Twitter = YouTube.

What? Is Battelle crazy? Hear me out. Think back when YouTube was growing like a weed, and Google snapped it up. Most folks (including me) saw this as Google "getting into the video business," and sure, that in fact was one part of the equation. But as we all…

What? Is Battelle crazy? Hear me out. Think back when YouTube was growing like a weed, and Google snapped it up. Most folks (including me) saw this as Google “getting into the video business,” and sure, that in fact was one part of the equation. But as we all know, making money from consumer driven video ain’t a cakewalk, and hosting that video is really, really expensive. So why did Google really buy YouTube? My answer, which of course looks brilliant given it’s 20/20 hindsight: YouTube was a massive search asset.

Afterall, YouTube now gets more searches than Yahoo, Google’s closest search rival.

So think about that. YouTube was the single fastest growing new form of search on the Web, and Google pretty much outflanked (and outspent) everyone to buy it. Not to get into video monetization, per se, but to harvest and control the most important emerging form of search. In short, Google could not afford to NOT own YouTube.

So, fast forward to today. What’s the most important and quickly growing form of search on the web today? Real time, conversational search. And who’s the YouTube of real time search? Yep. Twitter. It’s an asset Google cannot afford to not own, and also, one they most likely do not have the ability (or brand permission) to build on their own. (Remember, Google tried to build its own YouTube – Google Video – and it failed to get traction. A service like Twitter is community driven, and Google has never been really great at that part of the media business).

That means Google most likely really, really wants to buy Twitter. (So does Facebook, but we’ll get to that in a second). The great twist: Evan and Biz, two of the key co founders of Twitter, have already sold a company to Google (Blogger) and most likely are not keen to do it again. Nor do they have to, given their recent funding and the money they made from pre-IPO Google options.

Add in the fact that Twitter has already said no to a $500mm offer from Facebook, and the fact that Facebook has responded quickly with by opening up its Live Feed status API, and we’ve got a very interesting year ahead of us in the Internet biz. I’ll be watching closely.

(PS – Much speculation lately that Twitter is a threat to Google, see this Merc piece. I’ll respond more to that idea later).

Update: Plenty of folks letting me know of pieces that are related, will post them as the come in. So far:
from Mike

and from James

71 thoughts on “Twitter = YouTube.”

  1. So are you saying that Google might just overpay for Twitter so that they can own the leading player in the conversational search space, or that regardless of price, Twitter isn’t selling?

    I do like the 20/20 hindsight on the YouTube deal though. For Google to continue being Google, they need to continue to dominate search, so it only makes sense that they’re keeping a close eye on real-time, conversational search.

  2. “Google is going to buy Twitter out of goodwill, and out of fear.” – Brian Norgard

    Real-time search is going to be huge, and Twitter is the lead horse.

    Google still controls the $$$ in advertising, so I think if the goal is a huge exit, Google will be the buyer. Evan has VC’s he has to answer to now. If he didn’t, I doubt he’d sell-out to Google — because I don’t think he cares about an extra $XXXXmm; he’d rather shake things up.

  3. I agree. Twitter’s real-time search and word of mouth clicks are more valuable than search traffic. Higher conversion rate and better performance = higher eCPM.

    Twitter traffic is already outperforming other search engines other than Google. The issue is they aren’t getting any money for it yet. Inline text ads seems like easy way to develop revenue without interfering with community usage.

    Twitter also has an ability to scale to hyperlocal level..small medium businesses.


  4. John you observations would be so much better if you rooted it in financial data. Companies don’t just throw out cash without modeling on the future cash flows. Tighten it up for us.

  5. A much better outcome for all – even to include our economy – would be for Twitter to serve as the Silicon Valley’s “ice breaker” for re-opening the now solidly frozen channel of the IPO.

    The greater good would be for Twitter to go public, and thereafter, should it suit the shareholders then, of both GOOG and “TWIT” to effect a merger, then that would be a fine outcome for all. Google with its collective wisdom surely knows that what’s good for the economy, in the long run, will be good for Google.

  6. Using this logic, why didn’t Google sign a deal with Facebook?

    I think the YouTube relationship was about more than search (though search was a real consideration). It was about owning the content journey online. Search is about discovery. Discovery-on-demand has replaced the portal. YouTube presented a new form of web interactivity, one that was quickly changing surfing behavior. YouTube was eyeballs. YouTube presented reach in the fastest growing web format – video.

    I don’t know that this was a pure search play.

    I think it was an investment in an uncertain future. Google was playing with TV advertising. They had already launched Google Video. This was part of a broader initiative – to own the video ad market. Now that this has not come to fruition, Google is experiencing the added value of owning yet another phase of the search and discovery process.

  7. Spot on. I think you’ve nailed the real-time search aspect of Twitter and why it makes sense for Google to purchase them, but there’s one more big reason — Twitter is also a threat to FeedBurner as well.

    The biggest surprise to me, about Twitter, is how quickly its supplanted churning through my usual RSS feeds to keep up to date on industry news, blogs, etc. Now I just follow my favorite “personalities” and am instantly notified when they post as well as what they read and whom they talk to….

    Completely caught off guard by this, but I find it even more addictive and personal. Call it publishing or distribution 3.0 maybe 😉

  8. Spot on. Aside from the obvious real time chatter benefits, its also a bit of attention eye sore to Google. I always saw Youtube as just such a wave of attention that Google no doubt was missing out on.

    They bought Jiaku, snuffed it. Now Twitter potentially challenges them in sheer awareness. Google will give me one research, but I’ll tell ya- search real time conversations, given the 140 character constraint, is damn telling.

    Could they even buy Twitter and not escape the increasing shadow of monopoly being cast upon them as of late.

    Owning Twitter would effectively close the loop on the attainable insight to a large degree. Facebook’s still there, but will they still be the IT child of web come 2018?

    I stand behind my idea of the Twitter Nationalization Act of 2011, where by twitter is clued into the gov so much that it cannot afford for it to be sold to any one company- perpetual beta will preside over the brand while the empire farms insight from the masses.

  9. John – you just perfectly answered the perennial question: “When and how will Twitter make money?”

    Answer: It won’t. It won’t have to. Two of the biggest rivals in technology will spend the year falling all over themselves to own it. And since that bidding war will drive the price tag into the stratosphere Evan will happily sell.

    Would be a bummer for Google if such a buy sparked an antitrust investigation though. I gather DC folks – esp the new antitrust cop – aren’t keen on Google getting any bigger.

  10. I’d love to see some stats to support the argument that real-time, conversational search is the fastest growing segment of the search vertical. Does anyone have Comscore metrics for

    I’m also not so sure that Google would be a good home for Twitter. Google doesn’t have a good track record when it comes to community-driven sites. If it’s the real-time search component that they need, they could index that information without owning the company… as well as other real-time data sources.

    I’d rather see Apple buy Twitter. They could integrate it with the iPhone & iChat, pre-install a desktop client on all Macs, and use Twitter’s identity / social graph as the foundation for their future web efforts like MobileMe.

  11. For all the Twitter hype, I think this analysis is pretty sober and that the comparison to YouTube is apt. Google certainly didn’t buy YouTube for its revenue, and even the revenue it’s made from YouTube since acquiring it hardly justifies the purchase price. But they didn’t feel they could not own the gateway to video content on the web–especially since they were far enough along with Google Video to know they’d lost that fight. I’m sure they’d love to own Facebook but aren’t willing to pay the asking price. Twitter may well be affordable for them, especially if the investors get antsy enough over Twitter’s lack of revenue.

  12. Jaiku is much better, works on Google App Engine for unlimited scalability, is open-source and really decentralized.

    Just as for facebook, Google can just scrape and copy all the data out of twitter and put it into Jaiku systems in a matter of a second.

  13. Twitter is just a time drain no? For those writing and those reading.

    It really serves no productivity purpose correct?

    Thats my observations…

    Have fun twitter folk. I have more important things to do.

  14. More of this ridiculousness. I’m pretty sure the reason GOOG bought YouTube was because YouTube was running out of money, and was going to have to sell to someone; they were in talks with Yahoo and GOOG couldn’t let them pick up the site and all the page views (read: ad inventory) that YouTube represented.

    Also, Google doesn’t need Twitter to do real-time search. They have a blog search engine that could be re-purposed to index microblogs, piece-o-cake. And they’ve already adjusted their main search algorithm to account for new, breaking content from news and blogs.

    Plus, real-time search is lacking in the intent that web search has (you, of all people, should know this). Twitter is a social network with powerful search, but it’s only of value to brand names, and then only once it’s been analyzed and organized. It’s no better than blog search, and if Technorati didn’t take down Google, neither will Twitter.

  15. Conversations and all forms of audio data are effectively the “dark matter” that will make up the Internet Universe. Google can and must get into this space.

  16. I entirely agree with Gershman, and don’t understand what you’re smoking here, John.

    Oh, not that somebody won’t buy Twitter for too much, and nobody’s got more of that than Goog, but (like Youtube) it will be a strategic move in the wrong direction.

  17. I disagree. Twitter’s search value is nothing like YouTube. Real-time discovery is interesting, but that isn’t Google’s business.

  18. Real-time search over conversations… hmmm, sounds a lot like the hype around blog search, which… um… never materialized.

    What exactly do you think people would be searching for on Twitter and finding actual value from? The world of 140 character pieces of gold-like wisdom? Come on…

    Take another toke John, it’s a pipe dream.

    Searching for videos is the equivalent of being the TV guide – there is value there, but not as much as searches related to commerce.

    One can post-rationalize anything really. YouTube was bought because they snookered Google into buying it. There was no real business plan in place to justify the purchase, we all know that.

  19. Completely agree with your thesis…

    I see Twitter + FriendFeed as the tag team for the live web.

    Whether the asset is search or not, you can’t dismiss that Twitter is the well positioned to serve as “central spine” of rapidly emerging live web.

    How many apps are written on Twitter API and announced almost on a daily basis?

    Is Twitter a threat to “the Borg”, not yet, but don’t underestimate its current momentum and real time gravitational attraction.

  20. But is it for sale? No. Or could be.

    I think twitter would be fools to sell right now approaching the apex of enlightenment. It would be a terrible play for them.

    I see twitter standing alone as its own internet titan, why sell to Google, but oh i’m sure Google has been on the front lawn along with Jerry Yang in a toga begging for piece of Twitter. All the while twitter just keeps refining their experience, staying true, and watching people.

    I can yield a better pulse on what the planet thinks about a brand thru twitter than I can with search or blog or brand monitoring tools. Most of these tools leverage twitter as well to farm up the pulse. This is hugely valuable, and potentially one of many stakes in the ground as to what people will gravitate to next, and Twitter knows this.

    Remember Batman Forever? Twitter is our generations Edward Nygma. (and i think that two face guy could be either facebook and myspace or maybe google i dunno)

    Its our brain on the box. Sell to Google, Yahoo.. are you mad?

  21. i can’t agree more. i have been claiming for a while now that Google is a natural buyer of Twitter because Twitter does a better job at complex search and because it catches attention span from Google search but also from Gmail. Would be a must addition to opensocial and android.

    I wrote more about it here

  22. I don’t think it’s about search, per se, it’s about data. Twitter is one of the few independent communication channels out there.

    They’d want Twitter for the same reason they bid on the 700MHz spectrum. Search is just one of the many things they could do if Twitter were a Google property.

  23. I think real-time search for various verticals represents a key growth area for 2009 and beyond. Whether Twitter can capitalize and develop a business model around it before competitors remains to be seen.
    Right now the two frontrunners appear to be offering premium services and advertising.Given that there are so many free services available on the web it’s hard to see how offering premium services would work.
    As for advertising, Most businesses that use the web to market their services have two main objectives
    1) Attract new customers.
    2) Retain existing customers.
    Twitter is a very good communication tool hence it falls into 2). Right now most web services that fall into this category don’t tend perform very well at advertising (i.e. social networks).
    Google is very good at 1) Most websites get their traffic from search.
    So If Twitter can build out their tools to enable businesses to attract customers/traffic online advertising will become a very viable business model…and that’s when things become really interesting.
    ….That’s my two pence worth (sorry cents – I’m UK based)

  24. I would agree with you, but Google has already bought Jaiku (and announced they will give it away for free – the source – downloadable, and host it on appengine)

    Why would they want to by Jaiku? It would just be for the content maybe? If they bought Twitter, that would mean their Jaiku purchase was a bad one..

  25. Jaiku was mentioned a couple of times by commenters. I think that was google’s foray into that space and they scuttled it. I doubt google buys twitter if not for a ridiculous price.

  26. I disagree. Twitter’s search value is nothing like YouTube. Real-time discovery is interesting, but that isn’t Google’s business.

    Twitter traffic is already outperforming other search engines other than Google. The issue is they aren’t getting any money for it yet. Inline text ads seems like easy way to develop revenue without interfering with community usage.

  27. I agree with John on this one. I’ve been saying for some time that monetization doesn’t matter because if they get the critical mass then it will either sell (most likely) or figure out a revenue model that leverages the audience. Twitter is smart not to worry because they have a war chest of cash so as the saying goes “you can’t go out of business with money in the bank”.. The issue for twitter is to be relevant and continue to innovate on the user experience side .. John B talks about that real time conversational piece.

    Nice post Mark. My Angle is that twitter needs to get to at least 20m active per day to be the huge hit. If I were Google or Yahoo I’d have a clone up and running immediately.. then position Twitter as a cult of early adopters.

    more from siliconANGLE – Angle on Tech a new group blog..


  28. I really would not like Google to buy Twitter, yes they would make some tweeks that would look neet and bs…but! Remember that probably after 1 year they would add AD’s , Special Accounts (trying @Ev to admit that.) are “kind of” already in place.

    I mean sooner or later this year they will have to do something.

    Great post btw

  29. Awsome article! I can’t say I’m massively enthusiastic about the prospect – just look what happened to FeedBurner for example, but I see your point. Interesting times ahead for sure.

  30. I have to say John that I used to remember you as the guy who popularized the idea that Google owned a “data base of intentions” — and that idea isn’t less true today, although less visible. It might offer a challenge to your prediction.

    Twitterers don’t have an explicit audience (neither do bloggers) and this can cause some grief (see Dave Winer’s recent post on being insensivite Hashtags try to resolve this, but they aren’t convenient: they only work for simple and exclusive context (events) and no client resolve the problem of filtering the firehose from one of your relative when he sits at the #Knit-Conf (and letting him back on afterwards). More generally, it’s hard and tedious to sort every blurb with exhaustive tags.

    The twitterers that follow you might be able to add those afterwards, but no-one seems to star anything (and no client seems to care either).

    Google (or Facebook) seems far more able to attribute a raw string of text to the user who’ll speak the same language, thing it’s relevant, etc.

  31. Seems like you pressed the right button with this post! ;D

    I’ve been trying out @Ginx – it has revived some twitter features (which twitter stopped before you started using twitter – like being able to see a user’s “twitter stream” the way they see it (so-called “with friends” view).

    They’re also testing out some other stuff, but of course ginx is not called “twitter” (and as we get close and closer to web 4.6, we will see more and more of the Wisdom of the language taking hold — see ;).

    As I wrote as reply to @GuyKawasaki’s question (“Twitter as a threat to Google?”): “the threat goes like this: people no longer use Google (except novices/newbies who search for brands)”

    🙂 nmw

  32. Call me crazy but I think Twitter should focus on contructive ways to monetize itself. Crawl a bit, or at least jog rather than sprinting for the immediate cashout. In my opinion Google killed Youtube or at least made it hopelessly stale.


  33. John,

    I’ve been thinking and talking to people about this for a couple weeks as well. I agree, I think that Twitter is becoming a mega hit on the size of YouTube.

    What folks don’t understand is that YouTube and Twitter are fundamental inventions, new forms and new mediums that are valued at a much higher price than just improvements to previous software.

    In terms of who needs to own Twitter, I think that MSFT and YHOO need it more than GOOG, because, yes, it would be nice for GOOG to have it, but it is still super strong without it.

    To me the question of how Twitter will be monetized, particularly with ads is still at large. Just like ads might not work on FB, they might not work on Twitter.

    Still, just because it has got so much momentum and is so cool and so innovative it is worth a huge amounts of $$ to GOOG or anyone else.

  34. Openness plays a very interesting part of this puzzle as well. Twitter has chosen to be open for the most part, which is why summize was able to create a better twitter search engine than twitter.

    If acquired by a large competitor and made private it would destroy one of its most devoted followings, the developer community. If left public how is it any different than what we have today?

    Google is already indexing twitters content, selling ads against it, and trying to bend it to match its current algorithms, remember the no follow scandal of last year. The signal being generated by the twitterverse is interesting to a search engine, but I am curious how different.

    The big question for me, are twitter or real time updates such a different signal that today’s method of crawling and ranking does not scale? If this is the case, than I bet the money is in a new search algorithm, rather than the coolness of the signal.

  35. Definitely agree that Google’s interest in Twitter is not in its technology, service or community, but in growing its arena of search to areas were not previously thought of as search.

    Anyone change their Firefox search box from Google to Twitter Search yet? There’s a plugin for that.

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