Editor’s note: This article was first published in October 2010, as an opinion piece. Facebook’s “more than 500 million” users, Twitter’s lack of a business model and its predictions about the three companies reflect that moment. Twitter has since become X.
There has been a lot of talk lately about the possibility that social networks could become more powerful than Google’s search engine itself. In fact, this past month Facebook received more visits than the number of searches made on Google. But this is how things go in business and investing: while we watch to see whether Google or Facebook ends up in control, few people notice that the one that has floored the accelerator is Twitter.
To sum up briefly how each business works: Google’s business lies in websites and blogs, which it monetizes through advertisers, keeping both advertising companies and website publishers happy.
Facebook’s business is based on entertainment, and most of its traffic comes from people using it in a personal capacity, although more and more companies are realizing they can reach more than 500 million people. So Facebook monetizes the social network through its own advertisers, but website publishers get nothing from Facebook.
As for Twitter, so far it has neither paid nor earned anything through advertisers, although it is hiding a business that nobody has talked about and that it will soon bring to light: a business in which the advertiser, the user and the website publisher will all win. This is my own speculation, but I don’t think I’m far off.
Now, as an internet user, when you need a specific piece of information, the first thing you do is use Google to find it. Over time, there are sites you like to visit more often and whose content you enjoy, so you end up subscribing to receive their articles by email or in a feed reader.
You also add them to your Facebook list with those “likes”. From then on, every time the site publishes something, it reaches you without your having to look for it.
These days, you get to work and someone tells you: “Something happened in Panama, did you hear?” You go to Google, type “incident in Panama” and find plenty of pages about it.
In time, you will open Facebook or Twitter and already have the news, because you are subscribed, so there is no need to use the search engine.
On top of that, Twitter has its own search engine, which finds everything that has been written about the keyword you enter. So, again, you don’t need to use the search engine.
In short: of course they will hurt searches on Google, Twitter much more than Facebook. The most important point, though, is that they hurt Google’s searches but not its revenue, because all three paths end on a website, and once the user reaches that site, the advertising shown on 90% of websites is Google’s.
So as long as Facebook and Twitter don’t bring a monetization system to market, they will gain traffic, but the revenue will keep going to Google, which covers many more services than social networks do.
If I were a phone company, I would be more worried, because a tie-up between Facebook and Skype could really hurt the telecom operators.
Further reading
Featured image: Håkan Dahlström, CC BY 2.0, via Flickr.
