42 Comments

Summary:

Twitter has come out with new rules that make it clear the company plans to own the majority of the value in the ecosystem. While Twitter can probably get away with this kind of behavior, it risks losing much of the goodwill it has built up.

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In another shot fired across the bow of the Twitter ecosystem — or another volley in the ongoing Twitter wars of 2011 — the company has come out with new terms on which all developers must operate, which makes it clear that Twitter plans to own the majority of the value in the system, and relegate third-party apps to the periphery. As with the company’s other recent moves, including shutting down misbehaving apps, the response has not been friendly from many parts of the network. And while Twitter can probably get away with this kind of behavior, it is taking a real risk of losing much of the goodwill it has built up over the years.

Critics have accused the company of “nuking” the developers and services that helped it achieve its early growth in its drive to monetize its network, in much the same way that Hunch founder and angel investor Chris Dixon criticized the company last year for “acting like a drunk guy with an Uzi” after it acquired Tweetie. Some have given the company credit for at least laying out the rules in a clear manner with its latest API update, since much of the developer community has been unclear on what was permitted and what wasn’t, but those responses seem to be in the minority.

The point has become clear by now: anyone who is still under the impression that Twitter is the friendly, touchy-feely company that co-founder Evan Williams used to run — the one that admitted it “screwed up” relations with developers by moving too quickly — is living in a dream world. Twitter CEO Dick Costolo may have been a standup comedian at one point, but he is a businessman now, and Twitter is determined to do whatever it takes to come up with a business model to justify the huge valuations it is getting.

As MG Siegler has pointed out, what Twitter is doing is just business and not personal — but there is a reason that most businesses don’t operate the way the Mob does (other than the fact that killing people is illegal, of course). Acting that way, by routinely kneecapping people or setting their businesses on fire, is a risky proposition. Even if you *can* do it, it’s not clear that you *should* do it, especially if some of your business depends on goodwill (as opposed to fear), as Twitter’s clearly does, and especially if a large part of your success is due to that larger ecosystem.

Without the help of third-party apps like Tweetie and Tweetdeck, the company likely would not have been nearly as successful at building the network (and a ready-made client like Tweetie certainly wouldn’t have been sitting there waiting to be acquired). But the ecosystem didn’t just build demand for the network — it also helped build and distribute the behavior that now makes Twitter so valuable: the @ mentions, the direct messages, re-Tweets and so on, none of which were Twitter’s idea originally. That created a huge amount of goodwill, and led to the (apparently mistaken) idea of an ecosystem.

It’s all very well for Twitter to claim ownership of all those things now, since it is their platform. And obviously there are businesses that can get away with being arbitrary or dictatorial — Apple is well known for such behavior, after all, and it is one of the most valuable companies on the planet. But this only works over the longer term if your product is so unique and compelling that people will put up with it. Is Twitter in that category? Perhaps. The company managed to grow at an astronomical rate even when it was suffering repeated outages, because users (including me) were so addicted to it. That may have made Twitter a little cocky about how necessary it is.

It’s also true that there isn’t really much competition when it comes to micro-blogging, or whatever we choose to call Twitter. Open-source options such as Status.net have tried to get traction, and programmer Dave Winer has been lobbying for and trying to jump-start an open Twitter alternative for some time — even before the company made it obvious that it was planning to “prune” the ecosystem. So far nothing has come along that can compete, but Twitter’s behavior could serve to boost those efforts substantially. And there would be definite benefits to an open system — not just in terms of features, but for when governments decide to order companies like Twitter to release user information to the State Department about their espionage investigations.

In the short term, Twitter seems likely to get away with throwing its weight around and dictating the terms on which developers — and users, to a large extent — can access or make use of the network. And maybe the network has grown to the point where none of that matters any more. But sometimes when you bulldoze an ecosystem, what you wind up with is a lot of weeds and a corporate mono-culture in which growth no longer flourishes, and in some cases that growth subsequently moves elsewhere. That’s a risk Twitter seems willing to take — whether it is the right one remains to be seen.

Post and thumbnail photos courtesy of Flickr user Umberto Rotundo

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  1. gregg dourgarian Saturday, March 12, 2011

    Thank you for this Matthew. I’m curious as to why @FredWilson, a Twitter investor, hasn’t been called accountable for this deception.

    He of all people has led this fraud of intention by writing for example in his prominent blog that

    “you can build large businesses on top of a social platform like Facebook and Twitter. And because Twitter is so open and so lightweight, I am surprised that there aren’t more “new kinds of killer apps”

    http://www.avc.com/a_vc/2010/04/the-twitter-platform.html

    1. Fred is just one person, Gregg — he may have his own views about what Twitter should do, but they may not be shared by the company or by the board. I don’t know. In any case, it’s a little unfair to hold him accountable for what Twitter does or doesn’t do.

      1. Matthew
        Who’s holding him accountable for what Twitter does? Not me. I’m not sure how you read that into what i wrote.

        I’m reproaching for him for Pied Pipering devs/entrepreneurs to the Twitter platform (read the post I reference) and not now either issuing an apology for having done so or publicly rebuking Twitter’s actions.

        If I’m wrong on that I’d like to know.

    2. gregg – that post you link to is the opposite of “pied piper” i wrote it because i wanted to be transparent, open, and honest about what i saw was coming. i care a lot about developers and wanted to make sure they used their time wisely

      1. Fred…very cool of you to respond here.

        As a loyal reader of yours from the earliest days, i’d encourage a post titled “Twitter Nuked Your Product, What to Do?” or “How to Protect Yourself When Social Networks Get Evil”.

        Thanks for listening!

      2. Thanks for the comment, Fred.

      3. Why I have a feeling respective Mr. Dourgarian is kind of mockering?

    3. Greg, it is probably more instructive to look at Dick Costolo’s strategy with his last company (Feedburner) to see where this is probably going.

  2. Twitter is doing all the would-be developers a huge favor – they won’t be wasting their time developing a twitter application that might yield them ten cents an hour for their efforts, if that much, by the time people realize and accept the limitations of twitter’s value to society. Twitter is basically saying “look guys, we haven’t figured out how to make enough money to justify the ridiculous valuations being accorded us, so maybe you shouldn’t be investing your very finite time and resources on riding this wave”.

    1. I agree that clarity is good, Ken — and many of the things Twitter has done are understandable, and maybe even advisable. But the way they have done them seems unnecessarily harsh in some cases.

  3. Should we say this is “ugly side of twitter”? I believe so. I really wonder what they will do when users start to go away or will start to be boared on there? So far so good and I love twitter, but I wonder why companies always have to negate those who helped them the most and grab all the benefit for themselves at the end? This is rude and selfish and not even a bit fair not only to those who helped but to users (customers) themselves as well.

    Whatever, I didn’t know that “ugly” side and now I’m almost sorry I do.

  4. Perhaps those developers would gang up, create a rival microblogging service and route their apps to connect to the new service.

    Ev Williams, the developer guy is not there anymore. What else should we expect?

  5. Once you make it personal you can’t go back and make it just business. That’s what twitter is doing now. They made it personal by selling the we love developers line. Now we find that lie was just business.

    1. I very much agree. Everything for developers just that you will do our users happy and even more for users and when thsi relationship is finally establish (usually on very personal level), sometimes seams all such social networks (not just twitter) would rather throw them away – both – developers and sometimes even users …

      I would lie though if I would say I had any problems with twitter as a customer (I’m not developer fortunately) but would really be unhappy if now when all is established and very well used and actually came to our habits, would be “destroyed” or any other way driven away. I believe without many of those apps we’re usnig twitter is empty and boaring – sorry, but that’s how it is from the user’s view (at least mine).

  6. William Mougayar Saturday, March 12, 2011

    I’m not sure we can necessarily tie Twitter’s last API update to their revenue strategy. I think it was driven by their desire to see a more consistent user experience, and I don’t blame them for that. Imagine if Google had 12 different ways to a user experience.

    But I think it would have been more desirable if they had at least announced some breakthrough UI/UX at the same time in order to display their innovation capabilities. I hope they do get something out soon, because the last mobile client update didn’t cut it.

    1. William, the API may be designed to protect the user experience, but the result is that Twitter owns the client and any monetization around the client. I don’t think that’s a coincidence.

      1. Over time I agree, but first, they have to get the client experience right in order to monetize later. Google had to do search well first. For Twitter, maybe it’s something along relevancy and discovery. So, I hope that Twitter succeeds in figuring out their revenue model. That’s key to their longevity.

  7. Gotta love monopoly mentalities that believe they are more important than the network.

    Is Twitter big enough to not care? Sure for the next 18 months they are. After that? Not sure. I already have a myriad of ideas of things i would like Twitter to do that it doesn’t do now. Usually a start-up fills the innovation void that platform owners become incapable of creating over the long term. If developers abandon Twitter it is a huge risk to their business.

    Someone else is going to figure out the identity issue (importing your current followers/followed) at some point and then the switching costs go to zero -

  8. Clay Loveless Saturday, March 12, 2011

    Mathew, regarding your title: they did think twice. First thought was “we’re going to build official apps, so watch out.” Second thought was “You know, you guys just stop. We’ve updated our ToS to make sure you know we don’t want you.”

    Couple of good links relating to this:

    http://www.voiceoftech.com/swhitley/index.php/2011/03/a-letter-to-ryan-sarver/

    http://stevestreza.com/2011/03/12/reflections-on-twitter-and-on-ending-innovation/

    1. Thanks, Clay — I’m sure they did think twice, or maybe even three times. My point is they should have kept on thinking :-)

      1. Perhaps the discussion over this decision was carried out via tweets on clients with incomprehensible representations of tweets, and this whole thing is a big misunderstanding.

  9. I must admit one of the first things I thought of when I heard that twitter have stated “no more apps, thanks” was that they are protecting their revenue streams. I recall this week gone the “dickbar” incident and the fact that most users hate it, let alone the fact that it covered tweets – now fixed. But you know what, it’s still there. The trends bar is a minor addition to the app and one that “appears” inane. But they were very careful to say that they would fix the glaring error of covering tweets but despite the user response to it – not taking it away.

    Now I know this is one app on one platform. But it provokes a question: Why leave a “feature” that users appear to hate? I would suggest that this is a potential revenue stream. Second to this what’s to stop them adding other “features” that of the same ilk? Now factor in this latest statement. I am not saying that this is the motivation but who’s to say the reasons behind it are not to protect their revenue model?

    One other scary thought; what if twitter controlled all apps or had the only app for every platform? They could do what they liked because we would not have many alternatives.

    This is more a “just say’in” comment. I might not be right by any stretch but these were my thoughts and concerns and I have a suspicion that there may be some truth in it.

  10. Mathew, that’s a great piece. I especially liked the part about how, without an ecosystem, they wouldn’t have had a Tweetie to acquire.

    And that goes for future Tweeties, that now won’t exist.

    Further, I don’t know the guy that wrote Tweetie, but if he’s like most developers, he likes to work in a thriving, busy, competitive ecosystem. By shutting down everything outside Twitter, effectively, now the only thing guiding what’s left of the ecosystem is company politics. And it’s not a pretty thing.

    When I run a devteam, I always try to show them how good our competition is, so they are inspired to be even better. Now you just have more inbreeding, more of the internal reality of the company being reflected in the product. This does not usually lead to good places, even at the best Silicon Valley company.

    1. Just curious Dave, do you use Identi.ca?

      Wayne

    2. Thanks for the comment, Dave — I totally agree. In-breeding is a great way of putting it.

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