You're not accounting to the effect a premium service has on marginal ad revenue per user. It goes down as the people with disposable income (the most desirable demographic) opt out of ads.

I bet th effect of even of the most engaged users isn't worth $10/month in ad revenue. Although I think there would be an irrational element in the pitch of reach the whole Twitter userbase vs reach the users that haven't paid.

You also don't (yet, at least) pay for "new" content. People sitting through commercials (or paying for cable) get content before it is even available to you.

Such is the nature of disruptive technologies. The "yet" in your comment speaks volumes on the impending doom of traditional, multi-channel television. The core value of Twitter, however, is the fresh and organic nature of the information flowing through it. Netflix relies much more on quality than newness. The major difference here is that advertisers are paying to have information artificially inserted into the Twitter-verse where the core value is the organic nature of the content. A subscription greater than marginal ad revenue would greatly increase the amount of organic info on Twitter (both to subscribers and free users) which would lead to more users which would lead to more overall ad revenue.