Twitter’s never-ending guessing game – numbers and value

Up until near the end of 2009 much of the web spent its time speculating about Twitter and how it was ever going to make the kind of money to justify the massive $1 billion valuation that it has. Even after Google and Microsoft signed up to the Twitter fire hose for $15 and $10 million respectively it was pointed out that this really come close to justifying the valuation.

In fact using those disclosed figures and the number of messages that have supposedly been sent through Twitter some point out that those Twitter messages are pretty cheap at 3¢ each. Then we have the whole discussion started by Anil Dash the other day that called into question the validity of anyone claiming to have a million followers or more.

I think the reality is obvious: Nobody has a million followers on Twitter.

Does that mean Twitter’s follower counts are lying? No. Instead, Twitter accounts that have over half a million followers listed actually represent (at most) a few hundred thousand people who’ve chosen to become organic followers of someone, along with millions who are passively along for the ride. Some of them are inactive users, some are spammers, some just ignore the noise of the accounts that don’t interest them, like spam in an email inbox. But they can’t count as “followers” in any meaningful sense.

The whole problem with this follower/following sham is that there is a lot of money being passed around based on those numbers. So if there is any validity to Anil’s supposition what does that say about the true value of anyone’s Twitterstream – especially in the eyes of advertisers and of course search companies like Google and Microsoft.

Or is more of a case, as Business Week suggests, that these companies are placing more of a bet on the future value of Twitter messages:

Truth is, no one has figured out how to make real money off of tweets yet. Google and Microsoft are paying $15 million and $10 million, respectively, as a bet on the future. By laying out what are relatively tiny sums, they get first crack at experimenting with Twitter data. Both are already including tweets in search results. Sean Suchter, general manager of Microsoft’s Search Technology Center, predicts the company will end up profiting. “Many times in history when you amass the attention of users, that has proven to be a moneymaking endeavor,” he says.

In the end though we will just have to be happy armchair quarterbacking when it comes to Twitter and its search for a longterm revenue stream.