It has often been pondered when Twitter would sell but it is just as equally a case of when would someone buy and if when then who? Following a number of high profile acquisitions by Google and AOL, amongst others, the topic is firmly back on the menu with the likes of Dave McClure and Henry Blodget reciting the old mantra that it should be Google and the time is now before it’s too late.

Twitter has yet to demonstrate a robust, reliable means of revenue generation. Although Dick Costolo has said they are “definitely beyond the experimentation stage” features come and go – early bird deals, for example, weren’t a great success and have been put aside for now.

Promoted tweets may be costing up to $100k but many have yet to be convinced that this is the way ahead and caution is urged.

Changes

One thing just about everyone can agree on is that the design of #newtwitter leaves the site open for much better monetisation possibilities due to the new right hand pane but do Twitter themselves really know how to make the most of this? Can developers with pet projects really make effective businessmen? Or are they too close to the product?

The staff at Twitter have always maintained that any advertising on the site would not be invasive and would have to demonstrate effectiveness in order for an particular run to continue. As I wrote back in April:

Twitter expects promoted Tweets to be ‘useful’ – their gauge of this will be if they are shown to resonate with their intended audience, presumably by that audience replying or tweeting. Those tweets that don’t ‘resonate’ will no longer be shown.

Can Twitter find a balance between the need to finance itself and that to keep the site clean and thus avoid annoying its users?

Eric Schmidt thinks Twitter should be able to monetise so what is holding them back? Is it the desire to keep the intrusion to a minimum? When will the economics of running a fast growing company take precedence over technical and design ideals?

Content is king

As mentioned above, it is often suggested that Google should be the company to buy Twitter but, after the announcements surrounding social layers, it would appear contradictory to the direction they are taking in the social space. With ‘layers’ Google appears to want the social aspect to act as an additional resource to enhance the user experience around the content; it’s the content that matters most whereas, with the likes of Facebook and Twitter, it’s all about the network.

If we get away from an acquisition for competitive purposes (i.e. to battle Facebook) then timing is everything. Will anyone buy Twitter while it is still in this early stage of revenue generation or will it actually take a buyout - with dedicated, experienced staff on the business side - to make Twitter turn an effective and meaningful profit? Does someone buy into that potential described by Schmidt or do they wait until the coffers start filling?

Time = money

Regardless of your opinion or position, Blodget does have one thing right: the longer anyone goes before putting in an offer for Twitter the more expensive that offer will be and will have to be one that Twitter cannot refuse but at what cost to the network and users?

Image by ecblogger

I originally wrote a version of this post in July 2009 for a different site which is now defunct so it can no longer be found on the web. Rather than lose it completely I have re-posted it here with a few ammendments to bring it up to date.

Social media and the global economy – the parallels are striking and significant.

Now that the global economy appears to be on the upward curve of a major economic “downturn” it is obvious why things have failed. Hindsight is a marvellous thing but too often we don’t learn from what hindsight has shown us.

Perhaps, more importantly, we also don’t learn from those with the foresight to realise when things are about to go south. There were those who had been forecasting a major financial crash and there are those that have long been forecasting problems ahead with the social media “industry”.

Bubbles

Social media has seen the expansion of the biggest online bubble since the whole dot-com boom and, just like the money markets, it was not hard to see that this level of growth was unsustainable.

Just like our economies, social media services have their own “interest rates”. The more compelling a service (just like a savings account) the more we invest our time in it and, consequently, the more “interest” is paid. If a service becomes less interesting we invest less and, as it can no longer support the same levels of excitement, the “interest rate” falls.

These relative rates between services, and the cross over of features/interoperability, can be likened as the social media equivalent of the exchange rate between currencies. The rates will be in a constant state of flux depending on what facilities they offer and the perception the users have based on comparisons with similar offerings. As consumers we cannot help but compare our network of choice to the alternatives and the networks themselves should be doing likewise in order to consistently offer the best service they can.

The mighty dollar

As far as ‘mainstream’ usage is concerned, Facebook is the equivalent of the US dollar against which all other services are judged. While those in other markets may not feel that the Facebook dollar is the most relevant currency, the market needs a point of reference and that falls to the service with which ‘Joe Public’ is most familar.

Just as “real world” companies had been surviving on debt the social media sphere has existed on “borrowing” ideas from somewhere else, mimicking the functionality of other services. As there are only a finite number of ways you can communicate with someone else over the internet we obviously can’t go on with this borrowing. The credit (ideas) either runs out or no-one wants to lend to you. This is when we get the creation of walled gardens – businesses doing their own thing in isolation: a retreat from the global sense of openness that social media tried to instill in all of us.

Reduce, re-use, recycle

Aggregators and other services quickly became a repository for rehashes of information held in other places – trading (and potentially profiting) on the returns made elsewhere – money for (essentially) nothing and, perhaps, could be seen as the social web’s version of the “fat cat” bankers.

In the past year or so it has been interesting to see that – like a number of banks – various social media services have folded; the social web became too disjointed with too much replication without innovation. The mistakes have been recognised in hindsight and now, with curation services, the next wave is trying to provide additional value. Just as the banks are now required to hold more capital inventive presentation, intelligent filtering and recommendation are the tools being used by the new breed of services to prevent themselves become functionality bankrupt.

Caution

Consumers are now considerably more wary about where they invest their online time so services are forced to adapt to meet these premium needs rather than target themselves at the sub-prime market of the past where just about anything would pass as a social application.

Social products must now provide real utility rather than merely just a platform to communicate.

Image by simonk

There have long been calls for a federated Twitter with the likes of Dave Winer leading the way.

Now, following comments from Alex Payne (ex-twitter employee) repeating the call that Twitter (and other networks) should be decentralised, there has been a new focus on why this should happen. Jesse Stay, for example, blogged that the first network to open up “gets the opportunity to lead the pack, and hundreds of millions will follow”

Too late

Perhaps in the early days of social networks this might have been a possiblility, not now. A few years ago when there were no defined business models and networks lived off of Venture Capital there might have been the opportunity for a bold new vision but I feel that it is now too late to change direction. Social networks are like lumbering super tankers resistent to changes in direction. Unfortunately, once they have been set in motion along a particular path it is increasingly difficult to deviate from it.

Being a social network is a business and when you are in business you want people to use your product. Decentralising and allowing users to take their data and social circle elsewhere in its entirety is a frank admission “you don’t need us”. The networks, on the other hand, need their users and need to excert a degree of control over them for monetisation purposes.

Reports show that around 70% of Twitter traffic is via the website – the new Twitter is obviously a tactic to raise that. With this level of market share Twitter are willing to live with the third party apps as they add some value to the network without too much potential impact on revenue.

Consider, however, if the network was distributed with users jumping out to alternative sites or even self hosting? At what point would Twitter say “enough is enough” as they lose revenue due to a decline in market share within their own network?

Louis Gray posted earlier:

The New Twitter also reduces the options for some services to market themselves. Instead of seeing “From TweetDeck”, “From Tweetie for Mac”, “From Seesmic for Android” and so on down the line, the New Twitter no longer displays Tweet sources. I assume this is to reduce confusion from new users, and to focus on the content of the tweet instead of its source.

It could equally be a way of reducing the impact of third party tools as the Twitter website aims to be more of a permanent destination without the need to hop out.

Jesse has also recently pointed out that new twitter also removes the link to RSS feeds for streams. I commented at the time that this may simply be because it is an underused feature, Twitter have done the metrics and removed it. It is entirely possible, though, that is has been deliberately pulled to prevent the easy access to the feed from external clients.

Defensive

The networks are going to be protective over their estate and this is perfectly understandable. In order to maximise their returns they are going to want full control and will not be willing to share user base, advertising opportunities etc. Now that the networks have matured they are plugging their own gaps and, as I said before, taking back what they now consider to be rightly theirs.

Social networks may well be heading in the wrong direction as far as advocates of an open web are concerned. Some may feel, perhaps rightly so, that Twitter and other networks need to open up or die but the consequences of doing so could be equally catastrophic.

Social networks are, perhaps, realising that the old ways just don’t cut it any more and repurposing is the way ahead; by becoming destinations for more common activities such as news and media consumption they stand a much improved chance of survival.

Image by Jasoon

Since it was announced that Google are building a social layer, and choosing to do things a little differently, into their apps rather than a separate social network there has been criticism and outright rejection of the idea. But, as I have previously said, taking this approach actually makes quite a lot of sense.

TechCrunch reported:

“Google Me will produce an activity stream generated by all Google products. Google Buzz has been rewritten to be the host of it all. And the reason Google Buzz isn’t currently working in Google Apps is because they’ll use the latest Buzz to support the activity stream in Apps…All Google products have been refactored to be part of the activity stream, including Google Docs, etc. They’ll build their social graph around the stream.”

There has been some disappointment to Google taking this direction but it does not need to build a new social network from scratch – it already has one in the form of Google Buzz. It just needs to develop it further. With the rumor that Buzz will form the aggregator for the various social layers it would appear that this development is already on the cards.

Context

Fred Wilson raised the issue of context and likened this approach to FriendFeed. He cites FriendFeed’s failure to make a big impression as an indicator that Buzz as an aggregator could fall flat on its face.

He argues that the likes of Twitter have succeeded because of ‘social intent’ – users visit the site with a specific purpose in mind (a view I touched on a couple of years back) – whereas, FriendFeed failed as there was no specific intent and items appeared out of context.

I replied to his post with the following comment:

“The key difference to FriendFeed here, as I see it, is that each Google product will have its own social layer specifically tied in to that product – the specific social intent as you describe above.

If the reports are accurate then activity from each of those social layers is aggregated separately (allegedly in Buzz) – so Buzz is the equivalent of FF where you can access all of the social interactions from the products you use in one location.

The fact that each app is social in its own context means that you interact at whichever level you choose. Only use Picasa? Fine just interact there – there is no need to dock with the Buzz mothership. Want to use multilpe products and see what’s going on in one central location? Cool – head to Buzz.

In my opinion, it offers choice and flexibility.”

This layered approach will afford greater flexibility and allow users to choose how they interact socially – there would be no obligation to use Buzz.

Did FriendFeed really fail?

If you look just at the numbers then, perhaps, FriendFeed could be considered to have failed. Adoption rates aren’t up there compared to services like Twitter and usage has dropped off significantly. But let’s use Fred’s argument of context against him: when you consider that FriendFeed was bought lock, stock and barrel by the single biggest player in the social space and many of it’s features found their way in to Facebook itself then you have to consider FriendFeed to have been an ultimate success.

One crucial difference between Google Buzz and FriendFeed is that with the latter there was an explicit requirement to go and sign up an account; with Buzz , if you have a GMail account (and presumably an account with any Google application) you will automatically have a Buzz account. Google needs to ensure that Buzz is advertised but not forced down peoples throats.

#newtwitter, Buzz and context

Look at how Buzz currently operates: items shared into the stream are shown in full. Google Reader shares show the full text of the post (on the proviso that the feed itself publishes full text), images and videos are presented inline, etc. By bringing each social object directly into Buzz the context is largely retained. Discussion about a post makes sense as you have the post itself to refer to, Google just has to be careful what content is aggregated and how it is presented.

The new Twitter website is being hailed as a great way to get the most out of discovery on its network. Context is being introduced by showing images, videos and conversation threads right in the site but do we hear concerns that this will break Twitter and remove the social intent? No, we instead hear that it will facilitate easier discussion and discovery and the information is presented all in one place without so much need to leave the network itself.

I ask you, what’s the difference?

Image by Scr47chy

Googles CEO, Eric Schmidt could have finally announced news a lot of us have been waiting for: Google Me will be released in to the wild this autumn – almost. At the Google Zeitgeist conference he stated “We’re trying to take Google’s core poducts and add a social component,” and by “knowing more about who your friends are, we can provide more tailored recommendations. Search quality can get better.”

Reading in to what he said, it is implied that, rather than being a social network in its own right, Google Me will be a concerted drive to add “social layers” to existing products.

Google has been slammed in the past for its slap-dash approach to the social web; it seems as though the left hand doesn’t know what the right hand is doing with different products all having differing solutions to achieve a similar end. Mahendra illustrates this perfectly when he describes Google’s “Mess of Multiple Social Graphs”.

One graph to rule them all

A multi-faceted approach cannot continue; we cannot hold multiple lists of “friends” in multiple Google based locations and expect everything to play nicely together. Instead, there must be one central social graph which pulls in all of your contact information into a single location with the ability to filter and group based on purpose.

As I have previously said, the Google Profile is an ideal starting point or landing page.

Sowing the seeds

We have already seen the seeds of this behaviour with GMail, Google Buzz and the subsequent integration in to Google Reader. Being a subset of GMail, Buzz obviously shares the contacts list and then the inclusion of your Buzz contacts into the list of people followed in Google Reader is the beginnings of a social recommendation engine but it does not yet go far enough.

It is probably wise for Google to build on their existing strengths rather than try to build a competitor to Facebook or twitter. Instead of joining an all-encompassing network which tries to be everything to everyone you could use whichever of those services you need to. I wrote back in May:

“Google could build on its Profile system and integrate the services you use into one coherent offering despite them being independent applications. If you only use a single app then great, that’s all you are shown but for those using multiple services everything would be held in one place – a tab for each. Keeping each of Google’s services independent is a distinct advantage in my opinion.”

Rather than being a dedicated social network Google.me could be the landing page I mentioned above, an aggregator of sorts for your Google services where you can manage your social circle. This inner circle would then be combined with your wider social connections from other services such as already employed for Social Search.

A master stroke?

While a new network to directly challenge Facebook might be an enticing prospect, by extending existing products Google is able to drip feed its users with social functionality in the applications they already use; there is no need to prise people away from Facebook, Twitter et al. Millions already use search, Picasa, You Tube, GMail, etc. and a functionality upgrade is much easier to digest that a whole new product.

So, even though Schmidt may not have explicitly ruled out a standalone social product perhaps  it’s for the best if it doesn’t happen.

Image by TxPilot