November 2, 2022 - 7:15am

Elon Musk has promised that Twitter’s lords and peasants system (i.e. verification) will be coming to an end. The new CEO said that verified “bluecheck” users would now be subject to a monthly fee of $8. Discussion of the proposal exploded with (broadly) media-adjacent people saying that the changes would effectively destroy Twitter and (broadly) Silicon Valley technology people tantalised by the chance to “own the libs” and make money at the same time. For once, the media people have a point. Musk doesn’t seem to know what he bought, and how to transform it while retaining Twitter’s distinctive advantages.

Many of the technology entrepreneurs around Musk rightly believe that a blue check is quite valuable. That doesn’t mean people will pay for it. Why? Because it’s a status good. There are a class of truly valuable goods that cannot be (directly) bought. Attempting to buy them actually lowers one’s status: if it can simply be bought, it no longer conveys status. The blue check is such a good: it means that person is one of the Elect of Twitter.

Ironically, Twitter seems to have created a status good mostly by accident, a combination of how prominently the symbol appears on the text-heavy feed, the seemingly random conferral of grace (Twitter initially had plans to verify most users before just stopping), and Twitter’s media-heavy user base.

Some have speculated that the paid-for blue check could function as a Veblen good, an apparent waste of money that conveys the wealth and power of its owner. But status goods are usually the opposite — they depend on conferring something that cannot be bought.

Indeed, the value of status goods is destroyed the moment it becomes obvious they are simply bought. Even where the particular good conveys a more monetary form of status by celebrating the wealth and taste of its owner, luxury firms work to transform a transaction into something more and preserve status. The right to buy the most exclusive Ferraris, for instance, is conferred on the most devoted customers. Similarly, anyone with cash can walk into a Hermes store and walk out with a handbag, but the opportunity to buy a signature Birkin bag is a rare grace reserved for loyal clients.

If high status individuals demure on the blue check — and especially if low status graspers and climbers pony up — the network effect reverses and it becomes unattractive to be verified. Soon, Twitter wouldn’t be able to pay people to have it. Many a status good has been destroyed like this.

To put it a slightly different way, the blue checks aren’t the users. They’re the talent. You don’t make the gladiators buy tickets. The other, most successful social media sites have found ways to compensate their best content creators. Twitter notably has not, thus far.

Nothing about this analysis suggests that Musk can’t raise Twitter’s revenue. His bigger problem is that he does not seem to know what he bought. There is little hope of Twitter becoming a “common digital town square,” as he put it in a recent letter to the advertisers. Instead Twitter, like all social media, is a “discourse-themed video game”. Specifically, it is a multiplayer online battle arena, where competing networks of accounts (informally led by influencers and blue checks) do battle. Luckily for Musk, there has been an enormous amount of experimentation with this genre of online games over the past few decades, and there is a clear winner of a business model: freemium with micropayments.

If he hopes to transform Twitter and fulfil its potential, Musk would do well to lean in to what Twitter already is. On the other hand, if he hopes to drive the journalists and media figures off of the website so that it features less prominently in our society’s discourse, he should proceed with his plans to charge blue checks, and would probably be doing a public service. But it is a hell of a way to evaporate forty-four billion dollars.

Jon Askonas is assistant professor of politics at the Catholic University of America and a non-resident senior fellow at the Lincoln Network.