The doom and gloom crowd has been predicting Twitter’s demise for years.
- “Where is their revenue model?”
- “It goes down too much.”
- “Spam is taking over.”
- “WHERE IS THEIR REVENUE MODEL?”
After 2 years of defending Twitter, I’m starting to question whether or not I was wrong and they were all right.
Marketers, Spammers, and Bots, OH MY!
When Twitter first started making it’s mainstream push around a year ago, the percentage of tweets with links in them was very low. It was possible to get 10k clicks on links tweeted by “power users” with 20k followers and a lot of retweets.
Today, the situation is reversed. Thanks to the influx of marketers, spammers, and bots marketing, spamming, and botting, there are more tweets with links in them than not. Even a “power user” with a million followers has a hard time getting 2,000 clicks on links anymore and the retweets are down considerably or ignored completely.
Twitter’s influence on directing its users around the Internet has waned. Most do not trust links anymore after regular onslaughts of worms and malware have tainted us.
The spammers keep coming and regular users are growing wary. This is where the first Twitter Paradox comes in. Twitter wants to be open and encourage businesses to participate with the hopes of becoming an important method of communication and advertising, but they also want to keep the spammers out. These are two competing goals and thus far neither has been fully achieved. They may never be able to draw that line.
Technology that’s Slow to Upgrade
Twitter, as it has been well documented, was not built on a platform that is ideal for growth at the level they have experienced. Upgrading the systems and servers is a challenge and site performance has taken a beating since the site first started.
It was built for a limited group and thus has not been able to achieve true scalability even after 3 years. They have been able to embrace the “help” of applications and websites such as Tweetdeck and Hootsuite, but they are not directly associated with Twitter. In essence, they exist as fixes to a poorly conceived platform.
The Paradox here is that they would have to rebuild the entire platform from scratch to achieve true scalability and work as a standalone website rather than a hub for 3rd-party apps to flourish. Rebuilding the platform is costly, would diffuse the apps that have helped it to achieve the success it has seen so far, and would likely cause many to leave without gaining much other than a better running website. It’s a catch-22 decision that they cannot make – both choices lose.
The REAL Paradox – Make Money without Making Money
The beauty of Twitter is that it’s simple and free. Free of ads (for the most part), free of privacy issues (for the most part), and simple to use beyond belief. To make money, they will have to sacrifice something. Once they do, there will be an outcry from the blogosphere, the userbase, and mainstream media regardless of what the change is. That part is inevitable.
Twitter Advertising
If they start putting in more advertising regardless of how they do it, two things will happen:
- Users won’t like it and will complain that the ads are too intrusive.
- Advertisers won’t like it and will complain that the ads aren’t intrusive enough.
The results will be an angry userbase and unsatisfied advertisers (if you’re thinking Google adsense, please don’t tell me that’s a revenue model).
Selling Your Data
This is the most likely scenario for the magical, secret, VC-inducing revenue model that everyone from Google to Facebook wants. The “real-time web” and the data within there is a paradox of its own that companies are racing to control, but the data available on Twitter is a goldmine of behavioral marketing and search engine data-boosting firepower that everyone recognizes.
The problem is that once you start using the data, people will rebel and stop giving it. Regardless of how harmlessly the data is used, once people learn that their data (even though most is already public) is being used “against” them by businesses, they will fight it.
Keep in mind – it’s silly. People are willing to tweet intimate details about their lives to an open platform like Twitter, but once that data is collected and analyzed, they will hate it (even though it doesn’t make a difference and may actually improve their Internet experience).
Keep It Simple Stupid
In the end, Twitter will have to complicate things if they don’t make their money on ads or behavior targeting. They will have to make corporate accounts, premium accounts, premium features, donations, or any other forms of functionality changes that will complicate the site.
And thus, they will lose. The simplicity is what makes Twitter, and therefore cannot be changed. To do so would be suicide.
How Twitter May Not Fail
The one thing I’ve learned in my (2) years on Twitter is that they keep surprising me. They shouldn’t be as big as they are today, but they are. They should not be making the mainstream impact that they are. They shouldn’t be getting hefty valuations and a constant flow of cash, but they do.
They are much smarter than me, and they probably will succeed just because I don’t think they will. I hope they do. What else am I going to do while bored with my G1 waiting in line at the dry cleaners?
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Read more about Twitter on this Social Media Blog.
About JD Rucker
A very thoughtful article, thank you
Personally, I think selling the behavior information is the way to go. Yes, people will outcry. However, one of these days people are going to need to understand and accept which things do, and which things do not, hurt them on the net. Like you said, something like that is less info than they are already publically providing willingly, and likely to help improve the products, services and experiences for them them.
We have moved into an era of the savvy internet user. Millions of people research, shop and share online. They consider themselves adept, at the basics if nothing else. Now is a prime time to get people to learn which things to avoid, which things don’t hurt them, which things are a threat, and which things are neccessary to power the sites and features they enjoy. The internet has given people hope that they can get something for nothing, which is sometimes true. However, it generally is only true for a time. If you want it to survive you usually have to give a bit down the line, or lose the “something” you have become so accustom to.
In the very first paragraph, the correct word seems like it should be “its” (the possessive) and not “it’s” (the contraction). [When Twitter starting making its first mainstream push ...]
I agree that simplicity is part of the success of Twitter, but I think people will get too tiresome of the offensive x-rated profiles (and maybe spammers too) which could lead to its demise. I agree you’ve written quite a thoughtful article.
One strength of Twitter is how people within a certain group – whether it is the coffee drinkers, the news junkies, the foodies, or the knitters and crafters, sports enthusiasts, all seem to find each other. I’ve heard of a new ‘list’ feature (as most people have) and it seems to be exactly the right kind of tool to reinforce finding your niche, and help create more lasting power of Twitter.
And I hope Twitter succeeds! I like it!
This is an awesome balanced article that actually looks at the situation rationally. I think the biggest problem is that it is all people who have loud voices on Twitter like bloggers, marketers and entrepreneuers. Once the value starts to decrease (like you say the links and traffic they send) then all of those people will move on to the next platform and continue to spread their emssage elsewhere. Really excellent article though well done
This is a great article because you bring up a lot of the issues many people are starting to bring to the surface about twitter and the social web companies.
The part where you say…
—-
If they start putting in more advertising regardless of how they do it, two things will happen:
1. Users won’t like it and will complain that the ads are too intrusive.
2. Advertisers won’t like it and will complain that the ads aren’t intrusive enough.
—-
I think this is the general challenge most web 2.0 companies are facing.
The mistake lies in launching their site without any kind of advertising whatsoever, which leads to their audience to believe that everything would be free forever…and by doing so when trying to integrate any ads or business development initiatives to make money…the audience rebels…and goes somewhere else to another free and ad-free platform that serves the same purpose.
The only argument on the flip side, and what the majority of web 2.0 companies are banking on is that they hope their users feel almost “indebted and addicted” to the platform that no matter what changes are made…they still stay loyal to the site.
I am one who believes that if they showed the audience that they were planning on making money from day one, and not always giving everything out for free…most web 2.0 companies wouldn’t be struggling so bad.
What do you think?
People were probably saying the same thing about Craigslist, too, yet somehow Craigslist survives. Hm. Maybe it’s a better analogy than I thought…
Brilliant article! And yes, we all wonder “How do they make money?” How do they cover the payroll and other expenses? it’s not like they’re just 2 geek operation in a basement, is it?
We love it, we worry… We love it more than we worry about it, maybe because we fear we might lose it. What do you reckon?
Thanks for posting.
Great analysis! I have been on Twitter for 6 months (since it got really mainstream) and have not seen the greatness of all the features that I heard before joining. It works in segments, but it’s full potential seems tempered by the amount of spam that has arrived on the seen and inflated the stats/deflated the benefits.
You’re absolutely right. Twitter was a novel concept to begin with, especially when major celebrities jumped on the bandwagon. While it was extremely popular for a while and it seemed like everyone was tweeting, it’s popularity has definitely ceased. However, in the world of Facebook and MySpace status updates and blogging, it seems that there’s not a big outcry for people to sign up for Twitter anymore.
Once the novelty wore off, many people who were avid tweeters slowed down their Twitter activity, and many readers lost interest. Plus the inevitable large amount of “Twitter spam” and celebrity imposters made the site lose credibility.
Twitter could easily reap benefit from advertisement. Facebook has many advertisements that are non-invasive and can be clicked if a visitor to the site finds something interesting; not in-your-face popups that have to be clicked to get rid of them.
In any case, it seems inevitable that Twitter will eventually dwindle and become a thing of the past, like hi5.com or nexopia.com, since it was likely a “trend thing” from the beginning.
the real time web is here to stay. Twitter just did a deal with MSFT and GOOG – aren’t they now getting paid for their data?
Although Twitter is a novel app with a simple idea- many large vendors had previously bagged the concept. Now almost all search engines and internet companies are talking about their own ‘twitter like’ solutions… So I am predicting that the “twitter like” app’s will continue to flowish but there will be a number of these micro-blogging platforms that will gain a degree of stickyness with their own audience.
Cheers Matt
Twitter- sinotechian
April 2011…..time for a revisit?