Twitter’s New Found Wealth

Friday, September 25, 2009

The big news in the social networking world today is the $1 billion valuation of Twitter.  For comparisons sake, this estimates the worth of the micro-messaging site at about the same of worldwide bookseller Barnes and Noble.

Also breaking over the last few hours are early details concerning Twitter raising close to $100 million in investments, led by the large capital firm T. Rowe Price.

The questions everyone is asking are what does this mean for Twitter and is it worth it.

What it means for Twitter and its users, as far as I can see, is revenue raising - ads.  Instead of having indecent propositions from spam followers, we’ll get to see the ads in the sidebars.  Hopefully, as a trade off, it will also mean fewer appearances by the fail whale.

Facebook has had its ups and downs with regards to monetization; it will be interesting to see if Twitter is able to learn from those lessons, though they are obviously very different animals.  That said, the fact that Twitter has yet to offer a plan for how the plan to make the dough to pay these investors back is what makes this cash infusion all the more interesting. 

Personally, I worry that Twitter is peaking.  While growth has remained strong, it has tailed off from its remarkable highs. 

Moreover, the “conversation” appears to be occurring between fewer and fewer members.  How long will the minions remain interested?  The average number of tweets per user?  Just over one.  The median is only 24.  Most folks only do so once every three days.

Will the investment pan out?  Who knows. 

Obviously the guys with the deep pockets were sold on something.  One way or another, it is obvious we have reached the second coming of the tech bubble.