Twitter recently gave some guidance to developers about which type of 3rd party clients (e.g. TweetDeck, CoTweet, Seesmic, etc) will be permitted going forward. The guidance was essentially that developers should stop building consumer oriented Twitter applications. Evidently, they feel that "a consistent user experience is more crucial than ever." But the user confusion / inconsistent experience argument for reining in the ecosystem rings hollow. A more convincing explanation would be that Twitter needs to control the delivery of ad inventory across it's platform - and that's ok. Twitter has the right to do whatever it feels is best for them and their platform. And Alexandra Sameul has a good take on that in her recent piece over on the Harvard Business Review Blog. But biting the hand that feeds (um - fed) you is a mistake.
Twitter has benefited disproportionately from the efforts of it's ecosystem since it's inception. Hashtags, @ replies, RT's, and more all came from the ecosystem, not Twitter Inc. The real reason 3rd Party clients are so popular in the first place is that the Twitter.com product is virtually unusable for power users. They make using Twitter more intuitive and usable, not less. Shutting down the developer ecosystem in this heavy-handed way is counter-productive to Twitter's efforts to monetize in the long run. There are better ways to maintain control of your platform (and monetize other than serving ads) and still let 3rd parties innovate around your core where everybody makes more money. Ironically, this move to create a more consistent user experience may actually hurt them in a way that I don't think they're fully aware of. I contend that alternative user experiences actually increase their ability to monetize.
IMO the Twitter user base is split in to two basic user groups:
1) Power Users. This group uses Twitter as a business tool of some sort (customer acquisition/competitive intelligence/etc) and/or as an interaction platform. These users overwhelmingly use 3rd party clients because those clients are the only way you can efficiently process the Twitter stream. Twitter.com for this group is a complete non-starter. BTW, what ever happened to "Twitter for Business"?
2) Lean-Back Users: This group tends to follow high-profile celebrities, personal interests, and/or industry leaders. They consume and surf Twitter very similarly to how they consume Television or the Web in general - it's just another broadcast stream for them to drink from. This is the group for which the development of some form of a "channel" solution would be very compelling: "If Twitter were TV, In Search of a Better Twitter App".
The smartest thing Twitter could do is to recognize these two basic user groups and determine how to best serve and monetize each. And I think Twitter knows that the participation of a talented/hungry/motivated developer ecosystem can better serve the user base than Twitter alone can.
I continue to believe that Twitter can be the most important communication channel in the history of the Internet, but they can't do it alone. Ironically, what they'll realize is that by shutting down the ecosystem under the guise of "inconsistent user experience" they're handcuffing product development, which will limit their potential audience, which will constrain their ability to monetize to their full potential. There's middle ground here with the opportunity to open up massive new revenue streams. Twitter just needs to think this through a little better.
(Thanks to Chris Dixon for prompting me to write this post)
On the 5th Anniversary of the first tweet on Twitter, this mockumentary takes a look back at the history of twitter. "What we do know for sure is that Ashton Kutcher invented Twitter in the year 2006, and then ....."
On Friday Twitter suspended UberMedia's UberTwitter, Twidroyd and UberCurrent apps for "violating Twitter policies and trademarks." Twitter continued: "We’ve had conversations with UberMedia, the developer of these applications, about policy violations since April 2010". UberMedia's Bill Gross then responded by saying the suspensions "took us by surprise". Huh? Wha? We're obviously not getting the whole story from either side, but it's clear Twitter had had enough of UberMedia's creative interpretation of their TOS to take a dramatic action to make their point.
The blogosphere is preoccupied with the notion that this is proof that Twitter is at war with the developer ecosystem and that they're somehow manipulating the playing field to favor their own homegrown apps. But that discussion misses the larger point: Companies like UberMedia are attempting to profit directly at the presentation and consumption end of the stream infrastructure that Twitter has bought and paid for. IMO UberMedia has the right to monetize "consumption environments" (their apps) that add value to end users. At the same time, Twitter deserves to be compensated for the utility they're providing to UberMedia.
The only issue here should be: Who gets paid and how much?
Twitter is at an important inflection point. They need to come out and clearly articulate their position on attempts by outside parties to monetize the stream(s) built on top of their infrastructure. My personal opinion is that Twitter should construct a model whereby commercial “rebroadcast” companies like UberMedia can choose to monetize streams delivered on their platform(s) however they want, but they must compensate Twitter on some type of metered basis (API calls or other) for providing the underlying infrastructure that gives UberMedia the opportunity to monetize on Twitter's back in the first place.
At the end of the day Twitter is an information utility – they’ve admitted as much on several occasions. They should start acting like one and begin pricing their product accordingly. If not, we can expect more of these types of altercations going forward.
The WSJ ran a piece yesterday entitled 'Twitter as Tech Bubble Barometer' in which they reported executives at both Google and Facebook have had "low level talks" with executives at Twitter about a potential acquisition of Twitter. In the very next sentence they state that "the talks have so far gone nowhere". Ok let me get this straight: Low level talks that went nowhere - wow, that's quite a scoop! Their fascination though was on the rumored $8 - $10 billion dollar valuation of Twitter and on whether Twitter would be more likely to end up with Facebook or Google. Well let me answer that question, at least partially:
The probability of Facebook acquiring Twitter is exactly 0.0%.
The only thing that Facebook and Twitter really have in common is the status update. However, the respective environments in which these updates are created, exchanged, and acted upon are radically different. Twitter is a public space and Facebook is a private (or semi-private) space. It's almost incomprehensible to imagine how a combined entity would resolve these two spaces in to anything that would provide any real value to its users. In short, a Twitter/Facebook combination would be a functional / experiential train wreck.
An acquisition by Google on the other hand is an entirely different matter. Twitter's orientation around the "Interest Graph" makes it ultimately much more monetizable over time than does Facebook's Social Graph, and it dovetails quite nicely with Google's subject-matter / intent-based value proposition. Twitter and Google are in this sense highly complimentary. No such synergistic relationships exist between Twitter and Facebook. If Twitter ever figures out that its primary value proposition is in its broadcast / notification capabilities and starts to re-orient its product around the channel metaphor as outlined by Joshua Kerievsky at Industrial Logic, they (Twitter) have the opportunity to ultimately become substantially more valuable than Facebook. Unfortunately the Twitter product has essentially drifted sideways for the last two years. Until they get someone on board who has a strong vision toward driving the product (and revenue) beyond the "Promoted" suite of ad products, they risk falling disappointingly short of realizing their full potential value.
For the time being I don't see Twitter entertaining any acquisition overtures. They have $300 million in the bank which gives them plenty of runway to figure some things out. If they can re-orient the product in the next year like I hope they will, they'll have no problem getting to an IPO. And remember, neither Twitter's current nor former CEO are especially fond of Google - both had their companies acquired by Google (Evan Williams with Blogger / Dick Costolo with Feedburner) only to watch Google essentially bleed them to death.
The only way that Twitter sells to anyone is if Dick can't get the revenue machine cranking on all cylinders within the next 12 - 24 months. If he can't, I think the board takes it out of his hand and takes an offer from Google at between $15 - $25 Billion dollars. My bet (and hope) however is that Twitter eventually finds its groove and goes it alone.
UPDATE: Felix Salmon from Reuters wrote an excellent piece today entitled "Understanding Twitter's Valuation". I highly recommend it, especially if you've wondered how a rational person could value a company with relatively meager revenues of less than $50M at an enterprise valuation of $10 Billion dollars.
As usual, Stewart nails it - creates comedy out of Zuckerberg's hypocrisy:
“Mark Zuckerberg doesn’t want to be transparent? The guy whose immense success was founded on mining our personal data, the guy who shares my photos with the whole world unless I change my privacy settings every half hour!?”
http://www.thedailyshow.com/watch/thu-january-6-2011/the-anti-social-network