The Wall Street Journal’s Julia Angwin, reporting from the prestigious Allen & Co. Sun Valley conference for the media and business elite, says “Sun Valley: Diller and Malone Pessimistic on Twitter.”
She adds “Diller was pessimistic about Twitter’s prospects for making money,” and:
Malone said he didn’t think that an advertising model made sense on Twitter, but there was some hope for a subscription model. “Sooner or later people will be willing to pay for these services,” he said. Warren Buffett privately told him that he would pay $5 a month for YouTube, he added.
As much as I respect Liberty Media’s John Malone and IAC’s Barry Diller, I couldn’t care less about what they think about Twitter and it’s business model (isn’t it obvious anyway?). I would even go so far to say that I would be infinitely more interested in what Twitter CEO Evan Williams thinks about Malone’s and Diller’s businesses, rather than the other way around. And I won’t even get started on Buffett’s ideas on YouTube’s business model.
In fact, when I read the WSJ article I was reminded of my dad complaining about the music I liked in high school. The music he listened to growing up (probably played on a banjo or something) was infinitely more interesting than all this new stuff. Ah, the old days.
Diller and Malone both preside over huge companies with a variety of assets. Some of those assets, like Ask.com and Expedia, would even be considered new media or Internet startups. But just like the truly old media guys, Diller and Malone are already dinosaurs in a fast changing world. They have no clue what Twitter is even about. So why in the world would we care what they think about its business model?
A lot of people wondered how Google would ever make any money with a search engine. That problem was obviously solved. In any community with vast numbers of highly energetic and passionate users, there will be a variety of ways to make money. The only thing that can stop these services are high costs (YouTube and Facebook suffer from this) or someone building a better mousetrap (Facebook did this to MySpace who did this to Friendster).
By the way, News Corp’s Rupert Murdoch isn’t impressed, either, saying that the site is “a tough investment to justify because it has not yet come up with a sustainable way to make money.” He also gave the exact wrong answer to two questions: “Asked if he was considering buying Twitter, Murdoch said, “No.” Asked about selling MySpace, he said, “Hell no.”"
If you didn’t care, why did you write a midnight piece on the topic?
you can do better than that.
Call me when Twitter stops bleeding money.
Michael Arrington’s net worth 10 billion
Money talks.
And I’m stunningly uninterested in every single friggin post involving twitter. It really is a poor man’s email. For retards. Lay off it already.
Anything of real value, like E-mail, IM, Socail Networking, and twitter sms have been packaged and sold as enterprise software to companies and corporations. No consumer will actually want to pay for any of these services, but they will gladly use them for free. Therefore it is up to Corporations and retailers to carry the weight of providing these services and hopefully encouraging retail sales. Twitter can just sell itself to IBM and all its employees and customers will pay to use it.
I remember the days when people worked backwards. You think, “How will this make money?” Once you figure that out, you launch your business.
Everything in this dangerous, roulette universe we’ve created is growth, growth, get registered users….And assume because you have lots of users that your product will make money.
We are in extremely dangerous times because all venture capital going into tech companies in the future will be shaped by what happens to Twitter and Facebook.
This is an absurd statement:
“Diller and Malone are already dinosaurs in a fast changing world.”
Diller had the foresight to buy collegehumor.com (1 example) and help blow it out. It’s growing everyday. Nothing about this site or most of what IAC owns resembles any pre-historic.
Umm… These guys are worth billions and have made some great plays. Just because this is new media doesn’t mean it’s not business. Sometimes I think the newer folks need to recognize that some business principles are timeless.
My biggest concern with Twitter is it’s MASSIVE turnover rate for new customers – up to 70%. You need to keep a lot of people coming in the flood gates every month to make up for that plus provide growth. S
ure some people have found ways to make money off twitter, but shouldn’t twitter be the ones making money off of twitter?
yjhy yuy yuyu u6ry 6yty yrtyr
The title of the post does beg the question…
Nevertheless, you must have some insanely tough skin after years of dealing with some of the bozos that post on this site.
Hahaha…. This article coming from someone who himself is from the era of 90s is very interesting… Coz for someone like you Ajax update itself is way cool whereas for us it’s expected….
Believe me or not twitter is going to fail just like newspaper industry and just before that happens I know for sure you will post another article saying it’s gonna die and after it dies you will refer to that article, ignoring all the other article you were so optimistic about it. And that will be funny as hell …
I highly doubt Twitter will fail. I mean, have you seen how many celebrities use it? The President of the United States is even on it! (I know, he himself doesn’t run the account, but I’m just trying to make a point).
I can get people to use a product by giving it away. Doesn’t mean it can make money, turkey.
Twitter won’t fail. The global conversation is becoming an increasingly essential aspect of the web. Search engines didn’t initially have a clear way of monetizing and now look at them. Whether Twitter makes money at this point is irrelevant, the fact is they are providing a service which the world is beginning to heavily rely on (look at Iran). People need Twitter, it won’t die.
Yep. When Netscape went public, some otherwise brilliant folks just scratched their heads about a browser ever creating wealth.
ok, try this: the aching oxymoron in your headline. it’s one thing not to care, and another to be vexed enough to bang out 433 words on a topic in which you profess no interest.
Advertising model on Twitter could work. They just need to figure out the right way to do it. Found one way to advertise effectively on Twitter.
If interested, take a look – http://bit.ly/bycEu
Twitter’s advertising model will work. No doubt it. It may take a little longer but they will get it right. http://bit.ly/bycEu
who really cares what a bunch of old men from the east coast thing really…don’t they have to worry about setting up their trust funds for gods sake….twitter is the best and will continue to be the best.
best,
lance lee
“twitter is the best” ????
what are you 10 years old?
I love how all of you techcrunch boys react to anyone that ever poses the question?
“wait, how is this thing going to make money?”
like making money is a bad word.
The whole thing is sad! Ruined alot of people!
Here, here. The picture you used pretty much says it all. Although I can’t say that the path forward for Twitter to make money is perfectly clear, asking them about twitter is a bit like asking my grandfather about Nine Inch Nails…never going to get it.
And what if we were incredibly uninterested about your opinion of their opinion?
What else would you expect a potential suitor of twitter to say? “I think it’s worth $3billion” ?
mr. buffett…paid subscription service ..seriously? i would prefer to go back to stone age!
Buffet would pay $5/month for YouTube. Makes sense I guess since I would be willing to pay $0.01/year for YouTube. Here’s a shiny penny guys!
Actually … assuming Buffet averages 8% return annually on his $37B … a person making $100K a year would be willing to spend about $.002/year for YouTube … I think they’re better off going with advertising than the Buffet model!
If everyone paid $1/month for YouTube, then last month (assuming static traffic) they would have grossed $78,000,00 (w/o AD$).
Not bad.
ha.
assuming static traffic probably makes sense…I’m sure a subscription fee wouldn’t reduce traffic at all
Michael, u obviously seem to have my article saying exactly similar stuff a couple months earlier
http://www.itva...of-twitter.html
“The only thing that can stop these services are high costs (YouTube and Facebook suffer from this) or someone building a better mousetrap (Facebook did this to MySpace who did this to Friendster).”
Yeah, those are minor “details”, aren’t they?
That, my friend, was farken genius.
Reading this post it’s almost like beeing back in the late 90’s once again. A time when you really didn’t need to have a business model or even make any money. All criticism of .com companies where reduced to “You don’t have a clue granpa, the old rules don’t apply here”.
I’m not saying that Twitter isn’t a great service, because it is. What I’m saying is that the old rules of business still apply and listening to what the old geezers have to say is probably a good thing, even if you don’t agree.
As much as I agree that the old guard can be close-minded and embarrass themselves more than occasionally when discussing new business models and services, they have earned the position to do so. Basic rules still apply. As stated after .com 1, “Meet the new economy same as the old economy.”
At the end of the day, and probably sooner than later, all these enterprises are going to have to make money and it’s ludicrous to believe Google would never make money. Search Engines have been making money because it’s very well suited for the advertising model. Yahoo! saw it, as did the others. Google has just maximized it.
How will these other platforms do it? That’s the exciting question. It’s pretty much known the numbers regarding Facebook and their 1/2 billion they’ve tossed out are nothing but guesses being made.
I agree w/you to a degree regarding Diller but he’s on the mindset of generating revenue. This ride will eventually come to an end as the first dot.com implosion showed, Eventually all of them will have to turn a profit.
DM
Can I ask what may be a stupid question? Why can’t twitter send out ad tweets to users, much the way the unpaid version of tweetie for mac does? They’d reach a ton of people, they’re fairly unannoying, and I actually clicked on one in tweetie (for fluxiom), which is something I rarely – if ever – do on the internet. Seems to me Twitter could then maybe even do what tweetie does, and allow you to disable the ads by paying for the service.
This seems like such a no-brainer to me I’m sure I must be missing something.
Because nobody would use the service anymore…thats why
This article smacks of the type of elitism that gets very old very fast. Don’t be so quick to dismiss these “dinosaurs.” After all, they’re the ones with the money that resulted from building up successful businesses through vision. I kept waiting for you to expound on some suggested business cases for Twitter but all I got was the same kind of smarminess all too reminiscent of an elitist tech crowd that seems to think they know it all just because they’re not over 40.
“After all, they’re the ones with the money”
A lot less money than they had a year ago
http://www.goog...ACI&ntsp=0
wasn’t that right about the time barry diller split the IAC into 4 separate companies?
Mike, here’s the correct link, which shows the SPLIT and dividend marker:
http://www.goog...IACI&ntsp=0
I’m no fan of IAC… but it looks like it’s one of the few companies that’s actually maintained itself compared to the rest of the market.
By that smug logic, how much money did twitter lose year over year as their popularity went up?
my mistake arrington – i thought you followed tech. IACI has performed STUNNINGLY well in this market, as the huge drop is obviously due to the spinoff of lendingtree, hsn, ticketmaster, etc.
oh i forgot, if it’s not facebook twitter or iphone it doesn’t catch the eye of TC
yeah… we’ll worry about the revenue later… where have I heard that before?
google
Touché
Can you give any other example?
Google is exceptional because it is unique and not the norm.
Damn you!
There are freemium-based startups *everywhere*. A handful of them are making money today and another handful will be CFP sometime this year.
Twitter has been around for two years. Google was making money by that time.
no it wasn’t.
lol classic comeback mike
Google was founded in 1999. It generated $86M in revenue in 2001, netting a profit of $7M.
This is why you’re incompetent.
Google was not founded in 1999. That’s why you’re incompetent and why Mike has a net worth more than you.
Some of the readers clearly bent on being pricks on this site can’t even be bothered to look up stuff in Wikipedia to make sure they know what they are talking about. Pathetic.
according to this http://en.wikip....org/wiki/Yahoo!_Search_Marketing , Goto.com / Overture was doing PPC ads in 1998. Hmm I wonder where google got the idea to to sell ads. And they make money at it too ! You should really quit with this whole Google had no idea how to make money thing.
PS Google was incorporated September 4, 1998. Boo hoo I guess he was off by a few months. He still makes more sense than you.
Google Revenue, Loss/Profit: Actuals from S-1
Year 1 1998: Zero, Loss ($1M)
Year 2 1999: $0.2M, Loss ($6M)
Year 3 2000: $19M, Loss ($15M) Recession
Year 4 2001: $86M, Profit $7M
Year 5 2002: $348M, Profit $100M
Year 6 2003: $962M, Profit $106M
Facebook: all approx
Year 1 2004: Zero, Loss ($1M)
Year 2 2005: $6M, Loss ($2M)
Year 3 2006: $20M, Loss (~$15M)
Year 4 2007: $100M, Loss (~60M)
Year 5 2008: $240M, Loss (~$150M) Recession
Year 6 2009: $400M, Loss (~$250M)
Twitter (Approx)
Year 1 2006: Zero, Loss ($1M)
Year 2 2007: Zero, Loss ($4M)
Year 3 2008: Zero, Loss ($12M) Recession
Year 4 2009: Zero, Loss ($40M)
Year 5 2010: $10M, Loss ($60M)
Year 6 2011: $50M, Loss ($100M)
First 3 years they look similar, only Google pulled away in Year 4, 5 and 6. All had 1-2 years in recession. Search was monetizing before Google with Overture and others. Social Networks have never made profit so far, including MySpace & YouTube, like email has never made a profit, but is good for users.
Good summary there Bill.
So if something worked for Google it will work for everyone else, too? You are too smart for that logic, Michael!
How many advertising dollars can go around?
Why won’t Google make a similar ad deal with Facebook as it did Myspace? This game of users first and rev later isn’t going to continue for too much longer. How many more VC’s can afford to get burned by it as well?
Dead nuts on. How any of these guys can have any impact on progressive ideas on the net is beyond me.
Warren is the man when it comes to brick and mortar biz. He’s admitted before he knows very little about the internet and how to properly monetize. Diller hasn’t a clue. He had the pockets to pick up some easy plays. But facebook, myspace and twitter could crush match.com with amount of hookups created.
These “dinosaurs” understand “business”, and you have no clue. They understand what it takes to run a successful operation, and that it ultimately comes down to charging customers enough to pay expenses and make a profit. All FB, Twitter, etc, have shown is that they know how to keep a business alive while they pump it up for a planned exit.
“a tough investment to justify because it has not yet come up with a sustainable way to make money.” Murdoch
That statement right there proves that Rupert clearly doesn’t understand how fast things change on the net. Facebook is the new myspace….
Twitter is the new facebook??
What are you talking about? The 90’s called, and they want their mantra back.
When twitter begins to charge customers (you) to generate revenue, we can talk, but until then, its just giving away freebies.
why should anyone care whether twitter
(or any other business/service that is providing something to the public)
makes any money at all?
if they want to pay for it, they are more than welcome to
send twitter a paypal donation & STFU
Michael, perhaps you have some ideas about how Twitter should successfully monetise its business that you would like to share here?
search. see link in post.
I’m slightly embarrassed for Expedia who is equipped with a massive media team, yet hasn’t been able to come up with at least one decent idea on how to monetize Twitter? OMFG? Anyone??
Or even worse, they did come up with an idea, but were told execs are “pessimistic” about Twitter and the idea was squashed six levels below these guys while corp comm handed them 10 bass-ackwards talking points reinforcing how “Twitter isn’t proven as a biz model.” Bravo. And I would bet multiple employees are reading this from Ask, Expedia, etc, completely and utterly mortified at this lack of vision.
But here’s the good news, we likely soon wil get to hear emerging media aficionado, Andy Rooney, weigh in as “pessimistic” about the intertubes and our “Twats.” Darn trouble-makers and those thur fancee compootrs…
”
“a tough investment to justify because it has not yet come up with a sustainable way to make money.” Murdoch
That statement right there proves that Rupert clearly doesn’t understand how fast things change on the net. Facebook is the new myspace….
Twitter is the new facebook??
”
”
Ok, so you’re proving the naysayers right with this… why would anyone invest in any of these services if they’re gonna get trumped by a new one within 2 years? Where’s the money in Myspace now? The rapid pace of change is also a hinderance to profitability, that’s a pretty easy one to see and understand, I’d think.
Maybe chew on this for a second…Rupert Murdoch made money–lots of money–off the acquisition of Myspace. How are Twitter, Facebook etc. investors doing right now?
+1. Clue.
Tweetie has ads. Works for me.
love twitter.
but these guys are where they are because they are smarter business people than you and i (and that includes mike).
and we need more smart business people to help the likes of evan williams actually make money.
so go talk to evan williams to hear about good product ideas, and go to barry to make money.
Well put. The wallstreet journal a few weeks ago commented on that as well stating that the lack of seasoned talent was the main cause for twitter not making money yet.
Even Williams + a great COO = $$$$$
More like Evan + great CEO + great COO + great CFO = $$$$
NO, the main reason for them not making money is they aren’t trying to.
Not trying? Or haven’t figured out how?
riiiight like youtube wasn’t trying to?
Does it come with a G5?
“The rapid pace of change is also a hinderance to profitability.”
So… Crazy thought… Move faster?
The lumbering giants in every industry always have trouble taking advantage of anything that is time-sensitive, regardless of investment. We power point and strategize it, and by the time we leave the conf room, myspace has gone from ugly & successful to ugly & embarrassing. Typically the more you grow as a co, the further you travel down the backslope of the adoption curve as process & bureaucracy build like plaque on a candy-loving kid’s teeth. To adapt in this world that, to my point, these companies would refer to as “new world,” a descriptor which alerts you to that laggard mentality, you have to be unafraid to test something… Anything. Just please dear God don’t come back with “we started a myspace account” or I put together a preliminary strategic analysis of our Tweeting go-to market plan that includes ratios of how often…&&kd&kfy“dy}$. Sorry – fell asleep while typing that.
Simply put, TEST. Test. Test again. Strategy is only as good as the experience behind the thought-process, so if you’ve never done it, then close PPT ‘07 and get your MFing hands dirty. Content comes first, then $$. And content in this case is your following plus your mashup strategy. It’s sometimes now about who is following you on Twitter, but who are you following and what audience can you connect their content with not on twitter, but integrated into other, higher cpc/cpm environments… And would they pay for that access.
All my love,
Michael,
I’d have to disagree with that statement of better mouse trap. facebook didn’t build a better mouse trap. If you weren’t such an old guy you would of been one of the invites in 2004
and know it started off a total piece of crap compared to myspace. It had great marketing… focused on a very targeted market (college crowd), was exclusive, and had news geeks loving it… even you talk about it often. they def didn’t build a better mouse trap they built a better organic marketing engine that’s what wins best marketed not best product.
Myspace is waving away from their market focus trying to copy facebook which is stupid they should refocus on what made them great… being a place for music. That’s why myspace is degrading.
and friendster well.. that was just a ridiculous amount of mistakes right there from management to execution and marketing.
Er, by my recollection, far from being a total piece of crap, it was actually a lot nicer in 2003 than Myspace was. Myspace has always been fugly, and Facebook had a pretty good user experience. It didn’t have all of the features, but those are really just icing on a really well executed core.
not really myspace had a clean css layout with the ability to alter the page which i think was creative. facebook on the other hand from what I remember using it had me posting wall posts to the bottom of the screen with not even css boarders to differentiate between messages… me and my cs hommies thought it was created by a high school kid… oh wait
MySpace’s focus was “A place for friends.” Something their logo had as a tagline until very recently. Music was not their initial primary focus.
Facebook did build a better mousetrap. Their UI is much cleaner and more intuitive and the ads weren’t all in your face.
you should go read more about myspace’s history and how users use myspace its very much about music. Its nice that you read the sub line on the logo’s but using it would have you more clued in…
Not surprisingly, what makes a social network work is the right people. Facebook started at Harvard, which made it cool for the rest of the ivy league, which made it cool for every other university, which made it cool for everyone else. Twitter’s critical seed was the SXSW Music and Media crowd.
The irony is that when these tools reach a large enough user base they lose their value as a marketing vehicle and become simply a generic interpersonal communication channel. Generic communication channels are hugely valuable, as we have seen with telephone and e-mail, but they generally make money by charging for use.
The questions these “dinosaurs” are posing are legitimate questions.
Being critical towards the fundamental economics of a business can’t be waived away by a mere “they just dont get it” attitude. Potential to make money is not the same as actualy doing it.
you are soooo right on the money. diller is the most overrated in history. he lost his mojo when the web happened and never got it back.
Has there been a website or entity yet that has garnered the type of attention and users that Twitter does and gone on to Fail – to close up shop completely?
I can’t think of one (but what do I know – if there are examples, forgive my ignorance and please share).
I guess the counter to Google is YouTube – still losing money, right?
Maybe it’s just me (it is), but I’m tired of all these speculative articles about how this site has no plan, this site will fail, etc, etc. Where are the examples of popular failures? Will the web let a popular venture like YouTube or Twitter fail … as long as it stays relevant?
Subscription model would work best for Twitter.
As soon as they start charging, most users will flee.
Its too easy for someone to build a free micro blogging site. Sanjay is right. Charging for corporate accounts will be more likely along with integrating ads in search. Twitter Search is their real gem.
Michael, do you think you’ll ever be a dinosaur? Let’s say.. 20 years from now..will it happen eventually?
Do you think it’s inevitable, or is it a matter of personality and character?
I’m asking because apparently you consider older people as such.
I clearly remember how everybody mocked about Buffet back at 1999, and how it ended eventually.
(btw, MG once wrote he would have pay for YouTube, Buffet is not alone)
Arrington is already a dinosaur, he can’t handle a technical discussion in the present. How is he going to handle one 20 years from now?
Twitter is likely befuddling the traditional media powers in the same manner that Craigslist has done so to the print ad industry. I see little doubt that Twitter will be able to pay their bills and get off the dole whenever they choose to do so. The question is will they do it in a more low-key manner similar to Craigslist or heavy manner that traditional media craves and cannot understand why any red-blooded company does not seek to do?
Remember Digg anybody? Worth $200Mn? doesnt even get a mention in on TC. Old news.
Twitter is the Valley’s new shiny toy.
How many web 2.0 businesses actually make meaninful revs? Oh, and that silly metric called profits…
As always VCs are subsidising our internet usage.
Diller & Co deal in Billions.
Listen to them. They sell stuff!!
I dunno, I think sometimes tech guys are a little too quick to dismiss “the old guys” because they made their money on a different landscape. The success of these guys, especially men like Murdoch, is not based on massive innovation and exciting new technologies but their ability to spot and empower money making vehicle.
What Murdoch says IS correct – Twitter hasn’t displayed any viable BUSINESS model, despite becoming a hugely popular new media brand. I know innovating isn’t easy, and that it lives in a world of massive ‘free’ competition – but building a userbase where there is no real barrier to entry doesn’t prove a business model. Afterall, I could bake a bunch of cakes and start handing them out for free outside the local supermarket – I’m sure I’d be very popular. It doesn’t mean that my business model is viable, or that the supermarket should particularly care.
I think the “old media” players have their eye very firmly on twitter. I think they see marketing and PR value in the service itself, but I don’t think anyone can see any value in owning the keys to the kingdom. Murdoch wouldn’t have made the money he has if he had gone around giving it all away to “popular ideas with no money making ability”. I’m sure as soon as Twitter genuinely makes a few dollars, the old money guys will be lining up to throw it at Ev.
Subscription models won’t work online. Period. Try to charge for YouTube, Facebook, NY Times, or most anything else and someone will come along with a free version in a matter of months.
Or, as Murdoch knows, you can charge a subscription for WSJ.com, and grow quite a profitable subscriber base. One of the few newspapers that can pull it off, but the point is that subscription plans can work online if the right benefits are there.
‘Stunningly uninterested’ is a perfect way of describing this ‘old’ business paradigm. The whole “if it can’t be sold or marketed, it’s not worth doing” is complete BS. Malone, in particular doesn’t get Twitter in suggesting a pay model. Youtube, perhaps, but there are simply too many viable options for that to work on a whole, with a large scale community. Hypothetically speaking a pay model for youtube, twitter, facebook, etc… how much would we really be willing to spend per month? It’s not just one service, or one tool now, it’s a myriad of services and tools all tied together. How about monthly social networking bill? $5 here, $5 there adds up. The fact of the matter is unless you’re making money off services like youtube, you wouldn’t pay anything more than the cost of your ISP.
I don’t understand how you can be “‘Stunningly uninterested” in something you are writing about.
If Google was able to close licensing deals for premium content a la Hulu, they could charge for that, and it couldn’t be replicated easily, and certainly not by a legal free service.
But you highlight a good point – a lot of these services aren’t viable businesses in themselves in the current incarnation of the internet. There’s too much kamikaze capital ready to fund free alternatives.
Good thing Google is willing to lose $2 mill per day to keep YouTube going…
I’ve pondered how twitter will survive too. Is it wrong to ask how they will make money, or will they make the web 2.0 way, VC??
I guess depending on VC isn’t so bad. The founders pocket a buttload of cash, and it doesn’t matter if the company tanks.
wait till they charge you for hashtagging
Like Buffett, I’d be willing to pay 0.00000001% of my net worth per month for YouTube. Sign me up!!
Maybe Murdoch, Diller & Malone are waiting for the print edition of Twitter to come out?
haha great you are right!!, http://www.yout...h?v=Ji-cT58rgNc
What’s amazing to me is how many people think Twitter is still about 140 characters and typically state “I just don’t get it”.
I’m really tired of explaining (especially to older folks) what Twitter really represents… Real time.
yeah, real-time spam and garbage….it’s totally the future, dude
I’m really tired of explaining (especially to older folks) what Pets.com really represents… Real time dog food.
genius
So what is Buffett watching on youtube?
Agree with Arington 100%. Twitter is a new way of doing things, like the open-source movement. Look at Word Press and how they have caught up with Blogger (owned by Google) and killed six-apart.
Twitter is a serious threat to Facebook first, and Google next. Why is Facebook in trouble? There has been 3 waves of Social Networks- Friendster/Tribe/Tickle, then MySpace/LinkedIn/Bebo, then Facebook. The early adopters find a new network, invite friends, then leave to the new one, then invite their friends there. No on uses MySpace or LinkedIn anymore- unless you are a laggard. Not cool = Death.
Facebook is feeling it now, their model of closed friends helped them get students and adults, but now is hurting them. Can they survive? Will MySpace survive Facebook? No. Will Facebook survive Twitter? No.
Agree with the post- Diller also said, he doesn’t think there are that many smart creative people in the world. Can anyone describe why IAC still exists? Wait- its the Ask Algorithm! Duh! Remember those brain dead ads. Moved their share from 1% to 1.1%. Who cares what these guys think, media has moved on and they are a part of living history.
Michael, I hope you are not trying to compare Twitter on the same plane as Google… cmon man Twitter doesn’t even generate the bulk of its own traffic…
it’s a platform like the Apple Store or FB Applications, the difference is that both of those started with business models in one way or another.
i absolutely am.
People do need something like this. But Twitter is proprietary. This is its biggest liability and this is why it will fail.
Look everyone, get real.
Do not question Michael’s judgement on this issue. He is right 100%. Twitter is the next google ok. You guys just don’t have the vision that Michael does.
Michael, you are like god in our country. We worship the earth that you walk on. (This is serious not joke).
Who are these other guys, malone, diller, murdoch. I’ve never heard of any of them. Tell them to crawl back into hole where they come from.
I would take Liberty Media and IAC over Twitter right now if offered. I wouldn’t even have to look at the books. Cash flow, cash flow, cash flow.
I think twitter has a reasonably good chance of making money. as a means of engaging fans and user of products and services, i am sure companies will be willing to pay to distribute messages about upgrades, launches or to get feedback. it’s a ready-made, targeted, lightweight customer channel and those make money. They just need to differentiate the free consumer product from the charged business one. Limits on followers?
Arrington have you ever talked to Buffett? He knows a lot more about technology than he lets on, a lot more. So does his sidekick, Charlie Munger. They are just modest when they say they don’t understand it. It’s not that they don’t understand it, its that they understand it changes very frequently and hence a dollar of cashflow today can easily be gone tomorrow. It’s that they can’t predict it. Buffett isn’t about “bricks and mortar”, he is about businesses that have sustainable advantages over their competition. Its difficult to have that in a super fast changing environment no? Microsoft has a near lock on operating systems and spews out cash, yet it is debatable as to whether they will even exist in 25 years no? Youtube loses money hand over fist, google’s search makes money hand over fist. Why isnt it clear to you that there is uncertainty involved? Things that are uncertain seem very clear to you. Why?
Sounds like Twitter should sponsor a bowl game… and maybe Howard Dean could do the half-time show – that’d show these “dinosaurs” the power of the youths… Yea! Yea! Yea!
It’s a breakthrough app in search of a business, but it’s a breakthrough app. Takes a while for something this simple to start making sense to people. The evolution of messaging follows an acceptance pattern: I remember when e-mail became publicly available. People didn’t get it — why not call someone? Then IM — why not e-mail someone? Then MySpace / Facebook — why not call, e-mail or IM someone? Twitter combines it all, real-time. It’s a news headline source; an IM method; a broadcast medium; an advertising medium; a social network; etc. etc. May be a stop along the way; will need other services to be added (maybe ad messages tacked on before or after tweets; targeted advertising tweets; create advertiser networks and let users select which advertisers they want to get tweets from; so many potential models here). Twitter is no doubt a stepping stone to something else; but so is Google. Huge potential here, once they figure out how to teach the commercial and user universe how to use it, and what it is. It’s easy to debunk it, but any time you have an audience of this size looking at the same stuff you have a potential huge business model out there. Maybe Diller and Murdoch are developing their own Twitter knock-off’s, but around specific revenue models. Twitter itself may not survive, but the concept — simple as it is — has opened up a lot of potential that someone will monetize.
Business is very simple. If you’re profitable then you’re a business. If you’re not, then you’re just a bunch of people spending other people’s money. A bodega clearing $5000 a year is more of a business than a Web 2.0 burning through $30 million a year of investors’ money. Right now Twitter is not a business. Maybe someday it will be. In fact, it probably will be. But until then, I will continue to listen to Warren Buffett and the “old guard” who have proven time and time again they know what it takes.
amen
This is what Ross Levinsohn said about Twitter at LATVFest yesterday: “Twitter may just be a great .org opportunity you can build around.”
Did I just go into a time warp back to 1999? “Revenue doesn’t matter. It’s all about eyeballs.”
Most dot-coms fail over time because they can’t profitably convert their traffic. And most dot-coms need to buy their traffic from the likes of Google et al. So what Twitter and Facebook does have going for them is a ton of free traffic, which in theory they can convert into revenue. But so far (at least in the case of Facebook), the market has not valued their traffic very highly (~$0.20 CPMs) so their opex costs will start to eat away at their bottom line.
And the “well, Google did it so therefore [insert company here] can” argument isn’t particularly persuasive.
So while Diller and Malone may be dinosaurs, I think they do know a thing a two about basic business math–lessons we apparently haven’t learned from a decade ago.
revenue doesn’t matter. it’s all about eyeballs. the only caveat is, you better not run out of money before you get all the eyeballs, so watch costs.
Thats sad. Im not even sure if your joking or being serious.
That’s sad?
he’s basically right … with eyeballs the worst case is you sell the company (youtube) best case is you figure out a new market to own and go ipo (google) either way for the employees its a win
Nah, the worst case is you sell it too late and end up with bupkis. Ask Pointcast. They had a lot of eyeballs back in the day.
That’s right up there with “well, we lose money on every transaction, but we’ll make it up in volume.” I suppose if one subscribes to the Greater Fool Theory of investing, you’ll always find a sucker to buy those eyeballs. At the end of the day, someone needs to convert those impressions into cash.
“I don’t concern myself with making money. I have a business to run.”
Eventually, revenue matters.
I agree that Twitter is setting up to be massively profitable via search ads though.
Okay… I’ve supported your thought process until now, but I agree that the statement you just made, if said to me by any person of leadership at my quite large media company, would leave me staring at them blankly, and even possibly with “bless your little heart” eyes.
After thinking in my head that they had just wasted 30 seconds of my time talking in a circle of insignificant fluff, all the while assuming I was dumb enough to believe their statement actually STATED anything, my response would have to be…
“So, help me understand… if revenue doesn’t matter, at all, then why the hell are there ANY costs to begin with, and when did they start accepting eyeballs as currency at the bank? And one more thing… CPM is dying, which means eyeballs? Same. Based on massive amounts of research done in the past few years, don’t our advertisers value action, not eyeballs? So again… help me understand?”
If the goal is to sell, part of the sell is the valuation, and the valuation of your eyeballs is fundamentally lower if you haven’t done a darn thing to begin formulating a monetization plan, or evaluating the data within those eyeballs to evaluate likelihood of action, click-through, etc.
If you are going for “shock value” by stating revenue doesn’t matter, then touche. But I think your employer & signer of your paycheck would likely be happy to know, especially in these times, that revenue is quite insignificant to you – instead, you would be happy just having these friendly eyeballs view your blog each day. Who needs something as trivial as money when you have all of us to share the joy of being in the red with throughout eternity?
All my love,
Oh oh I know the answer to this. Get “Too Big to Fail” and have the Obama administration bail you out. Get Free govt money! That is what FB and Twitter are planning on doing. It will be sold to the US govt! (or the russian govt).