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Much – most – of the commentary about what Elon Musk is doing with the social media platform previously known as Twitter focuses on his personal role and decision-making.
But, as an intellectual exercise, let us de-personalise the matter and see what, if any, sense we can make of the re-branding of that particular platform.
And, for the sake of this post, let us assume the individual heading the platform to have the generic quality Y.
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From the perspective of an information technology (IT) and intellectual property (IP) lawyer, a platform like Twitter is comprised of one or more things of value.
Sometimes the platform is rich in IT – there are processes and hardware and software which are distinct and significant and difficult to copy. Sometimes that IT can be protected by patents, or by another form of IP, or it can be a mysterious trade secret. Sometimes that IT is simply on a scale, or is configured in a certain way, that makes hard to impossible to duplicate.
With Twitter, this does not seem to be the case.
The IT for social media platform is not, shall we say, rocket science.
Message boards and micro-blogging are quite common and although Twitter may have many more users than other platforms, the value of Twitter is not really in its IT.
And in their different ways, the Threads platform (which is the property of Meta) and the Mastodon phenomenon (which is largely non-proprietary) show that rivals can produce a Twitter-like experience without the Twitter proprietary IT.
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So if it is not the IT then perhaps the value is in the branding, which would be protected by trade marks and other forms of IP.
Even if the technology is commonplace, there would be value in the brand.
Twitter – and its associated words tweet (as a noun) and tweet (as a verb) – is part of the vernacular and popular culture.
The branding is well-known internationally.
A purchaser of or investor in Twitter could disregard and replace the IT completely and still have something of huge value in the brand.
And as long as the user experience was not affected, few would care or indeed notice.
Here Twitter has an advantage: it may not be rich in IT, but it is in IP – at least in respect of branding.
Regardless of the quality of the owner Y, it would be a very strange thing for an acquirer of or investor in Twitter to renounce the brand.
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A third thing of value in a business is what can be called generally “goodwill”.
Here the word means the collection of non-tangible (and tangible) things that keeps a business in, well, business.
So a platform which had commonplace IT and, say, unimpressive branding can still be worth buying because of the quality of, for example, its workforce or leadership team, or because of the size and loyalty of its customer or user base or its relationship with advertisers.
Sometimes a company will be acquired just for such assets – regardless of its IT and IP.
Twitter, however, has lost most of its workforce and its leadership team, and many users and advertisers have been alienated.
Users and advertisers are going elsewhere, creating goodwill somewhere else.
To the extent that Twitter users and advertisers have been the focus of attention, it has been as things to exploit for short-term revenue rather than for long-term development.
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The above list – IT/IP, branding/IP, and goodwill – is not exhaustive: technology and media companies are bought and sold, or invested in, for all sorts of reasons everyday.
Sometimes such companies, like football clubs, are bought for reasons that make no commercial sense whatsoever.
But when someone purchases or invests in technology and media companies one (or more) of those three things is usually the real target of the transaction.
And so what happens when a platform is purchased for an extraordinarily high amount of money which is (a) IT poor, (b) stripped of its valuable branding, and (c) alienates its users and advertisers?
What actually has been bought?
What is the value of such a company?
Well, now we know.
It is the value of X.
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I remember asking a friend why he was changing the name of his company, and suggested he was removing all the brand recognition he had built up…
“It’s my business and if I want to flush it down the toilet that’s my own lookout,” he replied.
It would be one thing if Musk paid the $44 billion to acquire Twitter out of his own pocket.
But, as I understand it, only $20 billion was Musk’s own cash, from selling some Tesla stock (only! ha! that amount exceeds the GDP of dozens of countries, such as Botswana or Malta or Mongolia). He personally borrowed $6 billion secured on his other assets, and the balance came from loans or equity provided by other investors.
Perhaps those investors are content to see the value of their investment destroyed, perhaps they think Musk is a genius because of his previous successes, perhaps what Musk is doing is all part of the agreed plan.
But if I were them (or more likely one of their advisers) I would be looking very carefully at the covenants in the investment documents.
As I think I wrote at the time, some investors invest on the assumption that a venture will fail, for their eyes are really on the security.
Musk has more money, much more money, than sense. It seems his vision of Twitter becoming an app for everything is worth all the losses he will incur making it happen.
As a consumer I barely feel the need to interact with Twitter as a messaging app these days. I certainly don’t want to interact with it for anything else.
I had zero need or interest in interacting on any way with Twitter. I have a minus need or interest in X.
Brilliant!
Very good and witty as well. BUT that is assuming that he is allowed to re brand Twitter as X since that is already under legal challenge by Meta, so for Y the value of X maybe $0
……….. the social media platform previously known as Twitter ……….
Has a ring to it much the same as “the artist previously know as Prince”. Why dump the name or brand? What is the advantage? Certainly Elon Musk is totally unfathomable or X
But ‘the artist previously known as Prince’ continued to create, record and perform music. So, while he lost his brand – or more accurately gave up his previous brand, the other aspects which DAG mentions continued. His skill (equivalent to the IT) and his appeal to audiences continued.
Solve the following : x – y = ?
What’s the value of the United States to libertarians, if they get to permanently take it over?
“X” will be the official communications channel for the (global) right-wing/libertarian cabal aiming to replace democratic order of western societies with something more a kin to Benito’s vision.
Or at least that’s the wet dream of Mr. Musk.
Of course, he is an amateur swimming with the serious boyz in a crowded pond. Between the Kochs, Mercers, Murdochs, Putins, Erdogans, MbSs, Tories, GOP, and other assorted modern day fascists (in the real meaning of the word, where politics, and state functions, are supplicants to industrial/business interests, and whereby the state becomes the oppressor in chief), Mr. Musk is a bit player.
Look at, say, the UK.
A nation so completely fcuked by state capture, since Maggie sold trickle down economics to the gullible, and privatized state monopolies to chums, that people did not, and do not even realize their generational well-being, and freedoms, were on the block.
Add to it the recent events of entryism capturing one of the major parties, and a backdoor coup d’etat by “an advisory referendum”, whereby your constitutional order was uprooted — and you have the model for the libertarian gang that has been proven to work.
Best case scenario, we, the people, will pay horrendous financial price for their follies. Worse case, we all become like Saudi-Arabia.
We need to tax, and regulate, these billionaires, and their co-opted political parties, media organs, “think-tanks”, PACS, etc., out of options/existence to influence policies — like yesterday, and we might still be too late.
China, of all places, seems to be the only nation able to keep their billionaires in check, or make them dead.
Ah, the perks of authoritarian regime. Maybe I ought to sign on “X’s” agenda after all.
The push I needed to delete my Twitter account.
X = (IT = 0) + (IP = 1-1) + (GW = 1-1)
X = 0
Elon Musk admitted recently that Twitter had lost half the value he paid for it and in my opinion that’s a good indicator of just how much the goodwill portion of Twitter’s value was until he personally ended that goodwill via his actions on the platform and Tweets.
People (owners) change the brand for myriad reasons – it’s neither right nor wrong and the outcome (clarity) often resides with the consumer.
Depending on optics it could be argued there are few downsides – ok, Musk loses a few user’s or advertiser’s the upside – it keeps Musk in the media for another 10,15 mins days/months.
It really is all about Musk – if he gets 15mins more exposure or ‘effective plugging’ by an liberal blog in the UK – he wins 😉….. who’d have thunk?
Rebranding on a whim is usually a mistake if the original brand is well known and liked. Remember Consignia? Imagine if the eventual new owners of Manchester Utd changed that brand? Vincent Tann tried changing the colours of Cardiff City to red on a similar whim, but had to back down eventually.
The problem for Musk is his monumental ego. No one dare tell him he’s wrong and he doesn’t seem to listen to advice anyway. He’s obsessed with X and can’t see that everyone else isn’t. You can’t run enormous businesses as a dictator.
Twitter has lost him billions and he’s made it worse. X will be another losing move. Of course this gets him attention, but it costs him fantastic sums for attention that he actually doesn’t need.
You haven’t worked it out yet – ‘the brand’ is, in my view “Elon Musk”.
He’s the man behind Telsa, Space -X, now Twitter.
I doubt he views money in the same way as you or I – it’s not about profit/loss, it’s about Elon Musk.
I struggle to get to excited about it – I will never own a Tesla, I will never have a Space X ride & I rarely tweet – happy to say he & his brand/sub-brands don’t feature much in my life now or ( knowingly) plan to in the future.
There, I’ve only quoted his name twice in this post, that’s two too many 🤗
John, disagree with me by all means but please don’t tell me what I haven’t worked out yet. I actually agree with you that it’s all about Musk. I said as much in my second paragraph. Where I disagree with you is that he’s doing it to get exposure in the media. Given his high profile he didn’t need to rebrand Twitter to do that. He said from the outset he saw Twitter becoming X, the app for everything. This could cost him as much as the Metaverse project cost Zuckerberg.
Money certainly does matter to him. He tried to back out of his overpriced bid for Twitter when the share price dropped.
Mr Musk likes the symbol X. Perhaps he enjoyed shooting that blue sparrow with an X bow. Pricey shot though.
Looking at Musk’s business model – SpaceX works well with deep pocketed governmental customers, Tesla is off its dizzy peaks but doing well. Perhaps Musk will replace the tintack logo with an X. But for the life of me I cannot see why Musk bought Twitter. The technology is ho-hum with lowish costs of entry, in a multiverse of flimflam businesses and I can’t see what he can do with it. Interesting to see where he goes next.
Remember those Boston Consulting matrices – Rising Star, Cash Cow, Dog, Problem Child. I think he has gone into the childcare business.
I’m a brand consultant.
In my world, the gold standard is a brand that has become a verb (to google, to hoover), or a noun representing the category (Tarmac, Tannoy).
If you have a brand like this, the last thing you should ever, ever do is give it up.
“To tweet” is a uniquely valuable asset. It makes no sense to tweet unless you are on Twitter. You can change the blue bird to something else, but if you fail to recognise that Twitter and tweeting represent the real value of your brand, you are a moron.
I’m not a brand consultant, but I was thinking on similar lines when I learned about all this.
It would be like Hoover deciding that it’s vacuum cleaners are henceforth to be called ‘Pillicle’, or Jacuzzi deciding to rebrand its water relaxation and massage devices ‘Smittig’.
Glad to find that a brand consultant is thinking on the same lines.
What does he think he’s doing?
He’s doing what he wants, because he can. There’s no one to tell him not to.
The value of a social network is that is a content platform and
a marketplace.
One way we can think about content is to measure its advertising value = #users * #time-spent * #ad-value. Twitter does quite well here and this is why Elmo will tweet about user growth and engagement. The problem is that Twitter has never made enough money through this model alone. A second way we can value content is that the data archive – the tweets and how they form conversations – can be monetised. Twitter has not done much here. Elmo is now trying to monetise this through xAI which will be able to use tweets to build an LLM.
For a long time people have proposed that Twitter have premium subscriptions and business services. This would turn it into a marketplace like WeChat in China. That is the model for X. Other social networks have successful marketplaces too (eg FB) and arguably the more generic an online market becomes the more like a social network (eg ‘buyer reputation’ scores).
WeChat is incredibly valuable to users in China. It is the everything app. Duplicating this in open western markets could be hard though.
Elmo is conspicuously failing to deliver a subscription service. People knock him but any other Twitter owner would have to do something like what he is trying to do. Perhaps with less melodrama and chaos.
So yes there is value in Twitter. Actually the “IT” as you call it is a big part of how the user experience works and Twitter is still very different from Threads, Bluesky etc. Mastodon will not scale.
Cheers,
alexis
X ⇒ X.org ⇒ X Window System.
Perhaps – but it reminds me of XCOM. I wonder what computer games Musk was playing in the 1990s.
Social networks demonstrate substantial network economies, as economists refer to it. This means (definition) that the more people who use the network, the more valuable it is to them and to potential new users. A consequence is that it is harder for new alternatives to gain traction to compete with it, and thus a tendency for the number of established providers to remain small. These networks have considerable inertia.
TSNFKATwitter retains inherent value because of the size of its user base, despite the brand value (apparently) being trashed. Mobile phone networks have changed their names, (Orange, Cellnet, T-Mobile, etc) and carried on and maybe did better after.
So sometimes it is something that is worth doing, with some short term loss of brand value and maybe potential longer term gain. Alexis R set out a useful discussion of the possible reasons and likelihood of success in this case.