s value proposition to advertisers is its highly engaged user base. Creators are major drivers of user engagement on social media, and Twitter’s new creator-focused features can help the company attract and retain creators. The end goal is to boost user engagement in order to incentivize advertisers to invest more in the platform, thus increasing Twitter’s ad revenues,” Enberg added.

Social media companies still need creators. And they need them more than the artists need the social media companies.

“You see a lot of experimentation right now where the platforms are flirting with trying to directly monetize creators, but they also don’t want to overstep and alienate them,” Fox said.

That means that while these social media companies want to bring in supplemental revenue through creator cuts, they have to tread carefully. If a company, for example, takes too much of a cut, a creator could decide to focus their time on other apps. The social media company could then, in turn, lose that person’s stream of content and not make a cut of revenue and miss out on advertising dollars.

“For creators whose stock in trade are words and ideas, Twitter has always been the center of the universe, and they’re making smart strategic decisions to keep it that way,” Fox added.

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Navtej Sarna on future of Afghanistan, Quad

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U.S. Secretary of State Antony Blinken (L) meets Indian Prime Minister Narendra Modi at his Residence in New Delhi on India on 28 July, 2021.

Ministry of External Affairs, Government of India | Handout | Anadolu Agency | Getty Images

The United States and India have a shared interest in Afghanistan — and neither side wants the Taliban to take control of the country by force, a former top diplomat told CNBC.

“Both countries really want to work together to bring about an inclusive, secure (and) stable Afghanistan,” said Navtej Sarna said Thursday on CNBC’s “Street Signs Asia.” Sarna was the Indian ambassador to the U.S. from November 2016 to December 2018.

Afghanistan was one of several topics discussed Wednesday when U.S. Secretary of State Antony Blinken met Indian External Affairs Minister Subrahmanyam Jaishankar in New Delhi. Blinken also met Prime Minister Narendra Modi to talk about efforts to deepen bilateral ties.

Shared interests over Afghanistan

“India and the United States share a strong interest in a peaceful, secure and stable Afghanistan,” Blinken said at a joint press briefing with Jaishankar in New Delhi, according to a State Department transcript.

“There has to be a peaceful resolution which requires the Taliban and the Afghan Government to come to the table, and we both agree, I think strongly, that any future government in Afghanistan has to be inclusive and fully representative of the Afghan people,” he added.

From India’s point-of-view, it wants to see the U.S. keep up pressure on Pakistan when it comes to dealing with the Taliban, according to Sarna.

India’s Minister of External Affairs Subrahmanyam Jaishankar (R) and U.S. Secretary of State Antony Blinken hold a joint news conference at Jawaharlal Nehru Bhawan in New Delhi on July 28, 2021.

Jonathan Ernst | AFP | Getty Images

The former ambassador also pointed out China’s involvement — the country’s foreign minister Wang Yi met with senior leaders of the Taliban in the Chinese city of Tianjin on Wednesday. That may potentially complicate matters further.

“There’s a lot happening there and it’s very important that the countries with a similar mindset on Afghanistan, who want to restrain the Taliban and make it an inclusive government, get together,” Sarna said.

‘Early days for the Quad’

At this week’s meeting, Blinken and Jaishankar also discussed strengthening the two countries’ regional cooperation bilaterally and through the Quad, a quadrilateral partnership including Japan and Australia.

While the informal alliance positions itself as being committed to a free, open and inclusive Indo-Pacific, some see its existence as a counter response to China’s growing influence in the region.

We’ll have to wait and watch, but I think the immediate concrete thing that can happen is the vaccine initiative.

Navtej Sarna

Former India ambassador to the U.S.

Sarna pointed out that Quad members have distanced themselves from the so-called “anti-China” club rhetoric, which some — including China’s foreign ministry — have called it.

The group will have to work together in areas where they can achieve results such as distributing Covid vaccines, climate change, building up of infrastructure and pushing critical technology advancements.

“These are early days for the Quad,” said the former diplomat, adding that the four countries do not have too much experience working together in many of those areas outlined.

“But, I think the fact that now summits are taking place at the leader level, I think it’s a positive sign,” Sarna said. “We’ll have to wait and watch, but I think the immediate concrete thing that can happen is the vaccine initiative.”

Quad leaders met at a virtual meeting in March and Covid-19 vaccine distribution efforts was part of the agenda.

Blinken’s visit will likely set the stage for the 2+2 Ministerial Dialogue later this year in the U.S. where Jaishankar and India’s defense minister will meet their American counterparts.

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The case against Tom Barrack could draw classified material into court

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Tom Barrack, chairman of Colony NorthStar Inc., speaks during a Bloomberg Television interview at the Milken Institute Global Conference in Beverly Hills, California, U.S., on Tuesday, May 1, 2018.

Patrick T. Fallon | Bloomberg | Getty Images

WASHINGTON — Tom Barrack’s defense attorneys have their work cut out for them, given the breadth and specificity of the evidence in the 45-page federal indictment against him filed last week.

Prosecutors allege that Barrack secretly took direction from the government of the United Arab Emirates, and used his status as an informal advisor to the Trump White House on Middle East strategy to push for the policies that Emirati officials told him to.

In a case that features a co-defendant who was working for the UAE’s intelligence service, and a sensitive subject like U.S. policy in the Middle East, experts say there are several unusual paths the defense could take.

For example, if Barrack’s lawyers try to argue that the White House knew he was working on behalf of the UAE, the conversations Barrack had with U.S. officials, telling them whom he was working for could contain classified material.

In the event they do, there’s a chance Barrack’s defense lawyers could resort to a legal defense tactic called graymail. 

Graymail happens when the defense threatens to expose classified government information during the course of a trial, in the hopes of forcing the government to drop the case rather than risk the exposure of potentially damaging state secrets or agents. 

Barrack’s attorneys did not respond to questions from CNBC about their strategy.

“It’s absolutely possible that the defense will threaten to expose classified information in order to prove [Barrack] wasn’t acting without anyone’s knowledge,” said a former top national security official who was granted anonymity to discuss how classified material is used.

In order to prevent defense attorneys in national security cases from deploying graymail, prosecutors typically tailor their strategy to avoid making classified material a relevant or necessary part of mounting a defense. 

Barrack, a longtime ally of former President Donald Trump, was charged along with Rashid Sultan Rashid Al Malik Alshahhi, an Emirati national with close ties to the royal family, and Matthew Grimes, a junior employee at Colony Capital, which Barrack founded. 

Grimes and Barrack have pleaded not guilty. Al Malik is still at large. 

Thomas Barrack, a billionaire friend of Donald Trump who chaired the former president’s inaugural fund, stands beside his co-defendant and former employee Matthew Grimes and his lawyer Matt Herrington during their arraignment hearing at the Brooklyn Federal Courthouse in Brooklyn, New York, U.S., July 26, 2021 in this courtroom sketch.

Jane Rosenberg | Reuters

Curious timeline

The desire to avoid classified information could help to explain a curious element of the formal indictment against Barrack: The timeline. 

It appears to be carefully designed to keep alleged crimes within a specific time frame, from April 2016 to October 2017.

After 18 months of near-constant communication among the three defendants, the last contact in the indictment is a text message on Oct. 11, 2017. 

The messages indicate that, at the time, the three co-defendants were ramping up an effort to influence how the U.S. responded to a UAE and Saudi-led blockade of Qatar.

But whether Barrack and his co-defendants succeeded may never be publicly known, because the indictment ends abruptly with the Oct. 11 message. 

“It seems like they have some evidence after that that they don’t want to surface, because it could be relevant to these charges,” said the former national security official. 

The duration of the overall conspiracy, prosecutors said, was two years, from April 2016 to April 2018.

But the indictment doesn’t describe what happened during the six months between October 2017 and April 2018.

Yet even with careful planning by the prosecution, several defense strategies could still draw on classified information while remaining inside the current window of time.

Back channels

“I think the Trump administration sort of created new norms in terms of the communications through back, rather than transparent and official, channels,” said Michael Atkinson, inspector general of the Intelligence Community from 2018-20. 

“We saw that with Russia and Ukraine, and there were allegations that it was done with China.” 

Shortly after Trump was elected in 2016, Kushner tried to open a back channel for Trump to communicate privately with Russian President Vladimir Putin. 

A few months later, Kushner privately worked with China’s ambassador to arrange a summit meeting for Trump and Chinese President Xi Jinping at Trump’s Palm Beach resort. 

In 2019, Trump was impeached for pressuring the president of Ukraine to open a sham investigation into Trump’s political rival, then-candidate Joe Biden. 

The prevalence of these unofficial channels made it difficult to know exactly what the Trump administration was saying to allies and adversaries overseas at any given time.

But this confusion could also factor into another possible defense strategy for Barrack, said Atkinson, now a partner at Crowell & Moring.

Barrack’s lawyers “could argue that there was no harm, because the interests of the United States and the UAE were aligned in these matters. So no harm, no foul,” he said.

“They could even try to argue that what these defendants were doing was in the best interests of the United States,” he said.

This is the argument that Al Malik’s lawyer, Bill Coffield, made to The Intercept in 2019. Coffield denied that his client was a spy, but declined to answer more specific questions. 

Al Malik “is a businessman who loves the UAE and the U.S.,” Coffield said at the time. “He has openly shared his beliefs that the best way to forge a stronger bond is through economic prosperity.”

Atkinson, however, is skeptical that this defense would work. 

“This is not a viable defense under the statute,” he said. 

“Even in cases where the United States and a foreign country are pursuing the same objectives, the government doesn’t want people sitting in those types of meetings, and not knowing that they’re acting at the behest, or the direction, of a foreign government.”

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How investors can position portfolios amid China crackdown

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The “tug-of-war” between the Chinese government and capital markets triggered this week’s wild market swings — but investors can position themselves despite the uncertainty, said Cedric Chehab from Fitch Solutions.

“Corporate China is having to navigate a more demanding government and regulatory sector,” Chehab, global head of country risk at Fitch Solutions, told CNBC on Thursday. “For investors, that proves a little bit more challenging cause you don’t know which sector … could come under greater scrutiny going forward.”

Chinese markets have had a rollercoaster week after a series of regulatory announcements aimed at increasing oversight in sectors ranging from technology to education and food-delivery.

The crackdown spooked investors and sent Hong Kong’s Hang Seng index plunging more than 8% in two days before rebounding on Wednesday and Thursday.

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Still, there are three areas in the Chinese markets that investors can focus on that may have less volatility, Chehab told CNBC’s “Capital Connection.”

“Focus on those … companies and sectors that are leveraged to the economic recovery,” he said, adding that they can give “some cover.”

Next, investors can identify sectors that have come under less regulatory scrutiny by Beijing in the last few months or quarters, Chehab added.

Finally, look at sectors that have been largely identified by the Chinese government as “not particularly important from a national security perspective.”

“You have a bit of a tug-of-war in terms of what the government wants and what capital markets want to do,” Chehab said.

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