Twitter, soon as worthless as MySpace?

Jeremy Schoemaker – perhaps better know as ShoeMoney, his online moniker – wrote in a blog post July 13 that “Twitter will suffer a similar fate as MySpace.”

It’s somewhat hard to tell from Schoemaker’s post what exactly MySpace’s fate is in his eyes, but in his own words:

MySpace’s financial situation is much worse. A couple years ago the company was valued at over 20 billion dollars. Now its valuation is around 30 million dollars [it sold for $35 million plus a small minority stake].

While the traffic as a whole has declined on MySpace dramatically the valuation has dropped at more then 20x the rate.
I believe MySpaces biggest reason for such a huge drop in revenue is because of the demographic switch of their users. As people who can afford to purchase items that companies are advertising are leaving, the people coming in are giving advertisers next to zero return on their investments.

I can’t recall any time when MySpace was perceived as a magnet for people “who can afford to purchase items.” It was always an ugly juvenile cesspool that clearly blinded media executives with a dramatic user growth story. Squeezing money out of the site’s low-end users is the kind of job that sleazy affiliate marketers excel at when they can operate in virtually unregulated territory. It certainly didn’t hurt their chances that Google signed a 3.5-year, $900 million ad-and-search deal with News Corp., a deal that gave Google a powerful incentive to let marketers run wild on the site.

The specific similarity between Twitter and MySpace that Schoemaker sees is that quality users are jumping ship.

The real value of Twitter always came from people with great opinions instantly chiming in. The quality of “Real Users” is nil compared to what it was a year ago.

I’ve been on Twitter since the end of 2008 and I can’t say I’ve seen much of a change in the quality of “real users,*” but then again I follow a massive 324 people while the more discriminating Schoemaker has found only 52 people worth following. Granted, he has 108,000 followers (I have 350 – holla bots!), who, according to his web site make up almost half of his “daily active readers.” His Twitter audience enables him to bring in $400 a week in advertising on that site, compared to the “over a hundred thousand dollars from advertisers paying [Schoemaker] to do tweets in the last couple years.” 7 months ago it was apparently $600 a week.

The “last couple of years” is an interesting period. In the summer of 2009 Schoemaker was promoting not only advertising on Twitter, but also advertising on the “worthless” MySpace. Heck, he promoted advertising on MySpace less than a year ago but he doesn’t appear to promote it presently. Which makes me wonder when MySpace became worthless to him?

What Twitter is worth to its investors and users is a fairly open question. It strikes me as a pretty poor medium for direct response, in part because messaging is so brief, visually indistinguishable and embedded in an endless stream of other messages. It’s probably a good deal better for customer relationship management (including customer service), public relations and deals or deal hunting. What the value of all that nets out to for Twitter’s owners and for people like Schoemaker is something I neither know nor particularly care about. I think Twitter is a quite useful service that is vulnerable to the short attention span of web users. Twitter could well end up dying on its boots without doing really anything wrong.

By the way, the $20 billion valuation is a BS number based on analysis of the most speculative kind.

*A good many users can probably be labeled as opportunistic users – including many politicians and celebrities – who will move on to the next hot thing at the drop of a hat.

A couple of disclosures:

I’ve met Schoemaker – briefly – a couple of times through a previous job. His personal story is a Horatio Alger-esque rags-to-riches one that I certainly do amdire. He is also a very skilled marketer and monetizer and you should always keep that in mind when you take in his words. If you don’t know much about Schoemaker I suggest you read Aaron Wall’s interview with him.

I used one of the MySpace advertising coupons that Schoemaker promoted in 2009. It worked as advertised.

I occasionally, maybe once or twice a year, run a miniscule ad campaign on MySpace/MyAds, mostly just to see what gives. I have not done it on Twitter and I am not planning on doing it either.