Facebook, Twitter and Profitability

Much has been made over the past week about Facebook's supposed even running when it comes to cash flow and for the most part, it's big news. Some of the big internet startups at the end of the tech bubble were having issues with monetizing their site, i.e. creating a way for it to turn a profit for investors. Facebook went the way of advertising, hoping that enough traffic plus enough ads would provide them with enough money to offset their operating cost, thus providing their investors with some sort of return on their investment.

However, Twitter's profitability is still in question. One thing that you'll notice on every twitter page is a complete lack of ads. In fact, there is a complete lack of editorial control. Twitter, unlike Facebook, which features apps, a controlled look to each page and ads, is a site wholly controlled and molded by user-content. If everyone stopped using Twitter today for an hour, the service would literally be dead for that 60 minute span. With no new updates, Twitter's bread and butter, of reporting news literally as it happens sometimes, would be destroyed. It's a service based on what's happening right now, not yesterday or the day before. Rather, if Twitterers don't provide new information, Twitter is stagnant.

Facebook, due to it's much larger scope and content, doesn't face this issue. If everyone stopped updating their statuses (a sub-par, direct rip-off of Twitter's service), Facebook still provides the users with loads of old pictures. Facebook is what it's creators want it to be, Twitter is what its users want it to be. For me, that's ultimately why Twitter is a more fascinating and interesting service, with loads of more potential. Twitter's a continually evolving beast, not because of what its programmers and creators want it to be, but because of what it's users desires. As the service matures and continues to find its footing, it will continually adapt to the changing climate as it changes. Facebook is still reliant on it's programmers to move with the curve.

Still, the question of profitability remains. If Twitter can't figure out a way to make money, what's to say that its private equity investors won't jump ship. Rather, than throwing good money after bad, they could feasibly move onto the next hip app or service. Personally, I'd love to see Twitter figure out the answers here because its potential is much more exciting than it's social networking counterparts.