Millions twitter, but where's the money?

Feb 26 2009 by Dominic Edmunds, The Journal

SO MUCH has been made of the micro-blogging service 'Twitter' in recent weeks that I can almost hear it, like the dawn chorus, every day, in everything I do. So what is Twitter?

Boasting six million users, Twitter is a social messaging tool that allows you to communicate with friends and complete strangers in messages of no more than 140 characters – it’s micro-blogging at its best.

Launched in 2006 and used by an eclectic mix of famous people, it creates the perfect environment to satisfy society’s increasing obsession with celebrities.

However, there is a more serious side to Twitter. At a time when communication is paramount, where society feels short-changed by the information forthcoming from governments, banks and businesses, Twitter is like a breath of fresh air. It is the home of intelligent social networking; it’s a million (or six million to be exact) conversations going on at once; it’s refreshing and it has invaded every corner of society.

Research reported in New Scientist found that instant messaging systems like Twitter did a better job of getting information out during emergencies.

From a national perspective, the Labour Party is launching a system to integrate MPs’ websites with Twitter and Facebook in a bid to help them communicate better with their constituents. Locally, Newcastle City Council claims to be the first UK council to announce an election result live on Twitter with results of the Fenham ward by-election being sent to ‘followers’ as they were announced.

The question is, can Twitter leap from a social novelty to a sustainable business model?

Well, with a company valued at US$250m, rejecting a purchase offer from Facebook for US$500m, securing US$35m in new capital (US$55m in total), increasing in active users by 900% in just one year and being used by one in 10 US web users, Twitter certainly has potential. However, we’re looking at a business that, as yet, has made no return on the total US$55m investment.

Only last week, industry news reported that ITV were about to sell Friends Reunited. Initially successful, Friends Reunited failed to adapt to the changing digital market. Twitter is only just evolving, but the ongoing challenge is for Twitter to actually start making money.

If you’ve invested US$55m and you’ve rejected a big money buy-out, then you must be confident that you can get it back in the relatively near future.

Personally I have my doubts.

And how do I know… well a little bird told me.

Dominic Edmunds is operations director at Sunderland software group Leighton