Despite Twitter's popularity and ballooning public image, the micro-blogging site may never be able to turn a profit. That was the prevailing attitude at Allen & Co's Sun Valley, Idaho media conference, where the topic du jour was Twitter. None of the old school media moguls in attendance seemed optimistic about its profitability and others flat-out said they would not be interested in buying.
Though the conference was closed to the press, the Wall Street Journal absorbed the negative vibe from audience members. Liberty Media chairman John Malone and IAC chairman Barry Diller both expressed a gloomy forecast for Twitter, the WSJ reported:
"Despite the hype about Twitter, Diller was pessimistic about Twitter's prospects for making money, audience members said. Malone said he didn't think that an advertising model made sense on Twitter, but there was some hope for a subscription model. 'Sooner or later people will be willing to pay for these services,' he said. Warren Buffett privately told him that he would pay $5 a month for YouTube, he added."
News Corp's Rupert Murdoch also didn't have much hope for Twitter raking in the dough. When asked if he was interested in purchasing, he said it'd be "a tough investment to justify because it has not yet come up with a sustainable way to make money." That means "no." When asked if he wanted to sell the rapidly degrading MySpace, he said, "Hell no."
Evan Williams, CEO of Twitter, was also at the conference. He kept quiet and darted away from reporters at the end, according to the Journal.
Sun Valley attendees are obviously the cream of the crop when it comes to powerful media types -- but should we care? Though I have strong personal doubts that Twitter will ever build a sustainable business model or maintain its current popularity, when I hear Rupert Murdoch defend MySpace, of all things, but pooh-pooh Twitter, I see a twinge of near-sightedness and an inability to grasp what's contemporarily cool.
These people also believe the public will pay for services such as Twitter and Facebook. I find this very hard to believe. We like these sites because they are free, simple, and accessible. If asked to shell out money to participate -- especially in this economy -- I suspect users will drop like stocks and these social networking sites will find themselves without a hell of a lot of people to connect.
And, as TechCrunch's Michael Arrington points out, no one thought Google would make money at first, and now look what's happened.
Advertising will likely be the answer for Twitter, but it'll take tough decisions from suits tapped into the vein of pop culture.