Yes, that’s the headline making the rounds, and I suppose it is a signpost on the way to the future of media. Twitter just raised an additional $200 million, bringing its market cap to $3.7 billion. We are then reminded that this is twice the market capital of the “New York Times Company,” which apparently produces a small local weekly shopper tabloid in the Long Island metropolitan area, so the comparison is a Big Deal.
Question: What does Twitter do to make money?
Google: They have a clear business model: give search and YouTube and mail away for free, and stuff them full of target ads based on what the user is doing at the moment. Brilliant, profitable, and results in a $500 per share stock price.
Facebook: They have managed to get every human being on the planet to connect to each other and post pictures of their respective pets and undignified moments from high school. The humans all agree tacitly to let this data be harvested, which is bought by market researchers and advertisers. Clear, a bit more complex ethically, but likely monetizeable.
New York Times: Long form, urbane in-depth journalism with ads on every other page. Clear, 20th century , maybe-profitable-again-one-day business model.
Twitter: …sponsored tweets? Some people pay for them?
First, while I love Twitter and find it functional, until I understand what they buy low and sell high, I will reserve judgment on their business model and what it means for other companies.
Second, they shouldn’t be compared to the New York Times. Yes, newspapers are on hard times. Yes, their model was more successful in the 20th century. But the insight provided by long-form journalism is not remotely equivalent to 140 character blasts about “Dang, it’s snowy and mah car is burried!”
Just because something is no longer hip does not mean you should underestimate its importance. If I said “railroads” and “Chevy Volt,” which term would have more relevance to the “hotness” of 2010? Well, Berkshire Hathaway dropped $44 billion to acquire the Burlington Northern Sante Fe railroad. Very 19th century in terms of hipness, I’ll grant you, but Buffett is no dummy.