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The Decline and Fall of Twitter?

Western Union asking Alexander Graham Bell "Why would anyone want to hear the messages they get from other people?" The Edsel. Kodak inventing digital photography in 1977 and then deciding there was no money in the technology. The Apple Lisa. Blockbuster declining to buy Netflix for $1 million, because they couldn't imagine anyone would want to receive DVD rentals through the mail. The New Coke. Decca Records deciding that four lads from Liverpool did not show enough promise to make it worthwhile to sign them to a contract. Betamax. The people who decided that Donald Trump would make an excellent partner for their casino venture. These are some of the biggest business missteps of all time. And, more and more, it looks like Elon Musk's acquisition of Twitter will be joining the list.

When Musk canned a huge percentage of Twitter's workforce in order to save money, he was warned that because of the "duct tape and bubble gum" approach that was used to construct and expand the platform, it would grow increasingly unreliable. After all, there aren't enough people left to patch holes as they present themselves. And guess what? Twitter has become increasingly unreliable. Surprise! Who knew? The platform had four different major outages in the month of February, and it started the month of March with yet another. Musk took to his Twitter account, during one of the increasingly infrequent occasions that things were working properly, to complain how "fragile" the software is. But he does not seem to have a plan for improving upon the situation.

Whether he admits it publicly or not, this is a big problem for his new business venture. After all, the trendline is headed in the wrong direction; if it's one major outage per week in February, then how many outages per week will there be by, say, July? And the more often people visit and find it broken, the more likely they will decamp for more reliable pastures. It is also the case that much of Twitter's usage is driven by time-sensitive stuff (like, say, journalists who use it to break news first). If people whose content is time-sensitive can't be sure Twitter will be there when they need it, they'll start looking for other options, too.

Meanwhile, the financial picture for Twitter is getting increasingly grim. Musk took on a lot of debt to cover the purchase, and to service that debt, he needed to find ways to grow Twitter's income. His primary initiative on that front was "Twitter Blue," wherein people could pay a monthly fee for various perks (including the "verified" check mark). Twitter Blue has been a train wreck, inviting all kinds of abuses. Meanwhile, it is generating... $2 million/month. For someone worth north of $100 billion, that is a rounding error.

This means that Twitter's core revenue source remains advertising. But that money is headed elsewhere at a rapid pace. Since Musk took over, ad revenue is down by more than 40%. In part, that is because Musk has made himself radioactive, and someone that many businesses don't want to be associated with. In part, it is because the audience on Twitter is smaller, which means fewer eyeballs to sell to advertisers.

We haven't got the faintest idea where this is headed. That is to say, we are not sure how far Twitter has to decline before it's no longer technically and/or financially viable. We also don't know exactly how Musk has set things up, and whether he can decide to cut his losses by shuttering the platform and selling its assets. If he did that, he would certainly lose the Tesla stock he put up as collateral. But would he be on the hook beyond that? Our guess is "no," in which case he might well reach a point where it's better to cut bait rather than to keep fishing.

Meanwhile, there is the question of what will replace Twitter. Or, probably more accurately, what is already replacing Twitter. Musk's platform had the benefit of being, in effect, the first provider in its market segment. So, it was able to attract pretty much every user who might be interested in a service like this. What seems to be happening now, however, is the same basic thing that happened to television. Instead of there being a "new Twitter" (or a "new ABC/CBS/NBC/Fox"), it appears that everything is splintering. Some people (mostly 40+ people) are leaning into Facebook. Some (mostly younger people) are moving on to more "hip" options, like TikTok or Instagram. Some are choosing echo-chamber boutique platforms like Gab or Truth Social. Some are migrating to Mastodon.

In short, it looks like the Twitter of 2016 is gone forever, and will not be replicated by the Twitter of 2023 or by any other platform. Assuming that the positive aspects of Twitter (like putting people in touch with life-saving information, or allowing journalists to connect with sources) can still be accomplished with that platform or with some alternative, then this seems to be a positive thing to us. Having a poorly moderated forum where individuals could potentially reach hundreds of millions of people with all manner of propaganda and dangerous falsehoods was not a good thing for the country or the world. (Z)

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