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Twitter as a Virtual Information Mississippie

In Perspective

Unio's "In Perspective" short-form series covers the Unio team's views on topics ranging from investing to business to economics.  

 

Twitter as a Virtual Information Mississippie

John Allison

The subject is social networking and the fact that, whether it's Facebook, Linkedin, Twitter and others, Internetbased social networks are in a class of unusual businesses where the customer is the product – or, more precisely, where customerusers of the product are themselves creators of the product.

If customerusers tweet, Twitter thrives; if they don't, Twitter dies. So with Facebook. If customerusers put up photos and comments on their Facebook sites, digitized "customeruserfriends" on Facebook visit. If customerusers don't create interesting sites, visitors don't show and Facebook loses faces.

Imagine WalMart stores where customers chose and hauled in the merchandise, displayed it, priced it, hawked it, restocked it and paid WalMart nothing for the use of the store space; while WalMart's costs consisted simply of putting up and organizing the store for these customerusers. Imagine if, in this business model, WalMart made money by inviting thirdparty vendors to visit the customers selling products in these stores so that these third parties could sell their thirdparty wares to these productselling customers. Finally, imagine what would happen if WalMart's productselling customers didn't like the WalMart space they used. Fewer would bring product to WalMart to sell it. And thirdparty vendors would drift away because there would be fewer customerusers in the stores to sell to.

This is the socialnetworking model: customerusers bring in the product – themselves and what they create around themselves – free; and thirdpartyvendors sell their wares to these customerusers.

Whenever you build a business where your customer creates your content you have a wonderful edge. The more customerusers create product in your space; the more other customerusers are drawn to create product in your space; and the more thirdparty vendors are attracted to your space to connect with and sell to the customers you have attracted. This is socalled network effect, although given the incredible interactivity that goes on back and forth on any socialnetworking site it should really be called the internetworking effect. On the other hand, when you rely so heavily on your customerusers to bring in and create product in your space you had better be awfully careful not to alienate them, because you’re alienating both your productproviders and the thirdparty vendors you’re inviting to sell to these product providers at the same time.

Which brings us to Twitter – in some respects the most potentialwithpossibilities of all socialnetworking sites because, more than most, not only do customerusers provide product to Twitter but they exchange product more and more frequently with other customerusers and increasingly more and more intellectually highvalue product like, for instance, the Financial Times' Wolfgang Munchau sending you his latest thinking on the Euro.

Though in my view the sophistication of Twitter is a fraction of what it could be, this is an incredible site for the following reason: it is a virtual information Mississippi with a thousand tributaries multiplied over and over.

What do I mean? Think of being on Twitter as standing on the banks of an information Mississippi. Except this is your Mississippi. Your private information Mississippi. And think of all those customerusers you follow as providing tributary rivers of information to your Mississippi. I happen to have information tributaries like The Economist, The Wall Street Journal and dozens of institutional publications, plus many individual bloggers like Simon Johnson, former Chief Economist of the IMF, and many others. Think of each bucket of information that flows from someone else’s tributary into your Mississippi as a tweet. You stand on your Mississippi’s banks and watch as the buckets flow by. And when you’re interested you can find out what is contained inside.

And there’s more. As you sit on the banks of your Mississippi – just behind you is a tiny brook into which you pour any buckets of information you have to communicate to the world – your tweets. These may consist of a brief comment of yours, or a comment connected with something you wrote, or the resending of a bucket of information – like an article – from some publication you want others to know you thought interesting. Your little information brook is a tributary into someone else's private information Mississippi. In fact, your tributary can flow into an unlimited number of other peoples' private Mississippis. And that’s how things flow in the world of Twitter.

I deliberately omitted many questions – like the business value of these social media and the risks associated with this value. But what's important here is to be aware that a kind of business where the customeruser is the product is taking up more of our timespace than ever before. And because you have millions of customerusers creating product and exchanging the product they create with millions of others you have a business phenomenon that, to put it mildly, bears close examination. 

— John A. Allison


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