Twitter’s move to reign in developer activity – which has already resulted in some negative backlash from those who feel the rules are too inhibiting – indicates that the company is hoping to monetize data around trends and usage.
“Twitter appears to be locking down its platform a bit so it can control its evolution … and more of its data,” says Chaudhuri. According to Kartik Hosanagar, a Wharton operations and information management professor, the company’s efforts to curb access to its data could be a mistake.
“While I agree that Twitter needs to own those features that are important for the core consumer experience and monetisation, Twitter needs to handle this carefully so that it does not lose the trust of developers who have invested lots of resources … based on the original policies,” Hosanagar notes. Twitter “needs to be transparent and consistent about these policies.” Hosanagar suggests that the company consider ways of sharing revenue with developers of applications that augment the company’s value. “Apple has been doing this successfully with its developer ecosystem,” he adds.
Should Twitter stumble with its developer relations, the company could have business model issues going forward, says Whitehouse. “What made Twitter attractive is that it was open, and that allowed an ecosystem to quickly organize the company’s data and present it,” says Whitehouse. “Will the drive to monetization undermine everything that made Twitter so wonderful in the first place?”
Mobile friendly
One area where Twitter excels is in supporting mobile access. Facebook, by contrast, has struggled to provide the full spectrum of its services to users on smartphones and tablets. According to research firm eMarketer, Twitter will earn $129.7 million in mobile advertising revenue in the US in 2012. Facebook is expected to bring in just $72.7 million in US mobile ad revenue this year, although the company is expected to surpass Twitter in 2013, eMarketer reports.
Twitter’s simplicity – with 140-character tweets that look good on any screen – gives it an edge on mobile devices. In addition, the company can just as easily promote tweets and sponsored comments on mobile as it can on a website. According to Matwyshyn, Twitter is a threat to Facebook because it is cohesive across all screens. “There’s the same comforting feeling with Twitter on a desktop or phone. Twitter is with you in the office, on the go or at home. Mobile first may be its strongest feature.”
Whitehouse agrees. “People can tweet from anywhere – from a mobile app, a mobile browser or SMS messages – with little loss of experience. Facebook started on the desktop and then moved to mobile. For Twitter, mobile isn’t a compromise.”
At the TechCrunch Disrupt conference this month, Facebook CEO Mark Zuckerberg admitted that the company has made mistakes in its efforts to move to mobile devices. The company has also acknowledged that mobile usage is spiking, but that it lacks an ad strategy for the small screen. However, Facebook has been experimenting with targeted mobile ads, according to The Wall Street Journal.
Fader isn’t convinced that Twitter is only a mobile juggernaut. “Yes, Twitter is more mobile-friendly than Facebook, but about 92% of my Twitter usage is on the desktop,” he says. “Twitter lends itself to mobile, but by no means will it be completely that way.”
If Twitter were to file for an IPO, the company would have to go public with detailed information about the business, its sources of revenue and its chief competitors. While Facebook may have suffered from overinflated expectations, a Twitter IPO may experience the opposite problem, Fader notes. “A number of people are really into Twitter relative to Facebook,” says Fader. “But Twitter is still in a niche. Many people don’t understand it’s a truly valuable tool.” The company, he adds, “could be undervalued”.
