In the push for more revenue growth, Twitter has been building up its business in areas like advertising and commerce, but aÂ move madeÂ late Friday night points to another area where the company is setting its sights: big data analytics.
Twitter announced that it will be terminating agreements with third parties for reselling firehose data â the unfiltered, full stream of Tweets and all related metadata that goes along with them.
Instead, it will use its own in-house big data analytics team, which it developed around its acquisition of Gnip in 2014, to seek to build direct relationships with theÂ data companies, brands and others that use Twitter data to measure consumer sentiment, market trends and other moving targets that can be better understood by tracking online conversations â a transition it says it hopes to have completed by mid-August.
DataSift,Â the biggest companyÂ to be affected by Twitterâs move, servicesÂ thousands of businesses who in turn serve thousands more. Unsurprisingly it moved quickly to post its own reaction toÂ the termination and its own determination to push ahead in its own business.
NTT Data, which deals only in Japanese Tweets, is still listed as a Twitter firehose partner at the time of writing, but Twitter has confirmed to me thatÂ NTT is alsoÂ affected by Fridayâs announcement.
This is both a very unsurprising and sudden move, from the looks of it.
Talking to Nick Halstead, the CEO and founder of DataSift, he said that his company wasÂ âblindsidedâ by Twitterâs announcement, which it made without any warning to DataSift. He said that before this, the pair had been discussing a renewal of the deal. And while DataSift recentlyÂ added FacebookÂ â Twitterâs big social advertising competitor â as a firehose partner, it didnât appear that this would impact those discussions.
âWe were in the middle of negotiations with everything pointing toÂ Twitter wantingÂ to still continue to be a part of an open ecosystem,â he said, âbut this is clearly now not true.â
On the other hand, forÂ those who have been following how Twitter has grown as a business, the companyâs move to cut off third-party firehose relationships should come as no surprise.
The company has made no secret ofÂ its bigger philosophy about how it interfaces with third parties in general. In its (in)famous âquadrantâ diagram, the company outlined its position towardsÂ third parties that added value to what Twitter was doing versus those that effectively overlapped with Twitterâs own efforts: those who were building Twitter clients that âmimicâ Twitterâs own experience in reproducing the Twitter stream were getting cut off.
You can think of lastÂ yearâs move by Twitter to acquire Gnip â another firehose resellerÂ who competed with DataSift â as a step Twitter was taking to move its interests into one more area of that quadrant.
At the timeÂ the acquisition was seenÂ mainly as a response to Appleâs acquisition of Topsy, who had been another firehose partner. AndÂ DataSift went so far as to reassure people that its status with Twitter would not be affected. But nowÂ itâs clear that Twitter had other things in mind, too.
Zach Hofter-Shall, head of Twitter ecosystem, said as much in his blog post late Friday:
Â âOne of the reasons Twitter acquired Gnip was because Twitter believes the best way to support the distribution of Twitter data is to have direct data relationships with its data customers â the companies building analytic solutions using Twitterâs data and platform,â he wrote. âDirect relationships help Twitter develop a deeper understanding of customer needs, get direct feedback for the product roadmap, and work more closely with data customers to enable the best possible solutions for the brands that rely on Twitter data to make better decisionsâ¦The acquisition of Gnip was the first step toward developing more direct relationships with data customers.â
In fact, whether they wanted to believe it or not, these companies were told by Twitter that they would be getting cut off nearly a year ago, we understand.
The directÂ relationships Twitter has with data customers, meanwhile, are also starting to take a new kind of form. Just last month, Twitter made its first investment in a startup through its new investment vehicle. The recipient? Dataminr, one of the companies that analysesÂ Twitter firehose data, in its case to track news and financial data.
The reason why Twitter wants to tap into more big data business, of course, comes down to one big reason: money.
Since going public, Twitter hasÂ regularly faced questions about user growth. On one hand, that has led it to many iterations as it tries toÂ snag more consumers who are not already regular Twitter users. On the other, it has increasingly focused on ways that it can better monetise what it already has.
Thatâs where the big-data services come in. Twitterâs data firehose, from what we understand, makes up a relatively small portion of DataSiftâs revenues. The company makes 20% ofÂ its revenues from licensing data, with that data including Twitter but also more than 20 other networks. The remaining 80% comes from data processing.* Cutting off the firehose toÂ DataSift, Twitter hopes, will potentially give it access to (and better returns on)Â the customer deals that DataSift held before.
(The big question now will be whether Twitter manages to convince enough of the people who used to buy data through DataSift to turn directly to Twitter for those needs instead.)
âTwitter believes that creating a closed market for their data allows them to generate more revenue,â Halstead told TechCrunch. âWe believe and others believe that an open ecosystem is importantÂ for aÂ brand to understand what is going on in the market.â
As for where DataSift is turning next, the company says it is signing on more social networks to provide its own firehose data feeds. No comment from DataSift on which feed will be next, but itâs notable LinkedIn is not yet a partner. The social network for the working world is clearly looking for more ways of using its data for analytics, and this seems an obvious route to do that.
DataSift isÂ also still able to work with Twitter data: if a third party buys data from Twitter, it can supply it to DataSift by way of a âconnectorâ so that it can still be parsed by DataSiftâs algorithms. However, this will mean significantly lower revenues for DataSift in the process from that feed. And Â armed with its Facebook deal and other developments in the pipeline, DataSift is pressing ahead with business. The company isÂ currently in the process of raising a new round of funding â a Series D round. To date, DataSift has raised nearly $78 million.
Update: Mark Suster writesÂ that DataSift returns 95% of data revenue back to Twitter. The 20/80 ratio we were describing referred to revenues from data firehose licensing versus data processing revenues for DataSift. Weâve updated the passage above to clarify this.
Originally posted via “Twitter Cuts Off DataSift To Step Up Its Own Big Data Business”
Originally Posted at: Twitter Cuts Off DataSift To Step Up Its Own Big Data Business by analyticsweekpick