Twitter Research Paper

Background:

When choosing the media company I wanted to research, there were a couple of directions I thought about going in. Major television networks such as HBO and Nickelodeon have been home to some of my favorite television shows of all time, while other streaming applications like Netflix and Hulu were very enticing to me as well. However, I decided to focus on a social media platform that I was introduced to in the ninth grade and has been of great interest to me over the years. At that point in my life, I had never used social media and did not have much knowledge about it. A few of my friends would often rave about Twitter, mainly due to the humorous content that they were finding and sharing on the app. I decided I would try it out for myself, and while I anticipated I would enjoy using Twitter, it has definitely exceeded my expectations, while also exceeding its creators' expectations as well.

Twitter has become a widely used and very productive social media app for people all around the globe to use. While its original purpose was to connect people with their friends, it has served this exact purpose and then some. Engaging in a conversation online is the basis of what Twitter was built on, giving me and anyone else a public forum to share thoughts on any topic of interest. From political news to sports highlights, there is an abundance of content to be found on Twitter that is extremely informative and interesting to converse about.

It has transformed the way we consume news, as stories are broken quicker than ever before. This has led to quite the innovation in the communications industry, such as the field of Journalism and Public Relations. The news cycle truly is 24 hours a day by 7 days a week with the surge of Twitter and other social media platforms. This has given us access to way more resources than we’ve ever had, while also making the field even more competitive. Anyone can break the latest story or share content from a live event through the use of Twitter. It has given a platform to anyone who wants a voice on any issue, while also expanding our reach as well. The amount of “citizen journalism” has skyrocketed through the rise of Twitter, which is a term used to describe the collection, dissemination, and analysis of news and information by the general public, especially by means of the Internet. Today, Twitter boasts 330 million monthly active users globally, offering us the opportunity to connect with people we otherwise would not have access to. So, how did Twitter become so prominent in today’s society? That is the question that has launched my research, starting from the origins, all the way to where Twitter is today.

Origins and History:

Twitter was launched in 2006, as the brainchild of Jack Dorsey, who pitched the idea to Biz Stone and Evan Williams, who at the time were executives of a now-defunct podcasting platform called Odeo. Williams and Stone both had previously worked at Google before leaving to launch this podcasting business venture. Odeo essentially became irrelevant once Apple launched Apple Podcasts, which led the two entrepreneurs to realize they needed to find a new business opportunity. This is where Jack Dorsey came in, who was the main engineer behind Twitter, making the dream of launching the app a reality. Pitching the idea to Stone and Williams, Dorsey introduced the idea as an SMS, or short message service, similar to texting. Twitter would allow a user to communicate with a small group of people through an online platform. The original 140 character limit was put in place because of Twitter’s being an SMS. At the time, SMS-based services had a standard character limit of 160 characters. This 140-character limit based itself on the SMS limit while leaving 20 characters for the username. Dorsey sent the first-ever message on Twitter on March 21, 2006, 9:50 p.m, as it read, "just setting up my twttr." This message-based prototype was being used at Odeo, where Stone and Williams were still employed at the time. It was tested as an internal communication service for Odeo employees but later launched as its own separate entity in July of 2006.

While extremely prominent now, that was not always the case for Twitter. In its early years, it was even mocked as being used only by shallow and self-centered individuals who would essentially broadcast their lives on the app. A popular late-night comedian even implemented a segment on his show that poked fun at it, featuring a segment on his show called "Twitter Tracker" that mocked users of the service. However, Dorsey kept tunnel vision on the process of growing Twitter, enabling the company to make great strides in the first couple of years in business. In 2010, Twitter had more than 105 million users who together tweeted roughly 55 million times a day. As the company continued to have success year after year, they were given a major opportunity to go public. Its stock had a starting price of $26 for one share of the company. On the first day of trading, this price quickly rose to $45. Within hours of going public, CEO Jack Dorsey was a billionaire due to the 23.4 million shares of Twitter that were bought on the stock market.

Company Structure:

A strong company structure and culture have been integral to Twitter’s success as a company. Twitter has become 5th amongst its competitors in terms of the number of employees, boasting 35 global offices. The main headquarters are based in San Francisco, while other offices are located in cities such as Dubai, London, New York City, and Paris. The company culture describes itself as very team-oriented in an organizational environment. Its employees are considered by many to be the “happiest in Silicon Valley”, which they learn through satisfaction surveys for all employees to fill out every 6 months.

Value/Financial Structure:

Dorsey remains the CEO today in 2020, with a net worth of roughly $5.1 Billion. The social network continues to grow and expand, making updates and improvements regularly. More than 140 million tweets are sent out daily, totaling for roughly one billion on a weekly basis. As for the company's employee growth, Twitter has gone from the original trio of Williams, Stone, and Odeo, to a major public corporation with roughly 3,920 employees. The net worth of Twitter as a whole sits at $18.24 Billion, as of April 1st, 2020. This metric has seen a change between different amounts over the years, going as high as $39.34 Billion in 2014, while lowering to $10.61 Billion in 2016. As for Jack Dorsey, he has gained a reputation as one of the more charitable CEO’s, and for good reason. Recently, Dorsey contributed $1 Billion to Coronavirus efforts, in hopes of ending the pandemic as soon as possible.

As seen in the graph, Twitter’s net worth has definitely fluctuated between various peaks and valleys throughout the past 5 years or so. One thing has remained constant, and that is Twitter’s immense profitability. Even the low points on the graph display Twitter as a multibillion-dollar company. There are only two main categories that drive Twitter’s profitability, being advertising revenue ($3 Billion in revenue) and data licensing ($.05 Billion in revenue). There is not much else to take into account aside from these two factors when discussing Twitter’s profitability and success financially. Like all media companies, advertising sales are what drive the business, considering there is no price or subscription fee that users must pay to use the app. The success of Twitter’s ad sales depends on the traffic and engagement levels on the app. The higher the traffic and engagement levels, the bigger the increase in advertising demand on Twitter, boosting ad prices, and the company's overall sales. There is also an algorithm Twitter has in place when looking at the targeted ads, as they can use this to ensure promoted products find their way on certain users' timelines. This includes the utilization of artificial intelligence, a tool that has essentially become an efficient market with a large mass of companies similar to Twitter that use it as well.

As for the smaller piece of the pie, twitter’s data licensing agreements are where they can sell subscriptions to “public data beyond its public API to companies and developers looking to "access, search and analyze historical and real-time data" on the platform”, according to Investopedia. Below is a visual of how Twitter’s revenue shakes out.

Market Overview/Competition:

Although Twitter has had undeniable success and influence over the years, it is not easy by any means for the company to stay in this leading position. The tech world is constantly changing and innovating, and Twitter must do the same in order to stay relevant moving forward. Social and Digital media is such a competitive field in general, with Facebook, Snapchat, and many other social networks competing with Twitter. Compared to other companies in the tech and social networking industry, Twitter is certainly powerful, but not necessarily at the top of this elite list. Facebook is at the top of the list. Year after year, there are new apps that come into the market, trying to knock off and become the next Twitter. Despite a plethora of competition that exists in the tech space, CEO Jack Dorsey keeps a positive outlook on Twitter, focusing on the internal rather than external of the company. “You can worry about the competition or you can focus on what’s ahead of you and drive fast,” says Dorsey. This type of mindset is what continues to drive the app forward, as Twitter’s evolution is far from stagnant. Pictured below is a bar graph from Statistica, displaying the most popular social networking apps and websites, measured by percent audience reach.

Twitter’s place amongst social media platforms is certainly a strong one, as they rank fourth on this exclusive list. However, as seen in the graph, Facebook has proven to be the more dominant social media force over the years. Considering that Facebook also owns both Facebook Messenger and Instagram, their share of the market is clearly substantial. Facebook was also the undisputed leader in terms of monthly user engagement with almost 788 minutes per user per month. Even so, Twitter’s future is very optimistic, as the voice and reach it gives to all users is something that cannot be replicated on other social apps. The goal of twitter remains quite simple, as Dorsey has stated, “My goal is to simplify complexity. I just want to build stuff that really simplifies our base human interaction.” That has been one of the reasons why Twitter is so innovative, as it has in many ways revolutionized how we communicate. There are more ways to communicate now more than ever, and Twitter has been a true player in achieving this.

Stock Information:

Another topic relating to Twitter’s net worth is its stock value. Currently, it would cost $23.04 to purchase one share of Twitter’s stock. Some analysts say that right now is the right time to buy Twitter’s stock, as the company is poised for great potential growth, in the ever-changing world of technology and digital media. The graph below displays Twitter’s projections moving forward, as far as the stock price is concerned.

According to a number of analysts, right now could be a smart time to invest in Twitter stock. As shown on the graph, the stock price of Twitter will skyrocket in the next twelve months. Stock price going from $23.08 to $55 is certainly a staggering jump, but what is the reason for this rise? There are a couple of factors that have led to this projected stock price surge. Twitter’s profitability is undeniable, making it a seemingly “safe” company to invest in. The company is able to report strong numbers year after year as a leader in the social media industry. The constant strive for improvement is another reason why investors have great trust that Twitter will continue to grow. Twitter has proven to be a dynamic company that is not complacent regarding past successes. The product continues to get better, whether it be by showing users tweets in their timelines from people they find interesting, or curated tweets from live events.

Growth:

Twitter’s potential for growth in the future is certainly very promising. Looking at where the app started to where it stands now, there has been quite an evolution. What started as something to be used just by employees of the now-defunct Odeo is now used by millions around the globe. The constant process of making the app better continues, with updates and innovations that have taken place. Some of what has surfaced on Twitter was not even planned by the company, but occurs naturally on its own. For example, hashtags were created naturally, as were the “@” that is attached to usernames. On the popular Joe Rogan podcast, Jack Dorsey explained this notion, saying, “The people helped create it. The at symbol, the hashtag, the retweet… Those were not invented by me or the company. We observed what they were doing, and they wanted to talk with each other around certain topics, using the hashtag.” The hashtag has been revolutionary in how it has broken twitter down into subsections, with #sportstwitter or #politicstwitter making it easily accessible for people to insert themselves into the conversation in whichever topic they may be enticed by. The potential for growth still remains high as well. Twitter still wants to make changes to their discipline policies, which have been subject to criticism in the past. Freedom of speech is certainly of value to the company, but some offensive/inappropriate activity of the past has resulted in users being banned from using the site. There has still not been a perfect process on dealing with these types of users, as these types of bans have been seen as unconstitutional. This is an issue that Twitter looks to find a better solution for in the coming years, as there has not been anything put in place yet that has satisfied all parties.

Conclusion:

There is no denying the impact that Twitter has made over the years. There have been peaks and valleys, but the vision has remained clear along this journey: To improve and innovate the way we communicate. Giving everyone a voice certainly has its benefits and challenges, but will continue to be a goal of the company. It is a platform that has so much power, and must be used properly in order to be utilized to its full potential. Today, Twitter continues to evolve and must continue to do so in such an industry that continues to grow and evolve. The fierce competition that exists in this market is one aspect of my research that stood out to me, as new apps enter year after year, in hopes of attaining Twitter-level success. It will be intriguing to see what the future has in store for Twitter, as it has reached heights unimaginable, with so much room for growth.

Resources:

https://www.statista.com/statistics/579334/most-popular-us-social-networking-apps-ranked-by-reach/

https://www.cnbc.com/2020/02/06/twitter-twtr-earnings-q4-2019.html

https://money.cnn.com/quote/forecast/forecast.html?symb=TWTR

https://www.convinceandconvert.com/social-media-strategy/twitter-engagement/

https://www.biography.com/business-figure/jack-dorsey

https://www.fool.com/investing/2020/03/11/why-twitter-will-start-buying-back-stock.aspx

https://www.investopedia.com/ask/answers/120114/how-does-twitter-twtr-make-money.asp

https://www.slideshare.net/iTheRauf/twitter-organizational-structure-and-behavior-culture

http://profilerehab.com/twitter-help/history_of_twitter

https://podcasts.apple.com/us/podcast/1236-jack-dorsey/id360084272?i=1000429008892

https://www.britannica.com/topic/Twitter

https://www.ft.com/content/4c9a76e6-7b0e-11ea-af44-daa3def9ae03

https://craft.co/twitter