Photo Credit: xdxd_vs_xdxd via Flickr

Twitter Should Focus on its Ecosystem’s Value, Not Ads.

It’s Friday night and I’m sitting in a Hotel in Next To Nowhere, Bavaria, waiting for a wedding to happen tomorrow (not mine, no worries). So, I just thought I’d write a quick piece on Twitter. I will first give you a rough analysis of the current state and close with an idea that might be worth further consideration.

I have been thinking about the service and its future for a few weeks now. Jack Dorsey’s and DeRay Mckeeson’s interview at Code Conference and the following analysis got me going. And, as chance has it, I just had a brief discussion about the topic with Stefan Hajek on Facebook (in German). I want to move it here as writing is just a gazillion times better on Medium (and because I believe it’s a topic worthy of a broader discussion).

Basically everybody agrees that Twitter is not in good shape right now. Even Twitter knows it. A lot has been written about the service lately. While I agree with everybody who says that Twitter won’t be able to compete with Facebook from a product standpoint, I do believe that there is a specific value to it.

I don’t have time for a deep dive into data and research so everything I present here is from knowledge, experience and personal estimations (also, the wifi isn’t working so I can’t do any in-depth research on the go; in case you’re wondering how I published it: Tethering). So feel free to chime in and correct any mistakes I might have made. The piece is not meant to be conclusive but provide some under-represented perspectives and some ideas for future analysis and thinking about Twitter.

Twitter as a product

Let me just briefly give you an overview about Twitter’s problems. If you look at it from a broad, mainstream audience perspective you could simply say: Facebook. That’s obviously very simplified and power users and aficionados will likely disagree. But the fact of the matter is: Most people simply don’t need a tool that allows them to share stuff openly and with the world at large most of the time. What they do want is sharing with their friends and families and Facebook is a lot better at this than Twitter — by design. Or as Ben Thompson regularly puts it: People live inside Facebook. People don’t live inside Twitter.

Of course, there are several exceptions to the rule, otherwise Twitter wouldn’t have any users, but as a general assumption I think the point is valid.

In our Facebook discussion, Hajek made the point that Twitter often appears to be mostly populated by senders aka people who want to ‘promote’ their stuff. Significantly less people go to Twitter to discuss, discover and engage. I think he is right to a certain degree but there are exceptions and I believe these exceptions matter (as in: they are where part of Twitter’s value lies).

Live Capabilites

For instance, Twitter is by far superior when it comes to live events with a broad public interest. Experiencing and discussing the European Soccer Championship, the NBA Finals, X Factor or — in Germany — Tatort is a way better experience on Twitter. Again: By design. Facebook doesn’t need to be in the live business, as it is in the business of relevance and targeting. Its very business model relies on those capabilities. Of course, the question remains: What value is there in being great at live communications? (I have some ideas but they are for another time)

Real-time organization of (social) movements

Related to this, yet I believe worth mentioning separately: This capability of live communication has come to full fruition several times now in the context of social movements. The Arab Spring, #blacklivesmatter and so forth. Interestingly, Dorsey made a point of this by being on stage at Code Conference together with Mckeeson, one of the leading figures of the #blacklivesmatter movement. From a monetization standpoint it’s hard to grasp, but it surely is useful to some people and one might argue that its beneficial to society (at least it has the potential to be). Again, the question remains: What value is there in being the infrastructure for social movements?

Twitter creates fragmented values

Another point that is rather obvious but missing from most analysis I read recently: There is not a Twitter. Every user has a very unique experience depending on who he follows. While this is also true for Facebook, it is magnified by Twitter’s open, asymmetric relationship structure (you can follow people without them having to follow you as well). In practice, this means there are probably hundreds of thousands of networks around particular interests. Many of them have very different modes of using the platform. There is football/soccer Twitter. The people there heavily interact and discuss during live games and beyond. There is [insert music genre of choice] Twitter. There, fans follow artists and interact with them, fans discuss among themselves and artists promote their work. There is tech twitter. The heavily self-promotional business twitter. Content distribution twitter. Comedy twitter. Photography Twitter. The list goes on and on. All have their own social codes and behaviors.

In order to identify the value Twitter creates for each of those communities, a detailed analysis would be in order. For the reasons stated above, I will just give you some non-conclusive assumptions (it would obviously be worthwhile for Twitter to really dig deep into this. I’m confident they do but if they don’t, Ev Williams should give his former co-founder a hint.).

Twitter sub-community: Values twitter creates

Business Twitter: Self-promotion / personal branding

Sports Twitter: Content discovery & (live) exchange

Music Twitter: Discovery & discussion

Comedy Twitter: Having fun, ‘hanging out with friends’, being creative

Brand Twitter: Content promotion, customer care, deriving insights

Teen Twitter: ‘hanging out with friends’, flirting, sharing memes, identity creation

Celebrity Twitter: Self-promotion, fan engagement

Journalism Twitter: Content & news discovery, research, content promotion

And many more (feel free to add to this list!)

By looking at this very limited list — there are likely thousands more — you get the basic idea: Twitter is a very fragmented service that creates all kinds of values to different people. Some of them are more easily turned into a business case than others. An additional issue for Twitter: Many specific cases are better catered-to by other services. If you want to flirt, you go to Tinder. If you want to discover music, you go to Spotify or Soundcloud. If you want to find business folks, you go to LinkedIn. In some cases, there are even (and always have been) services built upon Twitter that do a better job at things Twitter should do, as for instance the currently hyped Nuzzle. On the flipside, no other service does all those things at least at a decent level. Twitter does. The questions are: What value is there to having a highly diverse ecosystem that does many things at least okay AND how do you monetize this?

Mapping communities

One thing I want to mention that nobody does better than Twitter: It’s a great mapping service for communities of interest. Because of its open structure it’s the best place to start if you want to find out which people are interested and active in a certain area. You want to know who is vocal about Apple stock prices? Go to Twitter. You want to know which people are concerned with open administration? Go to Twitter. You want to find the best NBA writers? Go to Twitter.

Interesting side-note: The reason Twitter is the best place to do this is exactly that they weren’t designed as a people discovery service but as a tool to be vocal about things. Of course, the downside right now is that it’s actually rather painful (as in: not intuitive for most people) to use this capability. But that’s a problem which could be tackled rather easily by providing some better tools. The other issue and open question is: Can you monetize that capability?

Advertising isn’t right for Twitter

All this being said, the fact remains: Twitter performs poorly from a business standpoint. For the last two or so years they worked on introducing advertising features in a misguided attempt to turn advertising into their major revenue source. The problem is: Advertising on Twitter should work like Facebook’s advertising — brand advertising, image ads etc. (that is: not like Google’s system that is closer to the actual transaction) — for it to be a great business model. However, while Twitter has lots of valuable data, they are miles behind Facebook with regards to data important to advertisers.

As the gold standard for being a large scale advertising distribution platform on the web is targeting, personal user data is key. But while Twitter knows what you talk about, it doesn’t know who you are. Sure, they might use stuff like pattern recognition in order to make educated guesses but they remain guesses non the less. Facebook knows. So, this is not the right battlefield. Many people knew so when Twitter started and by now, I assume, even Twitter knows. Advertisers certainly do.

Thus, regardless of how much Twitter tweaks its advertising product: I don’t think it’s the optimal model for them. (And yes, I know I’m generalizing here, as there are some rather specific cases where Twitter ads work well. However, I’m talking about an easily scalable advertising product, which is what Twitter would need).

The power lives in the ecosystem

I strongly believe the real power and value of Twitter lies in the ecosystem it owns and the data it creates — in real-time and at scale. If you want to use software terminology: Twitter’s backend is more valuable than its frontend. Thus, any approach to monetize it should start there. Of course, in some way advertising tries to do that but it’s not the best use of Twitter’s data as I explained above.

Sure, there might be some ways to put more emphasize on the real-time aspect and sell this as a unique thing to advertisers but while this might sound nice in theory, it’s not. Most marketing organizations aren’t equipped to handle this, at least not at scale. And even most agencies couldn’t, even if they wanted to, because they rely on clients when it comes to signing off on things. As long as processes in companies are not in real-time, advertising won’t be. Plus, I’m not sure that real-time advertising is useful to most advertisers on a regular basis.

So, to me the real question Twitter should be concerned with is how to monetize all the data and the things going on in their ecosystem. The problem, however, is: It’s in the very nature of an ecosystem to be a fragmented, complex, heterogeneous thing. As I illustrated above: There are in fact very different Twitters for different users. Thus, there likely isn’t one answer that turns all the different kinds of value people derive from Twitter into revenue. But there might be many different ones. Alas, as a company Twitter has to deal with limited resources. If their next thing is a miss, they might indeed have a significant problem.

That being said, I believe there is an approach to tackle the problem. Funny enough, it’s a twist on something Twitter did in the past to become what it is today. Back in the days when microblogging became a thing, Twitter used its API as a driver for innovation by third parties (software developers in this case). In doing so, they managed to stimulate a lot of innovation. Way more than they could ever have done on their own (later, they bought many of said services). A few years ago they famously limited the access to their API in an attempt to get more control over the user. While this might make sense from a traditional business model perspective, it might have been a big mistake for Twitter as an ecosystem. I believe Twitter should go back to its roots in order to solve the monetization problem.

The monetization API

Instead of trying to create a sellable product, Twitter should think of itself as what it is: One of the internet’s most relevant ecosystems (at least to this day). That is, they should create something like a monetization API. What do I mean by this?

They should give tools to their users that allow them to come up with different monetization scenarios and then collect a ‘tax’. This would obviously contain cases where you need actual APIs but not necessarily only that. I think there might be ways even less technically adapt users would like to use Twitter for monetization scenarios. Activism is a big thing? Then let activists use Twitter to raise funds (and keep a small share). People believe their followers would like to support them? Fine, give them the tools to create a ‘donation’/patreon-like payment system (and collect a tax). And so forth. I bet there are many scenarios we don’t think about but someone does.

That’s basically the approach Amazon is increasingly taking as it is probably the best business model when you provide infrastructure. And Twitter right now is exactly that to me: Infrastructure (which allowed a substantial ecosystem to grow).

And what if this fails?

Of course, that’s only a rough idea and I don’t give any guarantee that it would work. Though it might be the best bet when you are Twitter right now. Still, even such an attempt might fail.

But then what? While I fully recognize the business challenges Twitter is facing, I’m also convinced of another thing: There is a significant amount of people who would agree that Twitter should exist. The world would be worse off without (something like) Twitter. Again: It’s an important piece of the modern web’s infrastructure. If they can’t figure the business side out, I have an even more radical approach (absolutely not thought-through, written late at night in a Hotel room without wifi and probably sleep-deprived):

In the worst case scenario, they should probably just open source the platform and turn Twitter into a public good.

First, though, I think following the ecosystem/monetization API approach sounds like a good idea to me.

If you want to connect, follow me here, on Twitter or add me on LinkedIn. For more information, take a look at my page.