Twitter’s share price is currently trending around an all time low of $14 a share. Despite Twitter’s user growth continuing to accelerate its revenues are dropping.
The company still isn’t profitable, but it highlighted the fact that its losses shrunk by about 23 percent to just $62 million. It has been a slow downward slide since the company went public in November of 2013. The big question now is whether Twitter can find a way to reverse the slide in its revenue.
How Twitter intends to reverse its fortunes
Twitter is now competing against Facebook, Snapchat, and Instagram; all three have larger daily user bases. Twitters “promoted tweets” is the company’s current primary revenue stream, however this is set to change by moving its focus away from advertising in the timeline to broadcasting big live events. Over the last three months it pushed 800 hours of live video from big name partners like PBS, the PGA, Bloomberg, and the Halo World Championship. This is quite a departure from the original concept of Twitter.
Twitter was created in March 2006 by Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams and launched in July. The service rapidly gained worldwide popularity. In 2012, more than 100 million users posted 340 million tweets a day, and the service handled an average of 1.6 billion search queries per day.
Twitter’s origins lie in a “daylong brainstorming session” held by board members of the podcasting company Odeo. Jack Dorsey, then an undergraduate student at New York University, introduced the idea of an individual using an SMS service to communicate with a small group. The original project code name for the service was twttr, an idea that Williams later ascribed to Noah Glass, inspired by Flickr and the five-character length of American SMS short codes. The decision was also partly due to the fact that domain twitter.com was already in use, and it was six months after the launch of twttr that the crew purchased the domain and changed the name of the service to Twitter. The developers initially considered “10958” as a short code, but later changed it to “40404” for “ease of use and memorability”.
Work on the project started on March 21, 2006, when Dorsey published the first Twitter message at 9:50 PM Pacific Standard Time (PST): “just setting up my twttr”. Dorsey has explained the origin of the “Twitter” title:
…we came across the word ‘twitter’, and it was just perfect. The definition was ‘a short burst of inconsequential information,’ and ‘chirps from birds’. And that’s exactly what the product was.
The first Twitter prototype, developed by Dorsey and contractor Florian Weber, was used as an internal service for Odeo employees and the full version was introduced publicly on July 15, 2006. In October 2006, Biz Stone, Evan Williams, Dorsey, and other members of Odeo formed Obvious Corporation and acquired Odeo, together with its assets—including Odeo.com and Twitter.com—from the investors and shareholders. Williams fired Glass, who was silent about his part in Twitter’s startup until 2011. Twitter spun off into its own company in April 2007. Williams provided insight into the ambiguity that defined this early period in a 2013 interview:
With Twitter, it wasn’t clear what it was. They called it a social network, they called it microblogging, but it was hard to define, because it didn’t replace anything. There was this path of discovery with something like that, where over time you figure out what it is. Twitter actually changed from what we thought it was in the beginning, which we described as status updates and a social utility. It is that, in part, but the insight we eventually came to was Twitter was really more of an information network than it is a social network.
It would seem Twitter needs to evolve again, and fast.