Partly due to celebrity involvement, Twitter has quickly gained popularity in the last few months. According to eMarketer, various online metrics firms reported an approximately ten-fold increase in unique Twitter visitors from February 2008 to February 2009. With the rise in popularity, news broke out that quite a few major firms, including Apple, Microsoft, Google, and Newscorp, are eyeing to buy out Twitter.
Should Twitter sell out when it is still hot? My answer to this question is no. Here’s why. Twitter, just as Wikipedia and Facebook, didn’t start out as a major corporation. Rather, it is built over time through the participation and faith of its users. What makes Twitter precious in consumers’ mind is the community that it has created. The value of the Twitter brand name is not in the company itself, but in all the people who contribute fantastic and interesting content on the fly and in the way it is able to connect people with each other. Now adding a suit and tie image and a clear profit motive that is usually associated with large corporations, it will simply clash with Twitter’s current brand image and turn off the goodwill it has engendered among its users. Twitter from Microsoft (or Google or News Corp.) just doesn’t sound right.
One might argue that YouTube got bought out by Google and it is still popular. But that acquisition has yet to prove beneficial to Google money-wise. It is estimated that YouTube will lose $470 million in 2009, on sales of $240 million. Plus, it is also facing pressure from Hulu.com, another video website that has successfully struck business deals with major networks recently, including a stake taken by Discovery. Piecing these events together, the future of YouTube is quite uncertain.
Of course, Twitter is going to face the same question too in terms of how it is going to support itself financially if it were to remain independent. To answer that question, one has to look at the value and competency that Twitter possesses. At least two areas emerge. One is information. By millions of people feeding news, facts, and opinions into Twitter in real-time, Twitter has become an information network that is no less powerful than a major news network. This can be powerful knowledge to news organizations (for breaking news), marketers (for customer opinions) and the like. One way for Twitter to make money in this area is perhaps to develop as an information expert, helping these potential beneficiaries extract and analyze the useful data. For example, a platform can be established to combine tweets with Twitter traffic information to better understand what is on the collective mind. A second area that Twitter can explore is its technology expertise. Using the basic Twitter platform, it can develop customized platforms that satisfy companies’ internal messaging needs, similar to what Yammer is doing but perhaps in a more proprietary and customized fashion. Such customized platforms can facilitate efficient and secure communication within an organization (e.g., between salespeople).
Of course, the smart minds at Twitter might think of other ways of making money. But whichever way it ends up making money, I simply do not think it is a good idea for Twitter to sell to any of these large corporations. And the company seems to agree, when Twitter’s co-founder Biz Stone said “We Are Not For Sale”.
Update (March 29, 2010): Recently, Twitter founder Biz Stone was interviewed by CNBC about its business model and strategy: