If Markets are Conversations, is Twitter the “Exchange”?
I’m currently reading The Cluetrain Manifesto, which I wish I had read earlier in life and highly recommend to anyone. The main theme in Cluetrain is that markets are conversations and that the market and humans in general simply want to communicate and the internet gives them a voice.
Lately, I have been thinking a lot about Twitter. There is something about it that intrigues me, and upon reading Cluetrain, it “clicked”. Those who know me best know that I am always thinking of things in the context of financial markets and economics, since it’s what I know. In the case of Twitter, I have come up with the following parallel:
If the Cluetrain guys are right (and they are) and markets are conversations, doesn’t that make Twitter the equivalent of the “exchange”?
This is a powerful thought. Just as the Futures Exchanges took the Forward Contract and standardized it (which I believe to be one of the biggest and best financial “innovations” of all time), Twitter has taken a message (or simply information) and standardized it into a 140 character “chunk”. This enables the playing field to be level for the exchange of information as well as information to be much more easily measured, analyzed, and compared. Just as a joule measures a standard, amount of energy, a NYMEX Gold Futures Contract a standard amount of Gold, a “Tweet” is a standard amount of information.
What does all of this mean for Twitter? Well, drawing on the evolution of exchanges, it seems that Twitter should see its profits come primarily from the data itself. After some time, exchanges do not make much off the trade, but are able to charge fees to access its real time and historical data. Twitter should be no different. Perhaps some “fee” per API call as an exchange fee. This seems to be the route that they are taking in helping 3rd party developers create “apps”. One thing I think they should not do however, is devalue the “tweet” for what it is. They can create new “products” of different character lengths, but should make sure that tweets are not tumbles. That would be a step backwards.
I think this single concept generates a lot of additional implications on the possible ways in which Twitter will be used, including my belief that the future of Twitter will include some sort of relationship w/ prediction markets, and I hope to develop some of these ideas in future posts.