Salesforce and Disney have given up on acquiring Twitter, citing its troll problems. To succeed in tech you need either profits or growth; Twitter has neither. So somebody’s going to buy it that doesn’t care about the users. As a result, if you’re a user, you can expect a very scary future — scarier than any ghosts you’ll see this Halloween.
Let’s start with the basic moral contract that Twitter has with its users:
- You can post all you want for free.
- You can have all the followers you want.
- All your tweets will be visible to all of your followers.
- Your tweets can’t exceed 140 characters.
- We’ll slide some clearly marked promoted tweets in there and make money from them.
- Twitter won’t sell your data.
Twitter’s efforts lately have focused around more sophisticated displays of content, as with its Moments feature.
But none of that is working. A strategic buyer (like Google, Disney, or Salesforce) would expect to get value out of Twitter beyond its core business, but its liabilities (in particular, its persistent inability to fix the troll problem) have torpedoed those acquisitions.
So let’s imagine a very different kind of buyer: an investor who cares only about money. That’s what Matthew Ingram wrote about in Fortune. As he said:
“Somewhere near half a billion dollars of costs need to be taken out almost immediately. And that involves firing people,” [hedge fund investor John] Hempton says. “It’s inevitable anyway—because Jack Dorsey burning half a billion dollar per year isn’t a sustainable business.”
The answer, the fund manager says, is a “Wall Street bastard” who can make the cuts that are required to return Twitter to some form of profitability.
If Ingram and Hempton are right, Twitter is going to lose more than many hundreds of engineers. Because a buyer like this doesn’t care about the moral contract Twitter has with users.
How Twitter can make money once it puts scruples aside
Imagine that you wanted to make as much money with Twitter as possible, and you didn’t care what people thought of you. Here’s some of what Twitter might do:
- Charge people to post. Not regular people. People who use Twitter as a mouthpiece. Anyone with more than 1,000 followers — because those are people who want to be heard. (That’s about the top 3% of users.) Put it on a sliding scale: 1,000 followers costs $5 a month, 10,000 costs $50 a month, 100,000 costs $500 a month. What happens if you don’t pay? Twitter throttles your tweets, showing them to only a diminishing fraction of your followers, as Facebook does.
- Charge for exclusive hashtag use. You could “own” a hashtag. Twitter would allow you to block competitors (or anyone with a large enough following) from using it. So when people search the hashtag, they only see tweets you haven’t blocked — or maybe they see your approved tweets at the top.
- Sell placement in the stream. Pay more, get shown to more people. No more chronological ordering of tweets — anyone who pays can jump the line.
- Sell longer and more visible tweets. Twitter creates a new product called “long beautiful tweets.” It allows you to post up to 1,000 characters, with multiple pictures and videos. Maybe the user doesn’t see the whole thing right away — but they do see a larger, more visible unit that upon clicking takes you to a space that the advertisers controls.
- Reach into email. Twitter starts to send out a weekly email newsletter. The content, based on who the user follows and who follows them, is 75% content links and 25% ads. Buyers who pay a whole lot can send a promotional email directly to a set of users.
- Sell your data. Syndicate the Twitter data store to Salesforce, Hoover’s, Google, Adobe, Microsoft/LinkedIn, and anyone else who serves marketers. If you’re using applications from one of these companies, you log into your marketing dashboard and can target customers based on what Twitter knows about them. You can automatically embed their tweets or tweets about them into your marketing materials.
- Ignore the trolls. It can get worse. And with no engineering effort on troll prevention, it will.
That’s just a short list off the top of my head. If you owned Twitter and didn’t care about how you treated users, what would you do?
This could never happen, could it?
Let’s look at the counterarguments to this:
- They’d never do this, it’s wrong. Get serious, honey. Twitter’s losing money and nobody wants to buy it and fix it; the strategic buyers have quit on them. The only solutions involve breaking the moral contract at the top of this post. If they don’t break those rules, there’s no future for the company. Remember what happened to MySpace?
- The users will desert them. Sure, some of them will. But where else are you going to get your Trump and Lady Gaga tweets? If they lose 20% of their user base and make twice as much money from what’s left, that’s a a win for whoever bought them.
- The popular posters will desert them. If somebody has a million followers, don’t you think they can afford $5K a year to talk to them? Despite the success of Instagram, Facebook, and YouTube for celebrities and companies, Twitter is still an essential channel — and if Twitter keeps the costs reasonable, the popular posters will stick around.
- The engineers will desert them. Sure, some of them will — and some will be laid off (ahem, RIFfed). But I’m betting a lot of the best engineers have left already. If Twitter becomes profitable, its value will go up. This is good for shareholders and engineers.
- They’ll fix the main product. What makes you optimistic? They haven’t fixed it yet — and what they’ve done so far has not restored growth or profit. If Jack Dorsey has a miracle in his pocket, why haven’t we seen it yet?
Go ahead, prove me wrong. I wish I were wrong. Charlene Li and I predicted Twitter’s success in 2008, and I’ve enjoyed using and watching it ever since. But analysts don’t write about what they want to happen — they write about the likely future.
If you think I’m wrong, I encourage you to describe another likely scenario. I’d really like to see that.