Kicking against the Ticks

Why Elon Musk’s strategy for monetizing status didn't work.

[The below is a piece I wrote one year ago to the day, now revived since Elon Musk seems to be desperately reaching out to departed people with large numbers of followers to offer them free blue-tick status. Since I only have access to my moribund Twitter account on one computer, and it’s not here, I have no idea whether I am one of the Chosen Few!]

Attention conservation notice: short but entirely speculative exercise in amateur sociology/game theory, by someone who has no professional license to do either, and had a blue tick for a couple of years but was always bemused as to why.

A quick note as to what went wrong with the Elon Musk strategy of giving power to the peasants. My take is that the Tyler Cowen case that “Elon is already ahead of the critics on this one, and was all along” was wrong, and that the politics of online aristocracy aren’t nearly what Musk thought they were.

My basic thesis is this. Blue ticks (more formally, ‘verified’ status on Twitter) is a particular example of an emergent online status system emerging from scarcity and social recognition. But if status is to remain economically valuable it paradoxically can’t be fully marketized. Milking status systems for money requires a degree of social astuteness that Elon Musk, for better or worse, shows no signs of possessing.

Initially, verified status was intended to solve a particular problem – that some people and organizations (famous; powerful; media personality) were particularly likely (a) to be targeted by impersonators, and (b) to have the resources to kick up an unpleasant and potentially expensive fuss when this happened. Twitter – like all big social media – did not and does not have the resources to police user registration at scale, so as to prevent impersonators from showing up. So what it did instead was to adopt the easier and cheaper solution of providing some recognizable means through which the “real” individuals could be distinguished from the fakes.

What then happened, unsurprisingly, was that getting verified came to become a connotation of social status. It showed you were important enough for Twitter to say that you were you. A blue tick beside your user name became a status good. It helped that it was linked to some notion of significance – you had been judged and somehow found worthy. It may have helped too that the process through which verified status was awarded was quite mysterious (I got verified one day, and have no good idea as to why).

Thus, then, the “lords” and “peasants” distinction that Musk drew in his tweet. And he was right that “blue ticks” drew considerable social resentment, especially from people on the right, who linked blue tick status with membership of the journalistic elite, and presumed hostility to godfearing people, Silicon Valley &c &c.

But the problem, as Musk has discovered, is that kicking against the ticks is not a profit maximizing strategy, or a particularly good money making strategy at all. The number of people who are willing to pay $8 a month is reportedly underwhelming.

In part, this may be because there aren’t very many real perquisites that come with it – as best as I know, promises that blue ticks will see less ads have gone unfulfilled, like many other promises of Musk-era Twitter. In part, it’s because the social status isn’t worth as much any more. To the extent that blue ticks are status goods, they are debased when they are sold at a scheduled market price. They don’t tell observers that the blue tick recipient has been found worthy in some mysterious process. Instead, they convey the information that the recipient is willing to spend $8 a month to get their tweets prioritized. That is not even an ambiguous signal of high social status.

Indeed, it may be a signal to the contrary. Under the current status quo, people will be unwilling to pay for blue ticks, unless they simply want to get their tweets in front of more people than they would otherwise. Their willingness to pay will hence be a negative signal of the quality of what they have to say. The current system of verification, without unlikely and expensive oversight, will overselect on spammers and egomaniacs. Second, for just this reason, ordinary Twitter users will plausibly be less willing to pay attention to accounts with blue ticks than to accounts without them.

The risk to Twitter then is of a degenerating equilibrium in which ever fewer people pay attention to verified status, leading verified status to become ever less valuable. That’s too neat and simple a story – real life social dynamics are always much messier. But I don’t think it is entirely wrong either.

Now, after originally promising to remove verification from all ‘legacy’ people who got it if they didn’t cough up, Musk seems to be contenting himself with just removing verification from the New York Times and similar groups and people who have incurred his displeasure. People who pay, and people who don’t but who got it as a legacy, are now indistinguishable from each other. In Twitter’s official language, “[t]his account is verified because it’s subscribed to Twitter Blue or is a legacy verified account.”

You probably can’t describe this outcome as the product of deliberate strategy. Musk’s management philosophy for Twitter hasn’t so much been a random walk as a grasshopper lepping around on a hotplate. But it is likely to stick for a while. The verified status system is plausibly more lucrative when it is a pooling equilibrium – that is, when it is impossible to tell who has paid for it, and who has not. The payers can parasitize some of the status of the legacies.

The actually relevant “lords and peasants” story that illustrates this is the British House of Lords. At one point in the early twentieth century, there was an actual price list. As Wikipedia describes it

Lloyd George made the practice more systematic and more brazen, charging £10,000 for a knighthood, £30,000 for baronetcy, and £50,000 upwards for a peerage. The practice came to a halt with the notorious 1922 Birthday Honours List, which contained the names of, Sir Joseph Robinson, a South African gold and diamond magnate who had been convicted of fraud and fined half a million pounds a few months earlier; Sir William Vestey, a multi-millionaire meat importer notorious for his tax evasion;Samuel Waring, who had been accused of war profiteering; and Archibald Williamson, whose oil firm had allegedly traded with the enemy during the war.

After public outcry, the law changed to make it illegal to charge for peerages and honors. Of course, it is still the case that you can get elevated to a life peerage for handing over dollops of cash to political parties. But this is decently obscured beneath a veil of official reticence. Certainly, there is nothing so vulgar as an itemized schedule of payments.

The British system of peerages still works as a moneymaker for UK political parties, because it blurs the status of those who paid hard money, and those who get them for good works, as well as the tarnished luster of feudal arrangements. It will be interesting to see whether Musk can maintain a similarly profitable degree of ambiguity.

I suspect not, because it requires a kind of acumen about social systems that he doesn’t appear to possess. Many legacy blue tick people are loudly proclaiming in tweets or in their profiles that they would never pay. They want to preserve their status, rather than have it debased by association, or at the least, not be identified as the kinds of people who would pay for the increasingly dubious status of being a blue tick (I’m of that class myself). Keeping a balance between those who provide lustre and those who provide lucre, requires the kind of steady hand that Musk doesn’t seem to possess.