Business, Featured - Written Thursday, April 22, 2010 by Denis Hancock - 2 Comments

Twitter, and the challenge of managing competitive collaborative platforms

Late last year I wrote a report for nGenera Insight clients called “The Six Phases of Twitter’s Evolution“, which focused on distinct phases the company went through, rather rapidly, in terms of both use and perception (you can read a brief overview of an earlier take on the first five phases here). The last phase, at the time, was what we called “innovation in search of a business model.” That Twitter was in need of finding one was hardly news at the time, nor is it today. But what was, and remains, quite interesting is the somewhat unique challenge Twitter faces.

While Twitter is a stand-alone company, the value of the service is heavily dependent on the large ecosystem of developers innovating on top of their API. Like Twitter itself, most of these developers took a “build the customer base first, worry about business models later” approach. “Later” is now here. As  everyone involved starts scrambling to try to make money, everyone almost invariably stumbles onto the word “advertising” as the solution. But no one’s quite sure how big the advertising pie will be, and Twitter itself needs to grab a pretty big piece of it. This is going to make it tricky to hold the ecosystem together.

While there were many signs of this coming through 2009, two particularly big ones popped up late in the year. The first was changes taking place with StockTwits, which described itself as “real investors providing real ideas in real time“, and had grown to become one of the most popular Twitter applications. As a TechCrunch article in September explained, StockTwits was evolving to create an entire back end independent of Twitter itself – “Yes, StockTwits is slowly breaking away from the service that inspired its name.” In turn, it would be reasonable for Twitter to think that an important partner might become a competitor, and others might follow.

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