Should Twitter Sell?

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:

User-Generated Content Study

I am currently working with Michelle Rogerson on a research project studying the rise of popular user-generated content online.  In particular, we are interested in identifying the reasons why some content (such as some YouTube videos; see Top 10 YouTube videos) gain star status, whereas others are barely paid any attention to.  We surmise that network properties as well as author characteristics both contribute to such contrast in circulation and popularity.  I will talk more about the research project in future blogs.  But right now, as part of the project, we are conducting an exploratory survey of people’s usage and sharing of user-generated content.  We would appreciate it if you could please spare 10 minutes of your time to fill out this short survey.  I will post the findings on my blog once the survey concludes.

Best Practices — Effective Use of Twitter

What is it?

In this entry, I am going to discuss two organizations: McKinsey Quarterly and Brooklyn Museum.  These two organizations are very different in many ways.  But they share one commonality in that they both use Twitter very effectively in gathering customer intelligence and strengthening customer relationships.  McKinsey Quarterly’s Twitter username is @McKQuarterly; and Brooklyn Museum is simply @brooklynmuseum.

Why is it a good idea?

Many companies use Twitter or other microblogging tools to bring customers more timely updates about the business.  This is what I call a “broadcast” model.  While it is useful in its own right, McKinsey Quarterly and Brooklyn Museum went beyond that by practicing the following:

(1) Attach links to tweets so that users can choose to drill deeper into a topic if they are interested.  Not only does this offer a higher level of interactivity to satisfy user needs, but with proper tracking it also provides useful insight on what interests customers.

(2) Use @replies functionality to build a dialogue with customers.  For those who are not quite familiar with Twitter, one can add @username into one’s tweet to reply to a user or to refer to a specific user.  Both Brooklyn Museum and McKinsey Quarterly closely monitor user comments and use @replies to respond to those comments in a timely fashion.  This approach makes users feel appreciated, which encourages future participation and builds loyalty.

(3) The third tactic that I would like to discuss is used by McKinsey Quarterly.  They have turned their twitter account and their large number of followers (7645 as of right now and it’s not hard to imagine the high relevance of these followers)  into a marketing research machine.  Earlier this year, for example, McKinsey Quarterly published an article on Six Ways to Make Web 2.0 Work.  Then using Twitter, they asked their followers what organizations get the most out of Web 2.0.  Combined with a special hashtag (#web2.0work), they were able to track responses from users.  The company then updated the original article based on the ideas they received from the Twitter community (of course they posted a tweet about that update too).  Does it get much better than free marketing research?