Twitter recently reined in its API (Application Programming Interface), effectively cutting off access to its stream by other sites and apps, LinkedIn and Instagram being two of the most notable. The move is financially motivated – Twitter needs to build a solid advertising revenue base, which can only be done if people actually go to Twitter.
In the process, Twitter also managed to p*ss off developers, who, in turn, have revolted by starting a “movement” of advertising-free social networks and related apps, chief among them App.net.
This shift toward alternative social networks is no where better explained than by Jim Morrison (no, not the dead rocker…long may he live!), but a developer based in the UK. In his blog post “app.net will change social networking forever,” Morrison asserts that Twitter may be biting the hand that feeds it and, as a result, “may have actually precipitated its own decline” by frightening developers into supporting the competition.
Alternative Networks/Apps Driven by Open API
The marketer in me is platform agnostic. I recommend that clients use whichever social network will benefit them. Traditionally, that’s been the big three – Facebook, Twitter and LinkedIn – but now we can add Pinterest and Google+ to the mix.
However, the geek in me is excited about something new, reactionary, and maybe even a little bit revolutionary, which is driven by a philosophical difference that expresses itself in two ways: put the needs of the user first, and have an open API.
That’s been part of the reason Google+ hasn’t taken off as well as it could. It’s API is restrictive, and only one way. If I correctly understand the dynamic (keep in mind I’m not a programmer), it’s an attempt to control the flow of information so that it is inbound only, and that’s what Twitter is now trying to do.
Alternative Funding Approach
The need to make money either to enable further development and/or to show a profit is partly responsible for this “techtonic” shift, and there are primarily five ways in which companies do so:
- Advertising – This is the most commonly accepted model, though both Facebook and Twitter have received no small amount of push back over the years for choosing it.
- Subscriptions – This is the model chosen by App.net and others. A similar model – “freemium” – also fits in this category.
- Donations – Think Wikipedia.
- Venture capital – This is extremely popular among startups.
You spend OPM (other people’s money) without having to worry about how you’re going to pay it back, or without the hassle of coming up with a revenue model. (Ok, I’m being facetious, but you catch my drift. I realize VCs don’t look at it that way.) - IPO – Hasn’t worked out well for Facebook or Zynga, but has for LinkedIn.
Of course, the major social networks are primarily funded by advertising: 84% of Facebook revenue comes from ads; most of LinkedIn’s revenue is ad related, though a healthy portion comes from recruitment options and subscriptions; Twitter’s ad revenue is expected to exceed $1 billion on 2014.
Even though they don’t fit as well within a social network paradigm, ads are easier to implement and keeps services free in the hope that massive numbers of users can be attained. (Then you figure out how to make money off all the acquired data. Sound familiar?)
The trade off with advertising (and going public) is that you are forced to please advertisers and shareholders, which means that less concern gets paid to the actual users.
So, the funding strategy chosen by App.net, Buffer and others is to charge for use (or at least use a freemium approach). That keeps the sites beholden to their users and no one else.
I encourage you to take a few minutes to read Morrison’s insightful post. I’ll conclude this one with another of his remarks that sizes up the current state of affairs pretty well:
“App.net may never make it to Twitter or Facebook’s scale. It may not even last the night. But what it has already done is to shift Twitter’s position in the market to ‘just another message delivery platform’ – and one that, I predict, will soon be one of a great many.”
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