FOR TWITTER, SHARING DATA WITH GOOGLE WOULD BE SUICIDE
In a way we are all virtual stock holders in Twitter. We all have a vested interest in its success. Facebook is soon to monopolize the social stream to the same extent that Google has done with search. That is not good for anyone, including Facebook. I have had many discussions with people in recent weeks about the face-off between twitter and Facebook and also about the high probability of Twitter cutting a deal with Google. When I was asked by Erick Schonfeld at the Real Tiime Stream Crunchup (Video) event about my opinion on Twitter giving Google their firehose feed, I responded that they could do that if they don’t plan to sell their company in the future. In other words, it is my humble opinion that if Twitter was a publicly traded stock its value would drop by 75% the second that deal was announced and for good reason.
Twitter is important. How often does a company come along that really changes consumer behavior? That creates a new form of media consumption and connectivity? For all the thousands of startups covered on Techcrunch only a few have a profound impact on the arc of internet history. Twitter has earned its spot in that pantheon and now it remains to be seen if it can play a bigger role in how to monetize the stream and in the process build a real business.
At this moment in time, Twitter has such a stronghold on this new form of real-time consumption that it has the potential to dominate the category. But its window of opportunity is closing fast as Facebook and others hurl themselves at that prize. The experience of real-time communication and search, that sense you get of unfolding streams of relevant information to your interests and queries flowing in a digital river has arrived with Twitter coursing first through the rapids. But now that we have arrived at this new medium, what next? Does Twitter become an example of a utility that is emulated by others that already have a monetization engine, leaving Twitter to ultimately drift to a respected place in Wikipedia like Netscape? Or does it continue to push the boundaries and create a sustainable and growing business that will allow it to continue to ride the whitewater?
If twitter is to confine itself to being a communications medium, or even worse, a news distribution engine, it will surely perish. By analogy, Google as a business is not a search engine but an advertising business that is printing money at unprecedented rates. Google does this by owning the equivalent of distribution in the digital age. Its just that the meaning of the word “distribution” in the digital age has shifted. Google, as the entry point for such a vast audience, effectively owns the distribution on the Internet as a business leader and brand. Its lead continues to grow as the audience grows.
Google’s economics lay in the economy of intent. The intent of users to purchase a product or service when they use Google’s search is what drives its money presses. The context of the users’ actions and interests map to an intention which advertisers are eager to pay for. The ability to automate the placement of advertising next to relevant content and map consumer queries to useful advertising stands at the heart of Google’s success.
This is something that has been notoriously missing on communication platforms. See AIM as an example. What was once an omnipresent juggernaut of a product is inching towards being a footnote in internet history. One that has always struggled to monetize its vast audience. The same is true for other communications platforms such as Hotmail and Gmail. They have become strategic traffic drivers in companies with a broader monetization engine. Look further into innovative news aggregation platforms such as Digg, Google News, and Techmeme and you see that it’s pretty tough to generate significant revenues in news, certainly not Google-scale revenues. Even for pillars of the industry such as the New York Times, big online profits are elusive. So there are not many prospects for building a sustainable multi-billion dollar business for Twitter either as a communications platform or a news discovery engine.
The way to make Twitter into a sustainable business is to tap into the economy of intent. God knows Twitter has that potential, but it has a narrow window of opportunity in which to execute. The business promise is to create a new type of useful advertising for people that is consumed in the context of a new form of discovery—one that for the moment is unique to Twitter but, alas, not for long. If Twitter doesn’t pick up the pace at this moment in time and take the path leading to building a business, it will begin to destroy its value. By doing a deal that will give Google unfettered access to real-time results from Twitter in Google search, Twitter will effectively be giving up the fight and losing the war. For if consumers can get the same experience that is currently unique to Twitter on Google, why would they need to go to Twitter to search? If they don’t bring their intentions to Twitter search, then Twitter is not participating in the Economy of Intent and as such will diminish its value to the single-digit millions.
At the risk of stating the obvious let me throw out some constructs. There has been much speculation about how Twitter will make money. From #pastryto #diabetes, the world of Twitter is self-organizing in a highly effective folksonomy that is vibrant and useful. Today, Twitter users are left to their own devices when it comes to unearthing these gems in the stream. As Twitter further develops its discovery(taxonomy) and search engine, the valuable content streams will be unearthed. Think of the simple impact of auto-complete in the search box to # tags. This is but one simple move which could start to drive traffic to focused streams of information, which could also map to useful advertising, just like on Google. Start with creating a marketplace for advertisers around the #tags, then search queries, and see how valuable the experience Twitter created really is. Throw in the recent evolution in geo-tagging and you add another layer of usefulness. Typing in “amazing restaurant” when you are in Soho should show a fresh stream of nearby locations, recommendations, and warnings. As Twitter make these changes, users will start focusing more on discovery, and it will become a self-fulfilling prophesy. Users will alter their behavior to capture the search queries. The notions of surfacing more advanced trends and audience recirculation present further opportunities. There is so much that can be done in this domain once Twitter has the critical mass of audience and data.
Twitter has a unique opportunity to innovate and create new forms of useful advertising that will truly help both users and advertisers. This was the key to Google’s success and is the key to Twitter’s future. It takes time for advertising to become useful as it requires a significant liquidity of ads. Twitter has to start soon to build up that liquidity in time for the face-off competition for the advertisers. They need for buyers to know they are the go-to place for in-stream advertising. Google is at a big disadvantage at this junction in time. One only needs to set a Google alert to see how latent their Twitter discovery is (I have seen alerts come in for tweets that are 3 days old). Google has not made it a secret that the strategic importance of the real-time web registers with them.
For Twitter to give away the farm (its firehose of Tweets) at this stage is tantamount to suicide and can only be defined as a form of creative laziness. Twitter, you got this far don’t get too comfortable with all that money in the bank. Get off your asses and push, you owe it to history. There are so many things you could be doing short of giving up and serving yourself up on a silver platter. If you must do it, if you do sell your data or yourself to Google – make ‘em pay, they can afford it. If you give away your data to the majors, they wont need to buy you anyway and if you don’t create a solid way to make money, you can’t survive on your own.
Make your own path, and you’ve got it made.