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Twitter is a Commodity

With $5.4 million in funding, Twitter’s certainly interesting investors. But is it really worth that much? Is it worth anything? Personally, I’m a big Twitter fan, but where’s the business model?

The knee-jerk reaction to “where’s the business model?” is of course, “advertising”. There’s no question Twitter could make some very valuable inferences about people based on the content of their tweets. With the right technology, Twitter has the potential to take contextual advertising to a whole new level. But will the users of Twitter actually accept advertising?

Already, many of us have Twitter-overload. We’ve got a constant stream of messages coming in, some interesting, some pointless. There’s been much talk lately of solutions that filter out the pointless and make more prominent the interesting. Given that we’re already in this situation, won’t advertising in the Twitter stream significantly compound the problem? And even if we accept their existence, will anyone actually pay attention to advertisements on Twitter when they’re just more noise in an already noisy stream?

Consider Twitterific. I love Twitterific. It’s my every day Twitter client. What’s interesting about Twitterific is the fact that it already contains advertisements within the stream. They don’t appear as notifications like tweets, but if I open Twitterific I’ll see them in there. Here’s a question to any Twitterific user: firstly, have you ever clicked on an advertisement? And secondly, can you even recall the content of one of them? Granted, Twitterfic (presumably) isn’t making use of contextual advertising techniques, but the point remains. It’s just more noise in an already noisy stream.

Let’s assume that Twitter adds advertisements to the Twitter stream anyway. It’s quite likely, because they need to try to make money somehow, right? — especially now that they’ve got investors to please. Twitter has two options: make the advertisements unobtrusive and let them get buried in the noise (ie. minimal revenue), or figure out a way to make them more prominent, rising above the noise. Let’s assume Twitter settles on the latter: will you, as a Twitter user, accept that? And here’s the problem- if the masses don’t want advertisements, they’ll either jump ship to a Twitter clone or use a client that filters out the advertisements. Let’s consider each of these.

Firstly, you might ask what makes the “jump ship” argument any different from any other social network. Couldn’t the same be said for Facebook, MySpace or anything else? Actually, no, it couldn’t. Most social networks involve setting up a customized profile and in-depth network. I’m not talking about mere aesthetics, but also the whole range of add-on applications that are intertwined with the fabric of the service and any data you enter into the system (either directly or as a result of your actions).

Twitter, on the other hand, resembles more of a “pipe”. It’s a little like email in that way. There are just three “lock-in” aspects to Twitter: your followers, your history of tweets and applications that have been built to work with Twitter. And, unlike other social networks, it’s incredibly easy to build a Twitter clone that allows for importing your followers and history. What’s more, expose an API that resembles Twitter’s existing one and it’s a straight-forward exercise for third party applications to add support for the Twitter clone. It’s also not a stretch to imagine that the Twitter clones will even add support for each other, enabling “unified clients” in the same way we’ve seen happen with instant messenger services.

And this brings me to the conclusion: Twitter is a commodity. It’s easy for developers to clone, and it’s easy for users to jump ship. Most Twitter users use third party Twitter clients, such as Twitterific, that can easily add support for clones. We then end up in a situation similar to the IM landscape: dozens of alternatives, pick the one you like and use a unified client to integrate with all of them. The purpose of this article isn’t to “rip” on Twitter: it’s a great idea and a great service. But I don’t see it developing into a sustainable business, in the same way that instant messenger networks aren’t sustainable businesses on their own.