the massooleh commblog

One of the main risks investors have recognized in Twitter since the company’s recent IPO filing is the quality of its users’ posts.

A large part of Twitter’s business model depends on co-creation: the amount of traffic on Twitter is largely dependant on content; however, this content isn’t generated by Twitter; it’s created by Twitter’s users. The lower the quality and the frequency of user content, the less people will return to the website, which means less people will click on ads, and less revenue is generated.

While a car manufacturing company has control of every factor of production from the moment the materials enter their factories, Twitter, in a sense, can only provide a factory and hope everything inside goes according to plan. The only thing Twitter can aim to perfect are the factory conditions, or the means by which they allow users to create and receive content. Currently, its 140 character limit, unique trends, like hashtags, and live blogging capabilities are very attuned to user tastes, but consumer tastes are extremely volatile, and creating a service so highly sensitive to them makes your business model highly volatile as well.

All social networking websites operate on this basis, and many of them, like Friendster and MySpace, get the short end of the stick.