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Friday, October 18, 2013

Why Isn’t Twitter Profitable?


Whether you love or hate Twitter, it can be a useful tool for millions of businesses and authors to promote themselves. However, when it comes to Twitter promoting itself as a viable business it falls far short.

Can someone explain to me how Twitter, one of the most famous brands ever, can lose money?

For all its popularity and huge, growing number of users, it can’t seem to convert itself into a money-making operation. Just as Twitter hopes to launch an IPO and offer public stock, it announced its biggest quarterly loss – $64.6 million in Q3. This loss was triple what it lost a year ago in the same period. You’d think they’d do everything possible to keep expenses down and make the balance sheet look strong just before it asks the public to buy millions of dollars of stock shares. If it can’t be profitable before the IPO, you have to question how much sense it makes to invest in such a company.

Twitter lost more than $125 million in the past year. It lost less in 2012, but a lot more in 2011. It’s not a profitable company, despite its ability to sell sponsored tweets and advertising.

It’s not like it isn’t generating revenue. It brought in $160 million in the last quarter – more than double its level from a year ago. But unfortunately, expenses have increased greatly as well.

All of this may mean nothing to you. You may or may not invest in Twitter – or even use the micro-blogging service regularly. But what it all raises is the real issue: Can something free be profitable? Can a really popular service not figure out how to monetize its resources, partnerships, and high usage?

It’s interesting that social media has impacted our habits, spending, information sharing, social lives, businesses, politics, and many aspects of our world. But for all that it does, it fails to make a profit. The virtual world, perhaps, is just that, and the screen world doesn’t translate to money in the bank.

Twitter may soon celebrate an IPO that yields a huge payday, but will the company prove to be a gimmick or a cultural cornerstone? And if it is the latter, will it have to find a way to charge users so that it can be a money-making company?

It may take more than 140 characters to find out.


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Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer, Media Connect, the nation’s largest book promoter. You can follow him on Twitter @theprexpert and email him at brianfeinblum@gmail.com. He feels more important when discussed in the third-person. This is copyrighted by BookMarketingBuzzBlog © 2013

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