Thursday, April 15, 2010

What to make of Twitter?

UPDATE: Take a look at how seriously Twitter takes itself.

Twitter has recently announced its latest statistics on registered users and traffic. The challenge is to interpret that data. As always, I'm here to help.

First, the data:

* Twitter has 105,779,710 registered users.

* It gets 300,000 new users a day.

* It receives 180 million unique visitors a month.

* And 75% of traffic comes from outside of

So. what does this data tell us? Just about nothing.

For example, it combines terminology in a way that doesn't allow for any meaningful comparisons. Twitter gets 180 million unique visitors a month. The generally agreed-upon definition of "unique visitor" is one person who makes one or more visits during the tracking period. So, by that interpretation, 180 million different people visit Twitter at least once during any given month.

How many of those are registered users? Don't know. How many times does the average unique visitor visit? Don't know. What percentage of the unique visitor number comes from registered uses? Don't know. We are told, however, that 75 percent of Twitter's traffic comes from "outside Twitter," or by visitors who aren't registered users.

At a conference I attended last fall someone estimated that a vast majority of people who register for Twitter never actually go back and use it -- that more than 90 percent of its traffic comes from less than 10 percent of its registered users. Now we learn from Twitter itself that 75 percent of its traffic comes from non-registered users.

We understand that this is somehow significant, but how? First, it means that many, many visitors to Twitter are lurkers -- people who pop in for a quick look-see and then leave. Second, it confirms that a good share -- a significant majority, at least -- of Twitter's registered users aren't regular users. Third, it adds urgency to the question, "How will Twitter ever make any money?" If its registered users who don't pay for the privilege don't use the site, how can Twitter expect to ask people to pay to use the site? And, forget about ad revenue -- so far, it just doesn't generate nearly enough money to cover Twitter's operating costs. (Have you ever looked at a Twitter ad?)

What Twitter continues to be is an application without a business model, sort of like online news sources -- without that legacy business (newspaper, TV, magazine) to support the operation, there's no business model. (If you're a media type and you've read this far, finish reading and then move over to Daily Patricia for some schooling on why it's really stupid for us to be asking advice from folks in the Internet business.)

What about Facebook, you ask? Good question! Facebook claims 400 million registered users, and claims that about half of those "log on" in any given day. It claims that 35 million users update their status on any given day, creating a total of 60 million status updates a day. The average users spends 55 minutes a day of Facebook. So what can we learn from these numbers?

First, that if you are a user who does status updates, you're likely to do just under two a day. You're six times more likely to be a "lurker" (someone who looks at the site but doesn't post an update) than an active participant. If the "average user" (I presume this means the mean, not the median) is on for 55 minutes a day, and most users don't even post a status update, it's likely that a small percentage of very active users account for the significant majority of time spent on the site -- at the very least an example of the 80/20 rule; 80 percent of the use comes from 20 percent of the users.

Given its flexibility -- many businesses, including mine, now have a Facebook page as a free promotional tool, for example -- Facebook feels more likely to be able to develop into a business model. However, there's no evidence to suggest that advertising will make up its largest revenue stream. At some point, a subscription fee is in the works, and at that point all the lurkers will go away as will a good share of the occasional posters.

The upshot? Just like free news online, free Twitter and free Facebook aren't sustainable. Without a drastic change in the model. Twitter and Facebook can't survive forever on the good graces of venture capital infusions.

1 comment:

  1. I really don't pay attention to any of the internet ads, even the ones that I'm forced to sit through before a particular piece of video is played.

    If Twitter were to charge a fee I'd leave, as I don't derive enough value from it to stay. Facebook? I gain some value from that, but I'd definitely weigh my options when they name a price.

    Legitimate news sources such as the PR, I will pay to access online.