Does #Music signal the future of Twitter?

Apr 22, 2013

Table of contents:

1. Twitter as a company
2. Closing the advertising loop
3. Real Time Network
4. What is #Music?
5. Twitter as the real time news room
6. Twitter’s #News vertical
7. The power of the news vertical

It’s interesting to analyse the moves of the latest crop of Internet giants, because in many ways it feels like these companies are breaking new ground. With each generation, it feels like primarily online based companies are getting stronger and stronger.

Whilst Yahoo, eBay, Amazon and Google continue to show strong performance (for the most part), it’s the likes of Facebook and Twitter that are continuing to push the surge of online companies. If you look at Facebook for example, they have started holding product launches that feel more like the release of new Apple products, rather than how you would normally see a new online product being introduced.

Last week Twitter launched their new music service #Music. At first glance, #Music looks to be a doubling down on Twitter’s #Discover service, showing the power of their real time network of information and communication. But does #Music reveal the future plans of Twitter as a whole?

With a rumoured IPO on the horizon, Twitter is in a position where it needs to dramatically prove it’s viability as a revenue generating company. Unless it wants to reenact the shambles of the Facebook IPO, Twitter needs to ensure that it can prove the future growth as an online giant.

Is #Music the first tentative step?

Twitter as a company

Whilst there are still doubters of Twitter, I’m definitely in the bullish camp. Twitter is interesting because it is a real time network of what is going on right now. Whilst Facebook has seen much faster growth and traction, I believe that Twitter posses many qualities that Facebook does not.

Two of Twitter’s big areas of potential for growth and future monetization are it’s ability to close the advertising loop, and the power of it’s real time network.

Closing the advertising loop

It’s a well understood concept that before the Internet, half of all marketing budgets were wasted, just nobody knew which half. The Internet has added a massive amount of transparency and analytics to track the Return of Investment which can be attained through online advertising.

Google remains the undisputed leader of online advertising with it’s Adwords product. Google is able to sell inventory in a perfect marketplace where each advertiser is paying exactly the right price for that spot. Google is then able to show exactly how each penny of a marketing budget translated into sales and how the advertiser can improve their campaign through online tools such as Google Analytics.

Twitter has the potential to offer a similar type of advertising product, but one that is more targeted to mobile and location aware devices. An advertiser can target a customer through deep understanding of that user’s profile through what they have tweeted in the past as well as who they are following and who they are influenced by. Tweets are inherently connected to physical location due to the ubiquity of mobile, and so an advertiser can track the success of a campaign in getting customers to a physical location.

Twitter is already generating significant revenue through their sponsored tweets and sponsored trends advertising products, but in order to justify their value and the future growth as a public company, Twitter needs to cement it’s earning potential.

Real Time Network

The second big opportunity for Twitter is to leverage their position as the undisputed real time social network. Twitter is already the undisputed leader for breaking citizen journalism, media commentary and the latest news. When an event happens in the world, Twitter is the first network to spread the news or the message.

Twitter is made to be a real time social network because of it’s simplicity, openness and the follower model that it has adopted. Twitter allows a message to spread quickly through it’s network. Facebook has tried to emulate this model by moving from private silos to a more open network, but Twitter is still by far the leader due to the potential proliferation through retweets, particular from individuals who have amassed large audiences.

If Twitter is going to be able to grow into a defensible company that can produce significant revenue and growth, it has to leverage this huge advantage.

I believe #Music and #Discover are how Twitter is planning for this growth.

What is #Music?

So what exactly is #Music? Well #Music is an independent application that uses the power of Twitter to surface what music is currently popular on Twitter, what new artists are emerging and what music the people you follow are currently listening to. #Music allows you to listen to tracks within the app through music streaming services, or you can purchase the track from Apple’s iTunes.

#Music is essentially the same as fflick, a movie recommendation engine that used the power of Twitter to see what movies your friends were watching (Fflick was acquired by Google in 2011).

Let’s be honest, #Music is not exactly an ambitious product for a company of Twitter’s size, but perhaps it shows that Twitter is interested in creating these vertical applications to surface data around certain categories. Whilst #Music might not be that interesting on it’s own, if Twitter is pursuing this strategy, it does have some interesting implications.

Twitter as the real time news room

Back in early 2011, I wrote a post on why I thought Twitter should acquire Digg. At the time, Digg was losing relevance as Twitter and Facebook, amongst others, had taken a serious hit on it’s traffic. Digg had recently launched version 4 and had faced a user backlash after it had introduced some dramatic changes.

I suggested that Twitter’s unique position and Digg’s history of being able to surface the best of the the Internet’s trending content and news would be a perfect match.

Whilst Twitter did not acquire Digg, a similar company called Betaworks did. Betaworks is a studio that creates new online companies and invests in others in order to fuel growth. One of the central themes, is the social, real time Internet and intelligent media. Betaworks has created properties like bitly, Chartbeat and it is now rebuilding Digg. Through Bitly, Chartbeat and Digg, the Betaworks portfolio companies are able to leverage the real time pulse of the Internet to know exactly what is trending and where activity is rising.

Although Betaworks has created this source from it’s many portfolio companies, Twitter is arguable the hottest source of real time information and trending news.

I believe that Twitter’s next big move will be to become the online newsroom of the Internet.

Twitter’s #News vertical

Following the #Discover and #Music verticals, I believe Twitter will finally unleash it’s power on real time news under the #News vertical.

Arguably Twitter is already acting as this model, despite not formally having a dedicated product. As the recent news events in Boston have shown, when the public wants real time breaking news, Twitter is the undisputed leader. The problem is, you need to be following the exact right people in order to get the breaking news. Often you only hear about what the breaking events are after tweets have been retweeted into your timeline. This isn’t an efficient way of surfacing the latest news.

Twitter should create the news room of the 21st century by creating a dedicated application that aggregates all of the breaking news stories and media all in one place. Leading news organisations will be able to gain wider exposure to their breaking news, videos and photos and the general public will have a single source for getting the latest news without having to skim a whole Twitter timeline.

Twitter will be able to surface breaking news as it happens by analysing trending topics, hashtags and sentiment analysis. Twitter can also offer leading news organisations the opportunity to promote their stories or coverage. Breaking news can be segmented by geographical location, or viewed by analysing the followers of a user. This would enable a user to find specific breaking news around a story in their local area that had not yet hit the mainstream press.

As a central source for breaking news, #News would act as a better filter for getting the facts. Once you can see that a trending story has reached a level of proliferation, and is backed up by major news outlets, it could prevent random rumours from spreading incorrect information or details of a story.

The power of the news vertical

Twitter is a ever increasing mature company. After a couple of years of technical difficulties and controversy, Twitter has emerged as a powerful new online network and source of real time information.

With an IPO on the horizon, Twitter needs to find a huge new avenue of growth and revenue. Whilst not everyone wants to become a contributor on Twitter, the network is increasingly becoming more valuable, particularly when breaking events are happening from around the world.

#Music is an interesting application, but it is still such a niche use case. If Twitter is to pursue this vertical strategy, I think #News could be the defining moment in the company’s history.

Twitter has already replaced TV coverage for breaking news and is already cemented it’s place as the second screen for other major events. If Twitter wants to continue on this trajectory, it needs to create a product that can leverage this opportunity.

I’m looking forward to #News.