The X Factor Behind Social Media

Journalists everywhere are proclaiming the death of social media. Twitter is regularly broken. Reddit is losing its most active users. Facebook lost a major privacy court case in the EU. There has been plenty of bad news for the major social networks over the last 12 months. Yet, the explosive growth of Tiktok, the spectacular debut of Threads and the steady rise of Discord shows that there is still a market for new social media platforms. If a new entrant can find the right concept and attract the right influencers, then people will come.

As with any technology start-up, good leadership is critical. All too often, new social platforms enter the space without a clear business model. They rush to attract users, but don't build any revenue streams until a few years down the line. As a result, social media firms have long struggled for profitability. Meta may have been a highly profitable enterprise for many years, but few of its competitors have repeated the trick. TikTok look like the sole exception. Not even Snap have managed to be consistently profitable.

The Money Problem

In an era of cheap money and limitless venture capital funding, a focus on user growth was easy to justify. The last 18 months have seen a sharp change of priorities across the board for the technology sector. It is now much harder to raise finance, and existing companies trying to raise money are expected to show a clear pathway to short-term profitability. Long gone are the days when Snapchat could launch without a plan for earning any revenue at all, let alone turning a profit.

The much documented travails of Twitter are largely a consequence of Elon Musk's struggle to reach profitability. Many of those problems are self-inflicted. Musk scared off a substantial proportion of Twitter's biggest advertisers in the chaos that followed his takeover of the site. Confusion about moderation policies has kept advertisers away. Twitter's struggles have been compounded by long-term concerns about the relatively poor targeting tools available on the platform. The site has long held a reputation for having lower ROI on campaigns than competitors. Linda Yaccarino, the new CEO of Twitter, will have to address these concerns if the site is to recapture its former position among advertisers.

The recent launch of Threads has made her job much harder. The Meta-owned site is a spin-off of Instagram focused on text-based content as opposed to images. That Instagram connection has allowed Threads to build up a substantial audience within a few days, breaking records in user growth. Already some leading brands have set up accounts on the site. Running paid campaigns on Threads will have to wait, as the site launched without advertising. However, both Instagram and Facebook have best-in-class advertising tools that can easily be ported to Threads, assuming users remain active once the initial hype has worn off.

The Network Effect

Then there's Meta's new archenemies at ByteDance. TikTok have also just joined the rush to replace Twitter, announcing the release of text posting capabilities this week. This capability will have been aimed as much at Instagram as at Twitter, but it does highlight one of the broad trends in social media. Namely, there won't be one single replacement for the Twitter platform.

The social media landscape has been gradually fragmenting for a long time. The last fifteen years have seen the launch of many new Facebook killers, some of whom built a loyal following without displacing any of the existing big players. The successful ones have had a key differentiator that allowed them to build a brand and audience among a particular demographic. But there hasn't been a mass social media migration akin to the MySpace to Facebook transition in that time. The only high profile site to totally shut down in the last decade was Google+, but that was due to a change in strategic priorities at the notoriously flighty search engine giant.

Twitter was able to build an audience for microblogging and remains the primary platform for this type of content in the West. They had an opportunity to own the short-form video space too, but instead allowed TikTok to take control of that format a decade later. In the same vein, Instagram owns photo sharing, Twitch owns live streaming, and LinkedIn owns professional networking. First mover advantage allowed each of these sites to build a brand synonymous with a specific type of content. They all have direct competitors, but network effects mean these apps are the go-to destinations for their particular format. Consumers have no reason to look beyond them simply because that's where their friends are.

The Value Proposition

Consequently, the biggest threat to Twitter's long-term viability is not Threads, Mastodon or TikTok. It's the recent rebrand to X. Musk is deliberately trying to shift the platform away from a micro-blogging service and into an 'everything app' akin to WeChat. There is an open question about whether this is a good idea - I'll discuss that in a future article. The big issue with the rebrand is that this shift in focus could scare away Twitter's most valuable asset: its audience.

X totally changes the Twitter value proposition in ways that users might not accept. Whether it's the restrictions on the number of DMs that someone can send or the requirement to log in before viewing someone's timeline. Every controversial change will see a small number of users deactivate their Twitter accounts. That's fine in a world where Twitter doesn't have a direct competitor owned by a big tech company. Most people will grumble and accept the change, and many of the lost users will eventually return.

However, Twitter does now have a major competitor owned by Meta with a built-in audience that exceeds the Twitterverse. After the initial hype, the number of people using Threads has dropped significantly. For many users, the app was missing too many critical features to be viable. Over time, those features will be delivered. This is the danger for Elon Musk. As Twitter evolves away from a pure micro-blogging app, we may reach a tipping point where Threads becomes a more mature social media platform than Twitter. If this ever happens, we could see the tickle of users leaving Twitter become a flood.

Not everyone will close their Twitter accounts. Even MySpace still exists, and Musk has a large following. However, if enough people leave Twitter we could see the platform replaced in the public consciousness with a new micro-blogging app. That would consign X and its media-hungry owner to a fate worse than bankruptcy: namely irrelevance. It's been a long time since we saw a mass platform migration online, but that doesn't mean it won't happen.

And the Fediverse...

P.S. In the interest of full disclosure, I am one of those who has deactivated their Twitter account and moved to a competing platform. For those who want to connect with me, I can now be found on Mastodon. The Fediverse has a reputation for being unnecessarily complex. This is unfortunately inherent in the decentralised model. Mastodon has made significant strides in user friendliness over the last nine months, but it still doesn't match pre-Musk Twitter in simplicity.

The other significant barrier to widespread Fediverse adoption is even more insurmountable. The Mastodon community has made a conscious choice to reject algorithm based timelines. There are valid reasons for this based on privacy concerns, but it's not a decision that will be popular among all demographics. For now, I'm very much part of a tech savvy minority.