Is It Strange That Twitter Earns Nothing From Its Most Loyal Users?

It’s off to the races for Twitter Inc., with
the first draft of a registration for a long-
awaited public offering filed and ready
for the media feeding storm. The bottom
line: Twitter is not making money. Does
that matter? It depends on whether you
think creating something great (yes, TMN
is an avid user) and changing the world
(yes, Twitter is doing that) automatically
equals a good investment. There’s reason
to be queasy about investing in any IPO
that has to be evaluated on a price-to-
sales basis because it has no earnings.
There’ll be plenty of discussion about all
this over the next months, as more
information comes out of Twitter, though
no amount of information will really alter
the basic dilemma. For now, three quick
points:
1) The new rules giving the public less
early access to IPO filings really don’t
make a difference here. As Bloomberg
View’s Matt Levine has argued , investors
will have plenty of time to evaluate
Twitter’s financials.
2) Yesterday’s filing is such an early draft
that it’s missing all the good stuff about
the capital structure and who owns how
much of the company. Bloomberg’s
reporters, Douglas MacMillan and Brian
Womack, had to dig up the number of
shares Twitter has outstanding (620
million) elsewhere. All that will certainly
be in later revisions.
3) Twitter has plenty of users who almost
never go to the Twitter website, and
instead use TweetDeck (owned by Twitter)
or other Twitter clients. I’m one of them.
The consequence of this is that I
essentially never see promoted tweets or
recommended follows. Perhaps there is
some setting there I’ve missed. If so,
others have too, and in any case I’m not
especially inclined to turn on advertising.
From my point of view, not having ads is
a feature, but it feels like from Twitter’s
it’s more like a bug. Lots of hardcore
users — those who are active enough to
use a TweetDeck or the like instead of
visiting the website constantly — don’t
seem to provide Twitter with any income.
That seems strange, no?