Twitter finally in the money with Google link | Hacker News Reader

Twitter finally in the money with Google link

business.timesonline.co.uk

32 pointsmun41112 comments

Four score and seven eons ago, Yahoo! paid Google to power their search results and we know how that played out.

And now Google is paying Twitter to power their real-time search results? If I were Biz Stone, I'd be cheerful too.

"deals worth... several million dollars a MONTH to Twitter"

Does that sound ridiculously high to anyone else? What is the likely ROI to google/ms on that? Maybe they don't really care :/

No. Google (and MS) can afford it, and the deal is worth it for the PR plus the head start on figuring out how to make money from the firehose. We have a few examples of people making money from Twitter -- the question now is how to follow that up so the platform itself can make money, and how its preferred partners can make money. This head start is worth the money, even if Twitter decides to open its firehose for free to all later.

If it doesn't work out, then the deal ends. I have no idea what the terms of the deal are, but suppose as a wild guess the deal costs Google $100 million over two or three years, then ends. That's not great, but Google can afford that for the chance of making lots more money. At the size Google is now, they need to find revenue opportunities and new markets measured in the billions to move their stock price, at which point $100 million sounds less of a big deal...yes, it's weird...

The Twitter deal is supposed to improve search results. Ignoring the competition, they could calculate if people search more because of the presence of real-time results, and how much ad revenue do these searches generate. Given their $2 billion/month revenues, a 0.1% increase on that is $2 million/month.

Taking competition into account, neither Google nor Bing can afford not to show real time search results given that their competition does. If real time turns out to be important for users, they can prefer one or another search engine based on its presence. Also it gives the search engines exposure to such data so that they can learn how to use it.

I seriously do not want anything like that in my search results. It'd be full of spam instantly.

I disagree. I use google because it's clean and quick. Feature creep is a sure fire way to die if you get it wrong. Sure, they should have a dedicated 'real time' search thing, like they have for blogs/news etc.

If Google do get dragged down by Bing into tit for tat features etc, it'd be a great time for a search engine startup to do what Google did at the start.

You're assuming the only value Google gets is the raw data.

Does Google seem like the sort of company that stops with raw data?

Or do they seem like a company that will squeeze every tiny little bit of information out of that raw data?

There's MUCH more value in Twitter's firehose than the literal tweets.

Google will extract it.

Can you give some examples. How does anyone know 'stephenfry' is the real Stephen Fry, and an 'authority', and not a spammer.

Well, you can argue RT is more prone to spam because there is less (recent) data and therefore spam filtering is harder. However, with Twitter/social networks the accounts have reliable authorship/history and you can exploit that for filtering... basically rank higher the pieces of data from old accounts that didn't spam before. I wouldn't say spammers have inherent advantage for real time.

Google has been pretty good in figuring out what to include in their "universal" search, I guess their quality control will notice if RT results are not useful for most people.

With as much VC they've raised, they certainly better figure out a better way of monetizing their traffic. $140M by 2014, which would be something like ten years in business, with $70M in VC?

This is hardly exceptional.

Until we know what their margins are, saying that $140m/year in revenue is unexceptional seems a hard statement to justify. With just 60 employees at, say, $100k/yr each, their staffing overheads are $6m. That leaves a lot of headroom for huge hardware and operational costs with a hefty profit margin -- GOOG's is 20%, so they could be spending $100m/year on hardware and still beat that.

I'm no financial expert, but it seems like that would be a pretty great business.

Of course, I've no idea where $140M/year is coming from. "A few million per month" x {Google,Bing} => $4M/month => $48m/year, which is probably still nice and profitable.

If I was Twitter, I would keep deals like this on the down low. As soon as your company starts generating revenue, all investors and stakeholders will start looking at that first revenue stream.

This deal is just a little utility fee they're getting for providing priority access to their data pipe. At this point, Google and Microsoft will probably be the biggest 'data pipe' clients that Twitter can have. These deals have resulted in "several million dollars a month" which is absolutely nothing! These numbers, without factoring in anything else can never justify Twitter's current valuation.

That's why I think Twitter should make sure that people don't get distracted with this puny little revenue stream, but rather turn their heads to the real pot of gold: monetizing the activity ecosystem.

People say they'd rather Bing won - but Microsoft isn't innovating at the pace of Google, so I know where I'd rather my custom (including buying adverts) would go - Google.

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