Twitter turns a profit, but it still resists change

Gone are the heady days of 2013, when the San Francisco-based company was signing up new users at a brisk pace and was, literally, the talk of the town.

Powered by automated translation

Twitter executives and investors would probably like to forget 2015 on the whole, but things aren’t looking much better for the social media company heading into the new year.

Gone are the heady days of 2013, when the San Francisco-based company was signing up new users at a brisk pace and was, literally, the talk of the town. Twitter’s share price soared following its initial public offering to more than US$60 on the New York Stock Exchange on expectations that it would become the next Facebook – an online advertising juggernaut with upwards of a billion users.

Two years later, the company has instead stalled at about 300 million users, with anaemic growth punctuating 2015. Twitter added only four million users in its most recent quarter, which helps explain its share price spiral to about $22 to close out the year, well below its IPO debut of $44.90.

The company fired the chief executive, Dick Costolo, in June and replaced him with Jack Dorsey, its founding chief executive who had himself been axed from the job in 2008. Upon his return, in October, Mr Dorsey had the pleasure of overseeing more than 300 layoffs.

Yet Twitter hasn’t been in free fall. The company finally became profitable last year, posting net income of $7 million in its most recent quarter. Revenue garnered from advertisers has also been climbing steadily, to $569m in the third quarter, up 58 per cent compared with a year earlier.

Investors, however, are worried the improving numbers won’t be sustainable without user growth. There’s only so much money that can be wrung out of existing customers, after all.

To that end, there’s reasonable concern that Twitter might have peaked. Despite being heavily cited in other forms of media, as well as an integral reporting tool in times of social upheaval such as the Arab Spring in 2011, the service has failed to catch on with the mainstream.

Facebook, which has more than 1.5 billion monthly active members, is used by about 70 per cent of online adult Americans, according to the US-based Pew Research Centre. In comparison, Twitter is used by less than a quarter, or fewer even than the photo-sharing services Instagram or Pinterest.

Despite its influence on other forms of media and constant references to it by newspapers and television news, Twitter is increasingly looking like an echo chamber. Many users are navel-gazing media types, celebrities and marketers who have something to promote and are not really interested in having meaningful two-way conversations with ordinary people.

Many non-media users are turning away as a result. While Twitter has about 300 million active users, more than a billion people have signed up, meaning that about 70 per cent of people who tried the service ended up quitting it.

Aside from the media echo chamber, Twitter also often resembles the worst kind of online comments sections. While theoretically offering a neutral platform for the high-minded exchange of ideas, it too frequently devolves into the lowest common denominator of communication.

A growing number of news organisations are doing away with comments sections on their articles. Vice's Motherboard, Bloomberg and The Toronto Star are among those that joined the list last year because, they said, conversations about their stories are happening on social media.

What they’re really saying is that they’re no longer willing to spend money on accommodating and moderating what they see as low-value communication, letting Facebook and Twitter handle the name-calling riff-raff.

Facebook has managed to become more than just that, as its mainstream adoption numbers indicate, but Twitter is resisting change so far. While Facebook continually tweaks its algorithms to display items in users’ news feeds that they are likely to be interested in, and therefore build engagement, Twitter is steadfastly sticking to its original concept — an unfiltered and unorganised feed that can often feel like a fire hose.

It’s great for those users who want everything, but the numbers show that the larger public isn’t interested in being blasted by Twitter’s overload of information.

Until the company solves that problem – if it even can be solved without upsetting Twitter’s entire mission of neutrally disseminating information – the anaemic growth is likely to continue and the overall woeful 2015 may be the shape of things to come.

Peter Nowak is a veteran technology writer and the author of Humans 3.0: The Upgrading of the Species.

business@thenational.ae

Follow The National's Business section on Twitter