What
has 310 million users but has never turned a profit? Here’s a hint – you only need seven
characters to answer.
Yes,
Twitter, one of the world’s leading social media platforms, can’t figure out
how to make any money. It is improving –
by losing less in the first quarter of 2016 -- $80 million -- compared to the same
time a year ago - $162 million.
It’s
strange that Twitter isn’t making a lot of money. Revenue rose by 35%, to nearly 595 million dollars
this quarter. It has a recognizable
brand, doesn’t need any stores or warehouses, has lots of users, and gets tons
of media coverage. Is it
mismanaged? Is it paying its employers
too much? Does it need to trim its
payroll? Or does it need to get better
at sales and advertising?
Somehow
everyone else is making money with Twitter.
Media companies, book publishers, musicians, and others use Twitter to
hawk products like books, magazines, and streamed content. Politicians gain voters, celebrities fans,
and sports teams increase ticket sales via Twitter. Others get paid for promoting or endorsing
products on Twitter. But somehow Twitter
can’t monetize all of its users and content?
Just charge users a buck a year and you turn a profit. Just charge 10%
higher fees and you’ll come close to breaking even.
Twitter’s
stock has plunged 42% in the six months since Jack Dorsey became CEO.
Twitter
claims it’s losing out to “higher-performing video products.” Really, how is this possible? Traditional media outlets, like print and
T.V. claim they’re losing ad revenue to digital. Twitter is digital. Isn’t anyone spending money on ads? If they are, don’t they need to pay Google,
FB, You Tube, Twitter and the like in order to grow?
Maybe
Twitter is just full of shit. They say they lose money the way Hollywood
accounting will claim a deficit on a huge blockbuster. It could all be fuzzy math.
A
friend of mine in finance says that Twitter is cash-flow positive but earnings
negative. Twitter gives out huge stock
compensations, which is counted as an expense, and produces accounting
losses. Stock compensation is an
expense.
Twitter,
it seems, could make a mint by trading in its access to so many people, whether
it’s with sponsored tweets, selling information to marketers, or partnering
with media outlets on the paid dissemination of the news.
Facebook
has managed to make a profit and become the sixth most valuable company in the
nation, with a valuation of 350 billion dollars. Whereas Twitter’s users only rose by 1.6%, FB
saw a 15% jump this year – and FB is more than 5x the size of Twitter. FB brought in $5.3 billion this past quarter,
with a profit of $1.5 billion. If FB
charged each of its 1.66 billion users just a buck every quarter, it would surpass
its advertising profits.
I’m
surprised there aren’t physical products from Twitter and Facebook. They should have a store, selling witty
T-shirts, mugs, bags, and the like.
"I Tweet, Therefore I Am” or “Do You Like My Facebook?” should be splashed across the chests of college students. Or have personalized shirts made up with one’s Twitter handle. I can see wearing a shirt with @ThePRExpert instead of my initials sewn into it. Or how about selling books about or based on cool content from Twitter or FB? Or maybe the brands partner with companies to endorse their products – Facebook’s official car or Twitter’s official drink or sneakers.
"I Tweet, Therefore I Am” or “Do You Like My Facebook?” should be splashed across the chests of college students. Or have personalized shirts made up with one’s Twitter handle. I can see wearing a shirt with @ThePRExpert instead of my initials sewn into it. Or how about selling books about or based on cool content from Twitter or FB? Or maybe the brands partner with companies to endorse their products – Facebook’s official car or Twitter’s official drink or sneakers.
It’s
not easy running a huge global company with new competition coming from all
corners. But once you’ve done the hard
part – establish a name for yourself, raise funds, go public, and become a
leader in your domain, you need to cash in on it. Authors and publishers would kill to be in
the position Twitter and FB are in.
Maybe book publishing should align with them somehow.
Otherwise,
Twitter can just put up a digital panhandling sign that says: “A penny for your
thoughts” -- and charge it!
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Brian Feinblum’s views, opinions, and
ideas expressed in this blog are his alone and not that of his employer. 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 © 2016
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