How to save Twitter

June 28, 2015

I don’t usually follow the news because, frankly, I have better things to do. I can’t control what most of the world is doing, but I can control whether my stories get written. But occasionally things filter down to me.

Lately, I’ve been hearing a lot of anguish over Twitter. Investors are disappointed, they say, because Twitter isn’t growing as quickly as they want it to. It’s nowhere near Facebook’s size, and doesn’t appear to be on track to get there anytime soon. Its growth rate percentage keeps tumbling, and Wall Street isn’t pleased.

Who. Fucking. Cares.

Let me tell you how to fix Twitter. It’s really not difficult. That may seem an arrogant thing to say, given all the smart people who undoubtedly work there. So in addition to telling you what they should do, I’ll tell you why they probably won’t.

Twitter’s problem, as a company, is two-fold.

#1: Twitter’s business model is crap

Twitter is trying to support itself with advertising, but it’s a terrible advertising platform. It’s a pretty good publicity platform—that’s why brands, politicians, and artists (including authors) use it to directly connect with and communicate with their fans. But that’s free. As an advertising medium, it’s shite.

Advertising is best when you have one of two things: mass and an interested audience. (And it’s best when you have both.) TV is the quintessential example of the former, especially back in the days when there were only three channels. Back then, putting out a TV spot insured your message would get in front of a certain number of eyeballs, and from there it was all a numbers game. Some of them would be interested, and you just had to figure out if the reach you were paying for was worth the sales it was generating.

As for an interested audience, Google is the best example. When you search for pressure washing services in Lufkin, TX, you’re clearly interested in something to do with pressure washing in Lufkin, TX. So if a pressure washing business in Lufkin advertises on Google, they’re liable to get a good return. Not many people will search for that, but those who do are interested.

This can also happen without a direct desire on the part of the potential customer. Penny Arcade famously had people who were sad when their ads disappeared, because their ads were curated to only advertise good games, and those readers appreciated that service.

Twitter has none of this. People go to Twitter to listen to the people they have chosen to follow, not to be advertised to by businesses they haven’t. In marketing parlance, Twitter is a Permission Marketing channel, not an Interruption Marketing channel. It’s ill-suited for its revenue model.

There’s one other problem with advertising: It perverts the company’s incentives away from building a good product. That’s because their customers are not their users; their users are their product. Their customers are the businesses who are buying ads, who they’re trying to sell our (the user’s) attention and information to. This has long been Facebook’s problem as well—because their users aren’t their customers, they constantly make decisions that worsen the user experience, but are better for their advertiser customers.

When incentives aren’t aligned, you get problems. That’s what’s happening to Twitter.

#2: Wall Street’s expectations are unrealistic

This one is easy. Wall Street is demanding that Twitter be the next Facebook, and it’ll never be that. Nor should it be! Facebook is already Facebook—trying to copy what it did will water Twitter down into uselessness.

Twitter has survived this long precisely because it’s different. That should be embraced. It has strengths that Facebook does not—while Facebook is better for keeping in touch with friends and family, Twitter is king for putting fans directly in touch with artists, musicians, politicians, and brands. I’ve spoken with authors via Twitter that I would never have a chance to meet in real life. But there’s a cost in that, and it’s mass. Turns out more people want to keep in touch with friends and family than they want to listen to and talk to famous people. Who knew.

If Wall Street would stop demanding that Twitter be Facebook, and start letting it be Twitter, it wouldn’t be losing so much money.

The Big Solution: Charge Users Money

The perverse incentives I talked about before have reared their ugly heads precisely because users are not Twitter’s customers. Advertisers are. But if advertisers aren’t bringing in enough money (which they don’t appear to be, since it’s a crappy Interruption Marketing platform), then the simple solution is to realign those incentives. Make users into customers, and Twitter can survive.

Not that all users should be required to pay. Not even most. Vox writer Matthew Yglesias suggested that Twitter restrict people who aren’t paying to 100 followers. First of all, that number is way too low. But even if the number were 1,000 or 10,000, that’s not the tack I would take.

Why take away formerly free functionality when you can add functionality? A few examples: Let users tag people without using up their character limit, let pro users create the Twitter equivalent of email distribution lists (“I want to talk to all the RandomC writers, so I’ll just tag my *RandomC list…”), hell, even let pro users have 160 characters instead of 140. Add enough little incentives, and the people who use it all the time will likely sign up, and they’ll thank Twitter for it.

Though to be fair, I’d probably also do the 1,000 or 10,000 thing too. Maybe 10,000—being generous is a much better way to avoid potential customers being angry with you. (A daily tweeting limit might be an option as well, as long as it’s high enough.) Focus more on what you’re giving to potential paying customers, rather than what you’re taking away.

Third parties that work with the Twitter platform already do this. I use Buffer, which lets me schedule out my tweets (and I love it, by the way). Because it has a freemium model, it can do what’s right for all its users, which aligns its incentives and keeps it from delivering a crappy product. That’s more likely to keep Buffer going in the long-run.

Why Twitter won’t charge users: The Curse of Silicon Valley

The problem is that Twitter is trapped in a culture that’s not conducive to what I’m proposing. That culture is Silicon Valley, and compared to the regular business world, it’s a strange place.

(Note: I don’t have any direct experience with Silicon Valley, though I do enjoy reading about business, so I’ve read more than a few articles on its culture. Chief among them are a lot of articles from Paul Graham, a co-founder of Y Combinator. So take all this with the appropriate measure of salt.)

Normal businesses focus on turning a profit. They might make up front investments, but they go into it with a plan to make money. If I put up the money to build this factory, after X amount of widgets I’ll be in the black and making money. If I put up the cash to publish this book, in Y amount of copies I’ll break even and be making a profit. And so on.

Silicon Valley doesn’t work like that. Often they’ll start with a idea that doesn’t have a business plan, i.e. they have no plan for how their product or service can make money. And angel investors and venture capital firms will throw money at them, demanding growth now, and letting them figure out how to monetize their business later.

I think this is a terrible way to do business, in general. It has its benefits in some cases, but a good underlying business model is required for long-term success. Dropbox had that. Airbnb had that. One of my favorite recent companies is CreativeLive, because it has an excellent business model—it broadcasts courses for free if you watch them live, or you can watch them whenever you want for a price. I’ve done both, and it works great.

Granted, you don’t have to pursue that profit model immediately. Companies like Uber can absolutely benefit from operating at a loss in the short-term, if it captures them market share in the long-term. But you need to know how you plan to make money eventually.

But Silicon Valley companies that decide on the Advertising route—particularly social media sites, and even ones that aren’t good advertising platforms—don’t seem to have a habit of changing their minds. That’s because there’s a lot of potential money in advertising, if someone (other than Google) can figure out how to capture it. Everyone knows it’s there—we all know how much money was made from advertising in the TV era. There has to be a way.

Sorry, but no, there doesn’t. I’m a marketer by training, and I’ll tell you why advertising worked so well for TV, and works so badly for the internet (paid search, i.e. Google, excepted). The answer is simple: TV can’t be measured. Not very well, at any rate.

When you put an ad up on a TV show, you’re counting on mass, but you never really know how many people will watch it, nor can you tell who those people are. We can make educated guesses thanks to Nielsen ratings and statistics, but you’re dealing with wide swaths of people—the coveted 18-to-34 demographic being the most famous. Inside that, you’ll get all types of individuals, and you can’t be sure whether they’ll be interested in Huggies or Bud Light Lime.

TV advertising is based on a mass delusion by marketers that it works, a delusion that is helped along by the fact that it sometimes does. Because it can’t be measured, it can’t be disproved, and when you add in the fact that marketers love to make and run advertisements, it pushes the advertising model forward. Incentives aren’t totally aligned, but they’re not badly misaligned either. TV shows just needs to draw people in—however they do that suits most advertisers just fine, within certain boundaries.

The internet isn’t like that. We can measure everything on the internet, from click-through rates, to how long users stay on a page, to even what parts of the page their eyes are focusing on! We can measure it all, and it has led to an inescapable conclusion:

Most internet advertising is crap. Banner ads aren’t the money-makers that TV ads were, nor are popups or anything else. Ads on the beginning of YouTube videos do all right, but they’re really just TV ads redux. The only real bastion of advertising on the internet is in paid search, where Google and its cohorts took over as the constantly evolving Yellow Pages of the digital age.

But companies like Twitter believe the money is still there, and their investors are pushing them to find it, hoping for the big pay day, not the steady, dependable trickle of a strong customer-facing business. Silicon Valley has a boom or bust attitude, and if they don’t get the boom, they’ll drive a company to bust in search of their pay day.

That’s a culture Twitter is steeped in, so it won’t surprise me if it takes a visit to death’s door for it to change.

To Twitter: Good luck

I wish the people at Twitter good luck. I hope they can figure it out. I enjoy their service, and I know many would be willing to pay to keep it alive. I think that would be a better route for them to take than chasing after the advertising golden goose that will never come.

As always, thank you for using my Amazon Affiliate link (info).

By Stephen W. Gee

Author of Wage Slave Rebellion, Freelance Heroics, and about two good blog posts out of a hundred.

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