Twitter’s userbase is starting to dwindle. But the company isn’t nearing its end just yet: it can now reinvent itself and thus become an example of an industry in crisis
On its tenth birthday, Twitter was hit with a triple whammy: First, it lost five managers in the beginning of January. Then, a well-known stock market analyst advised his clients to sell their Twitter shares. But it was the CEO of Twitter himself, Jack Dorsey, who gave the worst news in the business report for the fourth quarter of 2015: in the previous quarter, two million of Twitter’s users were no longer using its service. For a sector used to perpetual growth, this is a clear signal: Twitter is going south.
In reality, Twitter has been seen as a problem for years. The Twitter market price therefore barely reacted to the bad news – it had already begun its steep descent over a year ago, from 48 euro (RM211) per share in May 2015 to 14 euro (RM61) in February. But the quarterly figures were proof of the fact that something was fundamentally going wrong with the former flagship start-up. For months, the product development did not seem to make proper headway. But what was more interesting was the companies that Twitter bought for ‘‘external growth”: The video platform, Vine (whose founder left Twitter in January), and the live video service, Periscope. But several users mainly felt let down. The exciting User Stories were being written elsewhere long since. Instead, the user’s own Twitter feeds would be filled up with advertisement posts and irrelevant tweets by strangers. It appeared that Twitter was more anxious to grow as wide as possible than to make its existing customers happy. No wonder its users are running away from it in swarms.
Poor prospects
Scott Devitt, analyst at the American investment firm, Stifel, saw it coming. In a widely-acknowledged ‘’company update”, he expressed his distrust in Twitter’s share price: ‘‘we are returning our rating on Twitter shares back to where it should have been all along: sell”, it says in the 16-page paper. ‘‘Twitter is a product that has never fully developed into a sustainable public company due to either poor strategy, poor execution, or that it was never destined to be one.” Devitt’s argument can be summed up in three charts: the number of users on Twitter is growing increasingly smaller and the company is earning too little from them. At the same time, the company is extremely overvalued on the stock market, which will bring the share price even further downwards. The bottom line from the report reads: ‘‘Twitter will find it difficult to achieve its near- and long-term financial goals.”
Devitt’s arguments target Twitter’s position on the share market. But they are rooted in grave problems on a product level. More than anything else, Twitter needs more active users that provide a good advertisable audience. But for this, the company will have to forsake its ten-year-old concept of tweeting, where every voice is equal everywhere. For now, Twitter only works well for a small group of elite users. The rest is tweeting against an immense flow of trivial tweets and competing with the ruling feeds of celebrities and companies. On the other hand, Twitter has a considerable problem with troublemakers, fake profiles and spammers. This is poison for a social network and scares away advertising clients. Those who want to advertise selectively in a comfortable environment prefer to do so on Facebook. Twitter users have been on it for a long time. Twitter insider and Silicon valley expert Chris Sacca sums it up with a figure: in June 2015, Twitter had amassed one billion nominal users, according to its information. This is how simultaneously tempting and underwhelming the service is. Twitter is too hard, scary and lonely, writes Sacca. Especially what Twitter could represent, mainly fast live contents, has already been working on other internet services. Twitter knows the problems and has been working on solutions long since. Algorithmically sorted timelines and compilations of tweet into one thread (‘‘Moments”) should give newcomers and infrequent users an interesting feed. Lifting the 140-character limit could bring more bloggers and journalists to Twitter. Even the atmosphere will improve a bit by stepping up efforts against online harassment. But there’s still one problem: Twitter can’t be both, a broad mass medium and a playground for a selfproclaimed information elite.
Starting over
Farhad Manjoo from the New York Times has a better idea: instead of aiming for Facebook and Google, it should aim for Wikipedia. He suggests a drastic plan to Jack Dorsey: shrink your company, quit the stock market. “Every Internet company doesn’t have to be the biggest, boldest, always-growing entity.” Perhaps Twitter has better prospects than independent private companies as a small, sustainably managed branch of a larger conglomerate or even a non-profit organisation. Only in this way can Twitter lessen the exaggerated expectations that would get in the way of healthy development. Putting aside user growth and Facebook comparisons, Twitter seems to be a tough company with strong development. But how will the company’s next steps look? Twitter could focus on scaling down instead of focusing on maximum wide appeal. For example, on tweets, better group and private functions or curated contents, channeled according to region, subject and events. Twitter would thus weaken its concept of open network, but display its strength as an information platform. Twitter could become an infrastructure. This seems to be risky, but it could catch on. Because besides Twitter, a few other stars of the Internet scene are also under close scrutiny at the moment. The exit from Wall Street would mean a release from the stranglehold of shareholder value, allowing the company to grow the way it needs to in the near future.