Sorry but Twitter is not in trouble


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Now I love the industry that I am a part of. Its fast moving, dynamic, controversial and innovative. But every now and then, a comment here or there irritates me. And a recent Businessweek article by Ben Kanz (an insightful blogger by the way) hinting at an impending doom for Twitter does just that. Here are the two reasons why.

Sure the twitter business model is flawed or more accurately non existent. But that doesn't mean that one can't be created around it. A business model that's advertising or even subscription driven through value added services. Many a similar business have been able to provide meaningful value added services for which customers open their wallets. The article while thoughtful, fall shorts in that it assumes that Twitter must make a business out of its current feature set without evolving its features or its business model.
Secondly, the article highlights some interesting academic research but then off handily brushes them aside as theories. The smartest folks in Silicon Valley and Madison Avenue know not to scoff at academia. Please don't do that. Not only do you do a disservice to those amazing researchers, but you also irritate the reader who's just finished reading about those theories. In actuality, talking about Metcalf, Zipf and Dunbar are completely appropriate and insightful. And yes, while they do serve to complicate an analysis of Twitter, they don't undermine the value of the service. In fact, the same analysis can and should be applied to YouTube as well.

Still the article is worth reading as it does go onto analyze potential business models albeit with a negative bent. What it ignores though is how information moves on a service like twitter and how it amplifies influence. At Avenue A | Razorfish, we're experimenting with twitter as a communication tool inside the firewall - for leaders to communicate with the rank and file. And the experiment is working. Will we be willing to pay for a corporate license of some kind in the future? Probably. And that could be just one of the revenue driving value added services that a Twitter could provide.

Follow me on Twitter (@shivsingh) for more insights on digital strategy and social media.

6 Comments

Valdis Author Profile Page said:

Yes, I think you are spot on... behind the firewall, amongst project teams, Twitter is a killer app!

The issue with Twitter that I've seen mentioned frequently is that they now control all of your data. I wasn't happy back in the AOL days when you could message only with other AOL users, and I'm not happy to micro-share within a silo.

I love Identi.ca because it's open source and federated, so my community moves wherever I go.

To the last commenter: you can have Twitter behind a firewall, among project teams. Visit http://laconi.ca.

Shiv Singh Author Profile Page said:

Marina, thank you for sharing the information on Identi.ca I'll definitely take a look. What's also interesting is that twitter has fast become a verb making it harder for some of the other micro-blogging tools (even if they are better) to gain traction.

Ben Kunz Author Profile Page said:

Shiv,

Thanks for the thoughtful response to my BW column and nice reference to my blog :)

To respond, my column in BusinessWeek was not meant to suggest Twitter will never make money or evolve, but rather that it, like most social media, is by nature a poor business model when compared to other options. Social media does a wonderful job of empowering individuals to create and share and network, and that is why trying to make money from them by appending the old ad models is tough. Users are so busy sharing and creating, they don't respond in the same manner to third-party advertisers that other consumers do as cable TV washes over them.

One analogy I've used elsewhere is that of a consumer walking into a store vs. a bar. At a store, you're in the mode to shop -- which is why searches for things on Google make its Adwords program work so well. At a bar, you're in the mode to be social -- which is why ads on bar coasters don't work so hot, unless it's for the next beer.

Social media users are in heavy social mode. Third-party messages aren't listened to as much.

We have been down this road before. The Economist noted recently that webmail services got huge buzz a few years ago, e.g. Hotmail and Gmail, yet didn't really turn out to be good business models. I for one can't recall a single ad that's been served to me in my Gmail account. I love Gmail ... but will I respond to ads there? I'm too busy creating and sharing.

I'm sure Twitter will evolve. It could mine data, expand ad personalization, sell inventory at a CPM basis (which makes more money for the inventory holder if advertisers can swallow the waste), grow its user base, expand to value add, maybe try what Facebook recently did -- a redesign aimed solely at increasing ad inventory (look at your new FB layout, you'll see 2x ads on each page and tabs designed to get you to click around more to thus see more ads. Clever!). But in the end I believe Charlene Li was right, social media functionality will become "like air," and consumers used to getting connectivity for free won't want to pay for it. And that's the beauty and basic flaw of the SM model.

Thanks again.

Ben Kunz
Mediassociates

Romain said:

Your idea about the behind the firewall is interesting and may become a way to turn Twitter into a business. But you can also share information using Twitter as your information channel (using a simple robot sending private message to all its added people) and if you're in need to share secured data, don't do it with a software like this, it has never been developed for.

Basically Twitter provides a service that can easily be managed by others, and most of the service users belong to a restricted cluster of population. They won't be able to leverage, as it is now, any data and hit the market with any interesting added-value service. It's a stand alone feature, and without another business to leverage subscribed users, there's no way they can generate money. To follow on the mailbox example, AOL, Yahoo! as well as Microsoft did develop the email service to lock-in users and leverage them y creating portals that actually make money.

So Twitter seems to me like an impressive experiment, but unfortunately it is too early for the users and too early for the market. First because companies need to change their online key performance indicators to understand they have to jump into the social media field, and second because the technology plateau has come and we're currently not able to find out how to scan and map social data. With semantic, it's for sure a Twitter-like business would be a world class business.

Shiv Singh Author Profile Page said:

Thank you for your comments. Ben, I agree social media functionality needs to evolve. I often feel that its greatest potential will be realized when its not isolated from the web but becomes part of the mainstream - yes, like air but more in the pervasiveness sense and less maybe in the free one. They'll definitely won't treat social media as something separate once social graphs become truly portable.

Romain, you're right companies still have some catching up to do and twitter can evolve in a lot of different ways as well. I think we're nearing a point where we can map and scan social data. But for it to really happen, more common standards need to be established - whether that's opensocial and openid or something else.

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