Could Twitter's Biggest Problem Be Indifference?

Market movements send signals. So when Twitter lost a full 25 percent of its value following a report that user growth was slowing, it was a useful indication of what investors see as the key to the social media company's key metric. Especially now that it is a publicly-traded company.

Its erstwhile competitors and social comrades in clicks over at Facebook must have been enjoying a moment of pure schadenfreud: 'hah! It ain't just us,' after the humiliation Facebook suffered with their IPO and subsequent decline in valuation.Especially since Facebook has grabbed almost 50 percent of those with internet connections while Twitter has about 20 percent.

And these developments lie at the heart of the social media challenge. The social sites have aggregated vast numbers of eyeballs (and occasionally even brains), but then, how to monetize them? Lots of strategies have been bandied about. Confident prognosticators and bloviators have airily dismissed the skeptics for 'not getting it,' the cardinal tech sin, but the reality is that if it is to make the transition from a service to a real business, there has to be revenue and the hope of eventual profit.

In Twitter's case - as the following article explains - the issue may be that aside from celebrities, athletes and politicians, mere humanoids are unsure of what to do with it. They are urged to add followers and to use it as a kind of shorthand screen for quick life and world updates, but then they are inundated by voluminously relentless spam from trash factories like TechWeev, GlitterFairy, Gemstar, ArtWiz, NorthMix and their like, who gum up the works with their spew. So the question remains, do I really need this in addition to YouTube, Facebook, LinkedIn and all the others, broad and specific, attempting to grab some attention and, hopefully some day, a hint of cash.

Yoree Koh reports in the Wall Street Journal:

Even though it has blanketed the Internet, television and billboards with its hashtags inviting people to log on, four out of five Americans with Internet connections still don't use it regularly

Twitter Inc.  TWTR in Your Value Your Change Short position 's pitch to people like Christine Harsono isn't hitting its target.

The 21-year-old Los Angeles waitress has yet to give into years of nudging by Twitter to sign up. A Facebook Inc.  FB in Your Value Your Change Short position member since 2008, she says she sees no reason to tweet, even as her favorite TV shows, such as "The Voice," urge her to join the Twitter conversation.

Twitter seems to be on every television and in ever political and sports event. So why is it having trouble signing up new users? 

As for news and celebrity gossip, there is television and YouTube. "I feel like I already have a place for me to see all these things. I don't really see a need for Twitter," she says.

Ms. Harsono represents Twitter's greatest challenge, one that came into stark view last week when the San Francisco firm reported declining user growth.

Twitter is nearly a required part of advertising campaigns, and it's ubiquitous among news media.

Facebook, by comparison, has more than half the U.S. online population covered and more than five times the world-wide users of Twitter.

Twitter CEO Dick Costolo, after last week's disappointing data on the number of active users, said that several initiatives are planned over the next year that will change 'the slope of the growth curve,' but he didn't offer details. Bloomberg News

Investors wiped out nearly a quarter of Twitter's market value on Thursday, prompting a question critical to its advertising business: Can it fix its problem reaching mainstream users?

Twitter is still doubling revenue each quarter and has found ways to make more money per user. And some noncommercial users are obsessive tweeters. Rich LaPointe says he has sent nearly 9,000 tweets since joining in 2010. "I feel like I'm connected to a pipeline of information that a lot of people overlook or ignore," says the 43-year-old architect in Cohoes, N.Y. Twitter is also laying plans to generate revenue outside the service by selling ads on other sites.

But the core business depends on scale. The more Twitter account holders that use the service, the bigger the audience of potential targets for advertisers. Growth also factors heavily into Twitter's market value, which still sits at a lofty $30 billion.

The problem of reaching mainstream users has vexed executives. Early last year, they projected 400 million monthly active users by year-end, two people familiar with the matter said. Instead, Twitter reported 241 million active users, adding just one million in the U.S. and eight million abroad in the fourth quarter.

If Twitter's quarter-to-quarter growth stabilized at 3.9%, it would take about 11 more years to reach Facebook's current 1.23 billion users.

Twitter Chief Executive Dick Costolo, who has said the company's goal is to "reach every person on the planet," says improved functionality can speed user growth. In response to questions from analysts last week, he emphasized the need to ease the sign-up process and get new users "up to speed very quickly." He said the company is creating features to highlight conversations and messaging capabilities, functions that have proven popular on Facebook.

Some observers believe the company faces fundamental psychological issues. For one, there is the ceiling of 140 characters for tweets. For younger people who grew up texting, that isn't a problem. But for older people, the constraint conflicts with their "natural mode of communication," says Dhiraj Murthy, a professor of sociology at Goldsmiths College, University of London.

The greater issue may be the loose relationships on Twitter. Unlike on Facebook and LinkedIn Corp.'s  LNKD in Your Value Your Change Short position professional network, Twitter connections tend to be acquaintances, humorous strangers and celebrities.

"You obviously may not know everyone on Facebook very well, but overall you tend to have stronger relationships there than with the people you follow on Twitter," says Prof. Murthy, the author of "Twitter: Social Communication in the Twitter Age."

Weak ties can discourage users who have few followers from tweeting and overwhelm them with a flood of ephemera.

"I feel like there is a lot of noise on Twitter," says Jaime Richter, a 34-year-old video editor who has had a Twitter account for a few years. "I just don't personally need to take in all that in my day."

Ms. Richter hasn't logged in for months, so she isn't counted among the 241 million active users. There may be hundreds of millions of people like her. According to Twopcharts, a site that monitors Twitter accounts, there are roughly one billion registered user accounts on Twitter, but an unknown portion of them are spam accounts that were purged from the system.

Since it was founded in 2006, Twitter has evolved from a trivial messaging service into a vehicle for mass protests, a forum for big events and an information network dominated by news media and prominent figures. As a result, it has become a necessity for, say, journalists, public figures, activists, entrepreneurs and businesses, —but not so much for the average Internet user.

"The mandate is different on Twitter; —you have to be interesting," says Sherry Turkle, a clinical psychologist and Massachusetts Institute of Technology professor. "You need to develop a voice, which is something Facebook doesn't ask of you."

Twitter has been taking steps to make the service connect better with mainstream users. One way is by tapping into a mobile user's phone book to discover contacts on Twitter. That could make it easier for newcomers to connect with people they already know on the service.

To encourage logins, Twitter recently introduced push notifications based on the activity of the people users follow. For example, if several users are talking about a TV show or collectively begin following someone. Twitter features direct messaging more prominently and has begun allowing images in its main feed.

Such changes have encouraged activity. Mr. Costolo on Wednesday said direct messaging rose 25% in the fourth quarter from the third and that actions such as retweets and favorites climbed 35%.

He said several initiatives planned over the next year will change "the slope of the growth curve" but didn't offer details. "What exactly the slope of that curve looks like and when it will occur is not something…I can guess at."