Interesting article about the number of inactive user accounts currently on Twitter. Of the 941 million Twitter accounts in existence, almost half (44%) have never even sent a tweet. This seems like a problem for a company with a market cap of 23.6 billion, but a reported net loss last year of $511 million. The biggest struggle for these social media companies is finding a way to successfully monetize their user bases. Ad revenue is the obvious answer, but it likely presents a challenge for a company like Twitter to lure in new advertisers who might be wary whether their ads are actually reaching real people, as opposed to fake or computer generated twitter accounts. I wonder to what extent the problem of user inactivity at Twitter is evident of a problem in the social media industry as a whole. If social media companies cannot find ways to generate more revenue, the massive valuations that many of these companies have received (Whatsapp, Snapchat, Twitter, Instagram etc.) may begin to look more and more like a bubble ready to burst.
Agreed. Millions of eyeballs mean something. But when it’s not clear *what*, then valuing the companies that generate that kind of traffic – but little in the way of actual revenues – in the billions of dollars sounds like “irrational exuberance” to me. Twitter has obviously been transformational in terms of capturing news events in real time – crowdsourcing the news coverage, in fact. How do you many money off of that?
You all are WAY too young to remember when that was being said about the internet. (In fact, that’s an infamous quote from Bill Gates, who pooh-poohed the whole thing because it was free, saying, “there’s no money in it.”) Initially, a lot of people assumed that it was all research and communication (email). Then others thought it would put ALL non-internet business out of business. That didn’t end up being true, either; for a lot of companies, the internet was a way to drive customers to their other sites – meaning, other media, or the actual bricks-and-mortar locations.
Ditto for mp3s and file-sharing. Wow, here’s this cool tech, and everyone wants it, and it makes everything “free.” How do we make money at it?
The earliest adopters – and by that, I mean the earliest commercializers – aren’t always the ones who end up figuring out how to make money at something. (Thus the saying that the second mouse gets the cheese.) Twitter captures a lot of public sentiment. So does Facebook. So what? There are starting to be companies who track all of this digital “sentiment,” to determine what it means. Then they sell the information. Maybe there’s something to that, maybe not. Maybe the real moneymaker hasn’t been realized yet.