Twitter's Made It, But Will It Make It?

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Back in November, I wrote a blog post entitled, "Is Twitter Mainstream?" At the time, TechCrunch was speculating that Twitter was having its "hockey stick" moment--a point in time when traffic and popularity make an abrupt change that signifies a move into the mainstream. Five months ago, I felt it was premature to call Twitter mainstream, but now that moment has clearly arrived. The question is, can Twitter survive its own success?

First, let's explore the compelling evidence that Twitter has "made it":

• Oprah: One cannot underestimate the significance of Oprah, the reigning arbiter of all things mainstream. When she reads a book, it becomes a bestseller; when she acknowledges a diet plan, a million people suddenly start detoxing; and now Oprah is tweeting. The superstar made her first Tweet just two days ago and already she has 343,000 followers. According to UPI, more than 70,000 people signed up to Twitter just to see Oprah's first tweet. And if Oprah becomes addicted to Twitter like so many have--if she continues not just tweeting but talking about tweeting--you can bet newbies will continue to multiply.


• Number of Tweets: On AdamStiles.com you can find a graph that shows the growth in the number of tweets per day. (A similar chart can be found on Popacular's Gigatweet.) It took the better part of six months in 2008 for the daily average to rise from around 600k to 1M. Since the beginning of January, the average number of tweets per day has risen from 2M to 5M, and the rate of increase is not showing any sign of slowing yet. Of course, at some point in the future the rate of growth will decline, but by the end of 2009, the traffic on Twitter will likely be 10 to 20 times higher than it was just six months ago.


• Twitter is old: It is popular to think of Social Media participants as being teens and tweens, and some Web 2.0 sites and tools do skew quite youthful. But the demographics on Twitter are very mature (or, one might say, "mainstream.") According to CNET, the same percentage of Twitter users are between 55 and 64 as between 18 and 24. "In fact, the majority of Twitter users are 35 or older."
  

So while there may be no generally understood definition for "mainstream," I think it's apparent Twitter.com's time has arrived. The question is: Is Twitter ready for it? Anyone who uses Twitter is now very accustomed to seeing the "Fail Whale" that greets site visitors when Twitter is over capacity. Although the Fail Whale may have its own fan club, there is no denying the frustration Twitter users are experiencing on a regular and ongoing basis.

The troubling thing is that Twitter has never been all that stable. As Dan York wrote on his blog Disruptive Conversations, "It's getting increasingly hard to remain a Twitter fan." And he wrote that in May 2007!

It's not as if Twitter doesn't have any competition. Other micromedia sites such as Plurk and Identica would love a larger slice of the microblogging pie, but Twitter is swamping them. According to Compete.com, Identica and Twitter have had similar rates of growth in the past year, but Twitter has around 5,000 times more traffic.

Much like the iPhone, which is making headway against its mobile phone competitors thanks to the plethora of third-party apps available on the platform, Twitter's growth is being spurred in part by the third-party tools that use or hook into Twitter's system. I can't even count the number of Twitter apps and clients listed on the Twitter fan wiki, and every one of these applications creates new ways for users to access and create additional demands on Twitter's overtaxed backbone.

All of this popularity comes at a cost for an online service that famously still doesn't have a revenue plan. Some estimates put their burn rate at around $7.5M to $10M per year even before the latest surge of demand and traffic, and while Twitter has had no problem finding additional funds, investors cannot indefinitely bankroll Twitter's growth without an expectation of significant revenue . Even if Twitter is sold and becomes part of a larger publicly-owned entity (perhaps Google, as is rumored), their new owners will be obligated to produce positive cash flow and value for their shareholders.

What happens if Twitter waits too long to develop a revenue model or they fail to come to an agreement to be sold? Some seem to feel that "Twitter will never fail" and that "users will stick with it for better or worse". For them I have two words: SixDegrees and Friendster. Both were darlings of Social Media before the term was even in common usage.

SixDegrees.com was well ahead of it's time, operating from 1997 to 2001. It offered a service not unlike LinkedIn, permitting people to see how may degrees of separation they were from each other. At it's height, the service had one million registered members.

Friendster was launched in 2002. It, too, was ahead of it's time; MySpace wouldn't convert into a Social Network until 2004 and Facebook didn't open up to the non-student public until 2006. While Friendster is still kicking, it is but a shadow of its much larger siblings; Facebook receives around 7,000% more traffic than Friendster at the current time.

So the idea that Twitter has become too big to fail is ridiculous. (Twitter isn't BOA and won't get any TARP funds!) While we can only speculate at the scenarios that could cause Twitter to be added to the same dustbin of history as SixDegrees.com (or once soaring online businesses such as Pets.com, Webvan, or Flooz), possibilities include an eventual failure to find capital or a buyer.

A complete financial failure seems unlikely (and would certainly be more than a year or two off), but here's a more plausible, imminent, and disastrous scenario: Frustrated by constant latency and downtime, turned off by the arrival of a wave of Oprah newbies, and dubious of the mainstream popularity that has vaulted celebs such as Ryan Seacrest and John Mayer over tech and Social Media leaders, a couple key early adopters announce a shift to a different platform. What happens if the likes of Pete Cashmore, Michael Arrington, and Tim O'Reilly decide to endorse a more scalable and reliable platform to their 250,000+ followers? A scenario such as this would precipitate the kind of shift that MySpace--which just a year ago had twice as much traffic as Facebook and today has 40% less--would recognize.

Don't get me wrong--I very much hope Twitter succeeds--but I also lived through the dot-com bubble and subsequent crash, and the "growth is more important than revenue" mantra is one that causes me to flinch uncontrollably. A decade ago, some people argued that the Internet had somehow rewritten the rules of business and value creation. Those people lost a lot of other people's money; $5 trillion in market value evaporated from March 2000 to October 2002 as investor learned the hard way that the digital economy still required old-fashioned revenue and profit.

As a modestly early adopter of Twitter and a student and professional of Social Media, I am pleased to see the service grow into the mainstream. I just hope as 5M tweets a day becomes 10M or 20M that my one of my favorite communication tools doesn't rest on the mistaken belief that people are handcuffed to Twitter by their existing networks and will have infinite patience for cute Fail Whale images.

Few companies fail focusing on the needs of users and the user experience, but plenty have failed believing they can grow themselves to success!