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Social networks like Twitter and Facebook have been massive Web 2.0 success stories but profits have largely been not part of that success story. They are rich in users but poor in monetizing their massive user base. If you had half a billion customers coming through your doors daily, you would think revenues would be the least of your problems. I would, for starters, have the single most profitable lemonade stand in all of human history setup outside my business.
Twitter has become an invaluable tool for small business. It's a great way to find customers, support customers, and keep tabs on your industry's buzz. Twitter had a cool API that let third party developers build all kinds of interesting apps up to and including basically a better Twitter than Twitter. Products like Hootsuite, Tweetdeck, and our own BlueCamroo's Social Scout give users alternative ways of managing the Tweetsphere.
However, this past summer Twitter sent an ominous message about changes to its API. Twitter signaled the days of open access are over and walls are going up around its garden. And then just this week, Twitter stopped playing nice with Instagram, the social image sharing app now owned by Facebook. As I noted in a previous blog post, using Instagram over Twitter is a brilliant way for small business to get the emotional content of its brand right.
What's going on?
As I noted, profits from these massive user bases are elusive. It's like you, the small merchant, has suddenly realized all that foot traffic through your door is just people there to use your washroom. No one is actually bellying up to the cash. You might be tempted to bring the iron boot down on "freeloaders".
This is not the first kerfuffle. A while ago Facebook and Google were scrapping. Google noticed it was allowing Facebook users to search their gmail contacts for Facebook friends but Facebook wasn't reciprocating. So Google pulled the rather useful ability to
stalk ex girlfriends find some hidden friends on Facebook.
Let us not forget the Internet Messaging Wars of the late 1990s and early 2000s. AOL, Microsoft, Yahoo, and then Google Chat were all competing for IM users with their closed systems. Eventually we got some interoperability but not before AOL messenger (the initial leader) vanished and everyone realized Skype was the superior IM for business.
It was, for a time, not a lot of fun having to run 3 or 4 IMs on your desktop. I can only hope social networks are not all rushing away from convergence to the walled garden model. This served AOL and Compuserve for a time but was their ultimate undoing.