Will Twitter continue to be important as it scales?
We’re all familiar with the concept of network effects. We hear it used all the time to explain the success of companies like Google, Facebook, Twitter etc. As these networks scale, the value of the network to its users increases. The bigger the network, the more successful these platforms are, right?
Maybe Not! As a network scales, network effects make the network more useful for users until a point after which further scale makes the network less useful to the users. This is reverse network effects with scale. There are several cases where there are reverse network effects WITHOUT scale. E.g. Users on Facebook do not like advertising so having advertisers on the network makes it a poor experience for users. However, this is not an effect that kicks in only after a certain scale is reached. Even a small number of advertisers on the network can be equally annoying.
When reverse network effects occur with scale, the value of the network keeps on increasing at first, till it reaches a point where new user addition decreases the value of the network.
The term ‘social network’ has become extremely generic and is used to describe a wide range of platforms which have little in common except that they’re all networks of users. Twitter, as a network, can be broken down into the following:
There’s been a lot of discussion lately about how social networks are getting too big for us to feasibly maintain relationships with all our contacts. Dunbar’s number is often quoted as the evidence for the case. Even if this does apply to symmetrical relationship networks (though I feel, even in that case, it doesn’t), it’s a poor criticism for a network like Twitter for a couple of reasons
1) Users have a primary relationship with their feed, rather than with every other user they follow.
2) There is no obligation to maintain user-user relationships. Irrespective of the number of people in your network, users only maintain their relationship with the feed. This has other problems, though, which are mentioned below.
3) Dunbar’s number applies to contexts where relationships require significant investment, especially real world interactions. Fringe relationships can easily exist online without the continued need for investment or reciprocation.
In general, Twitter as a communication network doesn’t seem to struggle with reverse network effects.
Publishing platforms, where users create persistent content, run the risk of generating noise. Successful platforms with high user engagement typically do a good job of curating user-generated content through algorithms and community-driven tools (voting, rating, reporting, etc.).
As a publishing network, Twitter has strong network effects as more users on the network translates to more options for feed sources.
However, what distinguishes and makes Twitter so user-friendly could also be its bane as a publishing network. Twitter gives inordinate importance to recency over relevance. Unlike Reddit, Twitter gives precedence to current over important. Consequently, a user’s realtime feed always displays the most current information irrespective of relevance.
The problem is that as a user follows more users, the reverse-chronological stream ensures that the user sees activity from only a fraction of users who are active at the time of her log in. However, this fractional stream may not be the most relevant. Attention is the single most important currency on online platforms and users are unable to appropriately allocate attention when there is too much noise.
This problem is further compounded when networks like Facebook and Twitter implement monetization models like Promoted Posts/Tweets which potentially decrease the signal to noise ratio on the network. These models make sense at scale when there is more granularity in the targeting and Twitter simply doesn’t have enough relevant real-time inventory of promotions to make this a user-friendly feature right now.
In an influence network, users want to be heard. In the case of Twitter, the tweeters want to be followed and the perceived value that a tweeter derives from the system increases with the number of followers. Consequently, there is a positive network effect going on as users join Twitter because other users are already active on it, and there is a potential to develop a following.
The problem, though, is that Twitter possibly suffers from reverse network effects as an influence network beyond a certain point.
The other problem with an influence network is a large number of dummy profiles that get created to increase the “perceived” influence of existing profiles. Twitter has had its fair share of spam with marketplaces like Twiends emerging for ‘trading’ influence. Increased noise again circles back to the loop described above.
Negative feedback loops of this kind do not kick off a death spiral instantly. This is because users join the network in cohorts. Users joined Twitter over time, and the reduced value of a noisy stream first becomes apparent to users that joined earlier. Hence, early adopters start moving on to start with. Late adopters stop engaging when they can’t reap enough from the system. Over time, the number of users entering the above cycles increases and value to users progressively decreases. Also, just like acceleration hits a tipping point, deceleration does too.
Third party apps have been at the core of what Twitter does. Users and developers have enjoyed some form of cross-side positive network effects for two reasons:
With Twitter tightening the developer side, the utility of the service for users also gets impacted. In many ways, Twitter seems to be setting itself up for reverse network effects.
Networks grow best on top of other networks.
Telcos have lost to platforms so far but may benefit from what’s coming next
Creating infinite customer acquisition loops in your product.