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.
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.