June 18, 2009

Is Twitter Ready for Adult Supervision?

Unless you’ve been hiding under a rock over the past week, you’d know that something’s brewing in Iran. News of mass demonstrations against voter fraud there has finally hit mainstream media in US, but it all started on the blogosphere, video sharing sites, and social media sites like the Huffington Post, Youtube, Facebook and Twitter. This created side discussions about increased legitimacy of social media sites, in particular Twitter, which is reportedly widely used by demonstrators in Iran. Whether or not the claims are accurate, Twitter was suddenly thrown into the limelight as a serious player. After all, even the State Department threw in their weight and asked Twitter not to perform their scheduled maintenance so that Iranians could continue to distribute information via the service.

This wave of publicity will force the company and its business model (or lack thereof) under the microscope. Twitter which was launched in 2006 has resisted the advertising revenue model. One of the co-founders, Biz Stone, told the Reuters Global Technology Summit in New York, "There are a few reasons why we're not pursuing advertising. One is it's just not quite as interesting to us.”

Really? Ad revenues are not “interesting?” Are any revenues interesting?

The company has claimed that they will generate revenues from tools not from charging the users and businesses for the service, leaving the actual model that will generate actual revenues as a wild guessing game (who will pay for the tools if it’s not the users or businesses?).

Supporters of the company claim that this is all fine, and that Google didn’t make any money in its first four years either. That would hardly be any consolation to Twitter’s investors who for every Google, can name 30 pet.com’s that didn’t make it without a viable revenue model.

All this comes amidst news of 30% layoffs at myspace, the granddaddy of social networking sites which was acquired by Rupert Murdoch’s business conglomerate back in 2005. The layoffs were due to the fact that – big surprise – revenues at myspace declined. That’s what happens when grownups run a company.

Granted, Twitter’s CEO, Evan Williams, is a successful entrepreneur and sold his most famous company, blogger.com, to Google. Also, Twitter is really just beginning to find itself. It’s possible Williams has plans to prep Twitter for a successful acquisition even though he refused a deal with Facebook. The company has made promises of new features and a viable revenue model by the end of 2009 / early 2010 and his investors seem firmly behind his plans. But if he doesn’t take serious advantage of the Green Wave thrust upon him from Iran, they may have no choice but to look elsewhere for adult supervision.


  1. I believe by Twitter keeping itself out of the commercial discussions it is doing itself more benefit. The fact that Twitter is being used in this way - to circumvent censorship and restriction is what the Internet is all about; the flow of information.

  2. As soon as you create an ad revenue stream, it can be measured, and then everyone quickly figures out how little advertisers are interested in competing for the attention of the twitch set using text ads. Then the BS potential value of your startup evaporates. Evan Williams looks like he's holding out for a magic sucker number.

    As for these tools they plan to develop, they had better wall off their content, or people will just write their own parasitic tools ... like Cursebird.com.