Friday, April 3, 2009

Google Buying Twitter: Internet Bling

Rumors are awesome because they're like that first date when the girl says something like, "Oh, we should totally do this again.  I had a fun time," when you drop her off.  The hopes go up, you tell all your friends, but 80% of the time you end up confused and wondering why she avoids your calls.  Hold on; maybe that's not awesome.  Obviously I've avoided dating too long.

Tech rumors are no different than the whispers of romance you hear on a first date.  You start to salivate and dream over the potential that what you hear on the blogs is true.  "Oh my gosh...they're going to do what?  They bought them for how much?  They're producing little babies?  GOOTUBE??"  Sadly, they're not always true, and you realize all the time you spent figuring out if you were going to short the company's stock was an exercise in frivolity.

Today was one of those special rumor days.  Internet blogs blew up saying Google was looking to buy Twitter.  Past the "he said she said" of one blog saying it would indeed happen while another blog vehemently denied it, the rumor persisted and made it onto mainstream news sites all over major networks.  The rumor, just like any good one, was delicious.  To quote the alien, Hulu-loving Alec Baldwin; "I think I'm drooling a little."

If I could put the Google and Twitter (Gootter) relationship into a simile, I would equate this to a rap star with a few platinum albums, creative beats, and plenty of groupies.  This rap star decides with all the spare coin he can kick around he should go buy "bling" (e.g. new cars, new houses, new boats, new women, etc.).  Although the rap star can certainly afford his bling and generates buzz by making it onto MTV Cribs (or CNET in Google's case), it really does little to improve his bottom line or increase his profitability.

The problem with Twitter is the same problem that Youtube, Myspace, Facebook, or any other social media site.  They were raised in the wild of the Internet, and like any feral cat worth its weight in financial valuations they're awfully tricky to control, manage, or make lots o' dollars.  The business models created by these websites were born out of user ingenuity and the idea of meeting the needs of a consumer...not making bottom line dollars.  As far as I can tell, I don't think anyone has completely mastered the art of profitable social media.  In the end, it's a matter of convenience and user simplicity for the users of the site...and isn't that the way it should be??

If you don't believe me, take a peek at Google's purchase of Youtube for $1.65 billion in 2006.  Good googly moogly, that's juicier than my Fruit Punch Capri Sun I had with lunch today.  However, if you look at estimates of Youtube's revenue forecasts, the highest revenues I saw for 2009 were $125 million.  Although this is an impressive 50% increase over last year, if sales plateau at $125 million it will take them about 13.2 years to break even on this initial investment.  I'm a patient man, but in the world of business don't you expect a return on your money a little quicker?

The trouble with social media born in the wild of the Internet is conversion of the medium to a profitable commercial enterprise.  In my opinion, Google should just put its genius programmers (preferably the same ones who brought us the joys of Google Maps, Google Earth, and Gmail) and let them loose on creating social media that boggles the minds of its users and makes killer profit for Google.

-Mama said knock you out-

Phil Jones


K. Michel said...

Google buying Twitter... even if it isn't official, just the thought of it feels very, very wrong. *shudders*

Great looking blog by the way, from one writer to another.

Anonymous said...

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Michael O said...

Phil - 2008 was the year Twitter exploded and gained mass adoption. The executive team (Biz Stone, Evan Williams & co) have promised that 2009 is the year they monetize the service. Like you, I remain skeptical, but think that a combination of offering premium accounts (with enhanced features) and opening up the Twitter API to third-party sites that want to create a bi-directional flow of information with Twitter could be an option.

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