For a year or two I've predicted the ultimate demise of Twitter, which probably means some kind of acquisition. I stand by that prediction. They have hundreds of millions (if not billions) so it's not going to happen overnight but it will happen.
What is Twitter? I see it as two things:
1. Infrastructure: it is a means of sending thousands of short messages a second to people in asymmetric relationships. Technically this isn't a hard problem. There are many companies around who handle traffic many orders of magnitude above this. The danger with infrastructure is that it will get commoditized. The cost in terms of resources (bandwidth, CPU, power) is not that high;
There are parallels between Twitter and SMS. SMS survives and is hugely profitable because of the telco cartel that monopolizes it. Where hosting companies will provide you with bandwidth for cents per GB, SMS costs thousands if not millions of dollars per GB. That too will come to an end eventually. What saves it now is all the players want to push their own standards and they aren't interoperable. It's IM fiefdoms all over again.
2. An audience. Twitter and its users have the ability to reach a large number of people. Originally Twitter was envisioned as a means of real-time status updates between normal people. My impression is that this use case is basically dead. The vast majority of Twitter usage seems to be as a communication tool by celebrities. There is a business in that but it isn't the revolutionary communication tool it was once thought (and some still think) it to be.
So the camps in question (the API camp and the ad camp) fit into the above.
Owning infrastructure can be hugely lucrative (eg SMS). History is full of examples of this. Railroads, oil, telephony, etc. The problem is that you get too big and the government will intervene.
Messaging infrastructure is too important for one party to own it. Email is federated and open. The future of messaging is too (I believe) federated and open.
So that leaves (2), the ad camp. The problem with advertising on Twitter is the same as it is on Facebook: it's an unwelcome intrusion.
Perhaps Twitter could have (and may still be able to) build a display ad business but Twitter is still not a particularly mainstream product (and IMHO it doesn't look like it ever will be).
Perhaps Twitter could've had a subreddit/Facebook pages type hubrid model. Upvoting of Tweets is possibly interesting.
Of course this faces the same problem Digg had: few things are globally interesting. What's interesting to you is not necessarily interesting to me so you changing what I see is again an intrusion.
Basically "content gateways" (like Digg, Slashdot, etc) were I believe transitional. I don't believe you'll have a repeat of Digg moderators being paid to promote stories. You can (and people do) pay celebrities to retweet things but that still only goes to their followers. They have to consider their brands and building and keeping their respective audiences too.
Those thinking Twitter should have an open firehose (or close to it) are neglecting the reality that Twitter is a business and needs to make money somehow. Open access to their content greatly diminishes that.
Lastly, quite a few people will speak of "betrayed" by Twitter over API access. They also believe that developers were largely responsible for making Twitter popular. As I said (just yesterday) that this is inevitable. Become too successful and the platform subsumes you into their core offering (no one wants core features controlled by third parties). Developers were I believe largely incidental to Twitter's success. Twitter succeeded (as it were) because people used it. To take credit for that as a developer community is like saying that the automobile succeeded because of car wash stations and autoshops selling rims.
EDIT: one last point. It's popular, particularly on HN, to simply build an audience or something that scales without concern for monetization. I certainly understand the logic behind this. Sometimes it works but sometimes it doesn't.
Twitter hasn't come up with a scalable business model yet because there isn't one. As much as founders can be praised for "swinging for the fences" and going all in, sometimes the best outcome is to be acquired because what you've developed isn't a viable independent business but could be an incredibly valuable part of a wider portfolio of products.
Look at all those people talking about the eurocup!
Also:
> The problem with advertising on Twitter is the same as it is on Facebook: it's an unwelcome intrusion.
You mean, like television commercials? Which are the foundation of an I don't even know how many billion dollar industry. I'm not saying it's a slam dunk they'll get this right but there's a lot of evidence out their in the world that eyeballs can be turned into money just about anywhere. It seems a bit hasty to just dismiss all of that.
There's also plenty of buying intent to work with like this:
Me: Yes, like TV commercials and youtube commercials and the multitude of unwelcome intrusions that do have some effect, that provide some value for the intruder but which are low grade on the developing advertising food chain.
Harry: ...the foundation of an I don't even know how many billion dollar industry.
Me: You mean like the multi-billion newspaper industry? I'm not saying that TV will go the way of newspapers but you remember TV happened before the net right? The vector today is towards ads that give people what they want, not ads that impose things on people (these won't go away but they aren't a high-value area).
I actually found an interesting use case with Twitter a little over a week ago when Pier 29 in San Francisco was caught on fire. I initially heard about it on Twitter from one of my friends. I instantly searched for "Pier 29" and found a plethora of relevant images and links as the story was developing.
Sure, searching Google News or going on the /r/sanfrancisco subreddit might've given similar results, but there was an intense amount of content developing in real-time. I was able to see images of the fire from different angles and perspectives and I felt that this was a strong feature that Twitter has. I personally think that Twitter's business model _relies_ on having a large userbase. Using Facebook would be fine with a small userbase, but Twitter's model is much different.
A similar use case: I noticed the sunlight on the wall of my apartment's courtyard was a bright orange so searched twitter for "Berlin sunset" and right away found a gorgeous image someone had just made 5 minutes ago.
Armchair economists like to discuss SMS as an example of oligopolies gone bad, but that doesn't pass the smell test. Telephone competition is suboptimal but SMS is uniquely bad in its outcomes; they've done a much better job on all other forms of data. Furthermore, costs vary from place to place but by all accounts SMS is still very expensive worldwide.
Well, it happens that SMS is a technical hack; the data payloads are snuck into the control channel. The bandwidth in this channel is very scarce. The message could be re-routed over the data network, but the cross-carrier costs are still expensive because the receiving phone might have to use the old implemnetation.
I was going to ask "Source?" but decided to look it up for myself. For anyone else reading this: cynicalkane is right, sms messages "travel on the SS7 network in tandem with voice call signaling traffic" [0]. For a great overview, read this HowStuffWorks article [1].
Thats obviously a no-starter. Its not expensive because its "snuck into the control channel", which is only partially true. If that was the case and it would be immensely expensive to transport data that way, there would be a technical solution in no time.
Remember that before SMS, most payload was sounds, voice communication. Even with codecs that is still much more bandwidth intensive. And don't even get started with routing voice cross-carrier with minimal latency; atleast with SMS you can still temporarily hold them while you wait for capacity to free up.
What's funny is that the market has tried to solve it. The first cell phone I ever got offered low-cost AIM. My work BlackBerry has a free messenger app. But it turns out people like sending messages to a phone number, any phone number, and don't care for using multiple ways to text. So SMS is the only universal standard for this. Modern phones could re-route the data to save money but the receiving phone might still use the old protocol. It's a literal "network effect".
>Modern phones could re-route the data to save money but the receiving phone might still use the old protocol.
The iPhone messages app does exactly that. It first tries to send the message via Apple, with fallback to SMS if either the remote phone isn't an iPhone or if it can't establish a connection to it immediately.
Abstraction is the right answer. Just send a message, and let the application layer figure out the right transport to make it readable on the final device.
That may be the Messages.app (on iOS and even more on Mac) plan. I sure wish iMessage and BBM were made interoperable via some well-defined bridge standard.
I don't know why they are not doing the same on their own. Anyways they are doing it indirectly by giving the firehose access to companies like DataSift[1].
> The vast majority of Twitter usage seems to be as a communication tool by celebrities.
I had a hard time with the credibility of this analysis after that whopper. Twitter use continues to grow exponentially and is currently at 140 million active users with 340 million tweets per day. It is the third largest social network behind Facebook and LinkedIn.
To make money, you either need to help others make money, or help people get laid.
Advertising is a possibility but it would ultimately be a failure given the investment that has gone towards Twitter.
Paying for a premium Twitter account isn't going help either. For most people, Twitter doesn't help them make money or isn't a status symbol.
So perhaps the business model needs to be to help people get laid somehow. Listen, people want to either get rich or get laid - do 1 or the other and you'll make a lot of money.
Seems like quite the oversimplification. So everyone in a committed relationship is trying to get rich and everyone else is either trying to get rich or laid? Sounds like a theory that may apply say to people under 25 or so, but it doesn't really model any real world beyond that that I have ever seen.
What is Twitter? I see it as two things:
1. Infrastructure: it is a means of sending thousands of short messages a second to people in asymmetric relationships. Technically this isn't a hard problem. There are many companies around who handle traffic many orders of magnitude above this. The danger with infrastructure is that it will get commoditized. The cost in terms of resources (bandwidth, CPU, power) is not that high;
There are parallels between Twitter and SMS. SMS survives and is hugely profitable because of the telco cartel that monopolizes it. Where hosting companies will provide you with bandwidth for cents per GB, SMS costs thousands if not millions of dollars per GB. That too will come to an end eventually. What saves it now is all the players want to push their own standards and they aren't interoperable. It's IM fiefdoms all over again.
2. An audience. Twitter and its users have the ability to reach a large number of people. Originally Twitter was envisioned as a means of real-time status updates between normal people. My impression is that this use case is basically dead. The vast majority of Twitter usage seems to be as a communication tool by celebrities. There is a business in that but it isn't the revolutionary communication tool it was once thought (and some still think) it to be.
So the camps in question (the API camp and the ad camp) fit into the above.
Owning infrastructure can be hugely lucrative (eg SMS). History is full of examples of this. Railroads, oil, telephony, etc. The problem is that you get too big and the government will intervene.
Messaging infrastructure is too important for one party to own it. Email is federated and open. The future of messaging is too (I believe) federated and open.
So that leaves (2), the ad camp. The problem with advertising on Twitter is the same as it is on Facebook: it's an unwelcome intrusion.
Perhaps Twitter could have (and may still be able to) build a display ad business but Twitter is still not a particularly mainstream product (and IMHO it doesn't look like it ever will be).
Perhaps Twitter could've had a subreddit/Facebook pages type hubrid model. Upvoting of Tweets is possibly interesting.
Of course this faces the same problem Digg had: few things are globally interesting. What's interesting to you is not necessarily interesting to me so you changing what I see is again an intrusion.
Basically "content gateways" (like Digg, Slashdot, etc) were I believe transitional. I don't believe you'll have a repeat of Digg moderators being paid to promote stories. You can (and people do) pay celebrities to retweet things but that still only goes to their followers. They have to consider their brands and building and keeping their respective audiences too.
Those thinking Twitter should have an open firehose (or close to it) are neglecting the reality that Twitter is a business and needs to make money somehow. Open access to their content greatly diminishes that.
Lastly, quite a few people will speak of "betrayed" by Twitter over API access. They also believe that developers were largely responsible for making Twitter popular. As I said (just yesterday) that this is inevitable. Become too successful and the platform subsumes you into their core offering (no one wants core features controlled by third parties). Developers were I believe largely incidental to Twitter's success. Twitter succeeded (as it were) because people used it. To take credit for that as a developer community is like saying that the automobile succeeded because of car wash stations and autoshops selling rims.
EDIT: one last point. It's popular, particularly on HN, to simply build an audience or something that scales without concern for monetization. I certainly understand the logic behind this. Sometimes it works but sometimes it doesn't.
Twitter hasn't come up with a scalable business model yet because there isn't one. As much as founders can be praised for "swinging for the fences" and going all in, sometimes the best outcome is to be acquired because what you've developed isn't a viable independent business but could be an incredibly valuable part of a wider portfolio of products.