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Summary:

Twitter CEO Dick Costolo says the company wants to become more of a media player, and also wants to become a Facebook-style platform inside which developers build applications — but can the company find a balance between competing with third-party providers and working alongside them?

We’ve written before about how the evolution of Twitter from a real-time information utility into a full-fledged media entity is causing some friction with developers, and also raising competitive issues with traditional media outlets. In an interview with the Wall Street Journal about the company’s future, CEO Dick Costolo made it clear that Twitter wants to play a central role in media events such as the Olympics — where it has a new partnership with NBC Universal to run a real-time news hub about the Games — and also wants to become more of a Facebook-style platform inside which developers build applications. But can the company find a balance between competing with media partners or third-party providers and working alongside them?

Costolo told the Journal that Twitter wants to help its users make sense of messages around major events, and wants to “more closely tie the shared experience on Twitter to the actual event that is happening.” Although he didn’t mention the Olympics partnership with NBC or the company’s recent NASCAR editorial effort, those are clearly models for what Twitter hopes to achieve with other similar events — but as we’ve pointed out, the kind of curation and filtering function that Twitter is working on for the Olympics is also pretty clearly an editorial function, the kind of thing that is making the company more and more of a media entity.

Is Twitter a partner or a competitor?

Should media companies be wary of these kinds of moves? I’ve argued that they should (and so have others like blogging pioneer and developer Dave Winer), if only because Twitter is effectively building a multibillion-dollar media operation using their content — whether it’s through deals like the Olympics partnership with NBC or through features like “expanded tweets,” which displays added content from media outlets inside Twitter’s mobile and web clients. As the company builds on its already successful advertising model, the overlap and potential competitive issues with media companies are going to become more obvious.

Costolo downplayed these kinds of issues in his interview with the Journal. The Twitter CEO has repeatedly resisted attempts to label the company a media entity, and told the newspaper that he sees it as “a technology company in the media business.” It seems obvious that the company is trying to emphasize the fact that it can be a partner with traditional media players rather than a competitor — but as it expands the editorial aspects of what it does, that position may become harder to defend. If Twitter is a technology company in the media business, there are plenty of media companies that need to get into the technology business, and in that kind of environment partners can quickly become competitors.

birdhouses

The same dynamic is playing out with Twitter and its developer ecosystem — or what used to be its ecosystem, before the company started acquiring third-party services and ratcheting down controls on what others could do with its formerly wide-open API, driving away both developers and potential investors in Twitter-based services. Recent statements from director of product development Michael Sippey have made it clear that Twitter intends to continue that process; those comments triggered a wave of concern in the startup community and sparked at least one attempt to build a subscription-based alternative to the service.

Will Twitter’s walled garden be appealing enough?

In his comments to the Journal, Costolo said that Twitter wants to encourage developers to add specific kinds of features and services — such as tools that companies could use to analyze the sentiment within tweets — instead of duplicating the tools or applications that Twitter itself has. He said the company wants to move away from a situation in which developers and companies “build off of Twitter, to a world where people build into Twitter.” Sippey said something similar in his blog post about potential restrictions to the API, telling developers that Twitter wants them to “build applications that run within tweets.”

But the comparisons Costolo used in describing this evolution are revealing: he told the Journal that Twitter wants to become a platform on top of which other companies build like Facebook and Apple, two companies that are well known for being “walled gardens,” in which they control every aspect of what outside developers do. Twitter is no doubt hoping that this approach will result in the same kind of financial windfall that both Facebook and Apple have experienced by controlling their gardens, but it remains to be seen whether they can convince enough developers and services to play that particular game — especially given the atmosphere of uncertainty and suspicion that has developed in the tech community.

As John Borthwick of New York-based incubator Betaworks noted in an interview with Om at paidContent 2012, Twitter faces a challenge as it tries to move from being a kind of distribution system for real-time information to a walled garden, where the focus is no longer on sending people away but instead on keeping them within Twitter’s sphere of influence as long as possible. Facebook’s garden is huge and Apple’s garden is a very lucrative one for developers — what will Twitter be able to offer in order to convince outside services that it is a partner rather than a competitor? And will users want to stay within the company’s garden?

Post and thumbnail images courtesy of Flickr users Giuseppe Bognanni and See-ming Lee

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  1. Anuj Agarwal Tuesday, July 24, 2012

    I think twitter’s intentions by constructing a walled garden is good for them(in the short run) but not for the internet as a whole. They are hindering innovation by not allowing other developers to play around with their data. We all know twitter has tons and tons of data. But this data becomes “valuable” only if it is searchable or if it makes real sense. Had Google been allowed to index twitter data, twitter could have been 100x more valuable today.

    Users will continue to stay as long as they don’t find an alternative. If something like App.net takes off they might start scratching their heads. But i don’t see this happening anytime soon.

    On the other side, i also think, if they could build an App store like ecosystem well embraced by the developer community, that could change the landscape as well. And i just get the feeling that this will work for them. Being a developer myself, i see ton of opportunities to develop apps that work “INTO TWITTER” and that could improve the twitter experience.

    Anuj Agarwal
    Founder,
    feedspot.com

  2. Chris Haddad Tuesday, July 24, 2012

    Creating an App store ecosystem and hosted application platform will positively transform the business model. I describe a possible path forward for Twitter in my API Mutiny on Web 3.0 blog post at http://blog.cobia.net/cobiacomm/2012/07/03/api-mutiny-on-web-3-0/

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