Never mind what are Twitter costs, whats the cost of Twitter?

Posted by Pat Phelan
On January 4, 2008
Filed under General
48 Comments

Never mind what are Twitter costs, whats the cost of Twitter?

Over the past few days we have seen lots of posts on the cost of running Twitter from such luminaries as Jason Calacanis, Paul Walsh, Marc Canter, Dave Winer , Fred Wilson and Allen Stern
Myself and my business partner Florian Seroussi both serious Twitter users have been knocking around figures for the past 24hrs and Florian had a Eureka moment today

“Never mind what Twitter Costs, what the cost of Twitter? ”

According to @missrogue and @fredericguarino there over 450.000 active users and 750.000 registered users on Twitter and with Twittown suggesting 340,000 accounts in July and a growth figure of 60,000 users per month you can settle on a rough 1 million users.
Jens Alfke over at Thought Palace suggested
“11,000 requests per second”
The figure that stands out to me is “…up to 11,000 requests per second”. Jesus Christ, that’s a lot. Where does that come from? Even assuming a million members who each post ten times a day, that’s only about 100 posts per second”

Some users like @Warzabidul say they are on Twitter 17 hours per day and with heavy users like Silicon Valley superstars Robert Scoble, Seesmic founder Loic Le Meur , New York Video superstar Loren Feldman and Vonage founder Jeff Pulver keeping an incredibly strong presence on the site we suggest that the average user spends at least one hour per day Twittering.

Our figures suggests 27M minutes per day about 450,000 hours/days around 13.5M hours month of non productivity due to our obsession.

At a growing pattern of doubling it sizes every 6 weeks, we can expect twitter to cost 30M hours per month of productivity.

Our estimates for 2008 suggest @ a minimum lost productivity cost of $20/hour this will represent $300M/month so $900M for first quarter, $600M per month for 2nd quarter so $1.8B, $1.2b per month for 3rd quarter so $3.6b and $2.4b/month for 4th quarter so $7.2b.

In total Twitter should cost economy around $13.5b in 2008!! Isn’t that FB value?

Update- We excluded the costs of sending and recieving SMS’s that are likely coming from/to a corporate phone’s.
Thanks Dameon

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48 comments...What do you think?

Posted by Mike Butcher 5th January, 2008 at 12:03 am
One word. Genius.
Posted by Dennis Howlett 5th January, 2008 at 12:05 am
Hmmm – I just don’t know. I have no way of knowing what sort of throughput @ev is dealing with. 11K/sec would require a monstrous setup but it’s nowhere near what they handle on SEC for example or on trading floors. As I understand there are something like 728K Twitterers and taking 450K as active makes 11K/sec looks mightily high.
Posted by Florian SEROUSSI 5th January, 2008 at 12:08 am
Thank you !!
We took the problem the other way around. While everyone is looking for value we were looking for cost. In the old days cost and value were very much related
Posted by Florian SEROUSSI 5th January, 2008 at 12:11 am
The 728K is not an offcial number. 728k is the number of active twitters in the last 30 days followed by http://www.twitdir.com
I wish we had more precise data – but we don’t. I sent an email to pr AT twitter but got no answer.
Posted by alan p 5th January, 2008 at 12:18 am
Nice post…

I saw a reference to c 4m users in early 2007, in most Socnets round about 10% are active in any month type period.

Blogged my thoughts on their economics here:

http://www.broadstuff.com/archives/640-Twitter-Business-Model-isnt-that-Oxymoronic.html
Posted by amit shafrir 5th January, 2008 at 1:04 am
nice model,

however, if you are calculating the cost you should assume that there is some value in terms of productivity that one gets in return. when using the telephone system, presumably there is an inherent positive impact on productivity by the mere fact that one does not need to physically go somewhere to have the conversation – thus the value out-weighs the cost.

similiarly, one can assume that some of those 27 minutes are used to get business related questions answered, get information quicker etc. thus producing a positive impact on productivity.

if you recall in the early days of the web – many companies prohibited employees from using the web during work hours as they were concerned with the impact on productivity. i believe that average productivity in the work place has only increased since and that practice is vary rare now.

in the long run, i believe that…. what do I know
Posted by Paul Fallon 5th January, 2008 at 1:31 am

Pat you should be “life hacker”! In fairness if we all went off-line we would have a lot more productivty! Peaks in creation/briths are during black outs, bad wather and s on

but in seriousness, it is amazing how many folks and companies that are seeing this as a prodcutivity tool. It certainly has it rough edges, but with a background in geo region dispirsed teams and collborators, I can see a huge benefit to this; as I subscribe to the idea of stream of consciousness after all

/P
Posted by twizzz 5th January, 2008 at 1:58 am
interesting calculation
Posted by David Mackey 5th January, 2008 at 5:10 am
I haven’t figured out the attraction to Twitter…I have an account but I barely use it.
Posted by RM 5th January, 2008 at 5:11 am
Oh my God, now imagine the costs of masturbation! All those calories we burn pleasuring ourselves costs over $30B USD annualy!

Sorry, It had to be said. This comparison is ridiculous.
Posted by Neville Hobson 5th January, 2008 at 10:09 am
Very interesting data and suppositions but this reminds me of the hysteria about Facebook in mid 2007 and all the headline-grabbing claims in the mainstream media about lost productivity and the costs to business.

Curious to know how you’re defining ‘lost productivity.’ Amit Shafrir above has good points on productivity. So is your definition based on the assumption that people using Twitter as you’ve explained here are wholly wasting time with no business value whatsoever?

Even without any credible facts to hand that support any claim to show some business productivity benefit from using Twitter, lumping everything into a ‘lost productivity’ bucket makes no sense at all.

Dan York wrote a pretty compelling post last week on what he sees as productivity benefits of Twitter. Worth a look at in the context of your conclusions.

http://www.disruptiveconversations.com/2007/12/the-10-ways-i-l.html
Posted by James 5th January, 2008 at 10:17 am
this is why working in America has gone down the shithole. this is all you care about? productivity is lost! oh no! my god, you sound like a slave driver. why do you care?
Posted by david little 5th January, 2008 at 10:43 am
nice thoughts … but show me the money! I guess they are trying to follow the skype model of get big fast and sell to some idiot like ebay before they realize the costs.

Also when did Paul Walsh become a luminary, please. Makes me wonder what other figures you might have got wrong?
Posted by Mark Evans 5th January, 2008 at 2:17 pm
What would be really fascinating is if you somehow could calculate the costs of blogging, time on eBay and surfing on StumbleUpon. I can’t imagine how high the number would be.
Posted by Aswath 5th January, 2008 at 2:47 pm
To continue the joke, you should have added the loss of productivity while people read this post, twittered about it, commented about it and so on.
Posted by bOK 5th January, 2008 at 3:45 pm
awesome post… I just can’t get over the fact that facebook status is the same thing! sooner or later, facebook will allow people to choose whether or not they want their facebook statuses to be public… if enough of the 58 million facebook users choose to have a public status page, then what is the advantage of twitter? Twitter needs to do something dramatically different in order to survive for the next few years…

Aydin Mirzaee
Posted by Moshe Maeir 5th January, 2008 at 5:03 pm
hmmm,
what is the cost of the water cooler?
$50 billion?
Posted by Moshe Maeir 5th January, 2008 at 6:35 pm
I was just thinking alittle more
There are approx 200 million workers the USA. During the winter 15% have a cold. Now say they sneeze on the average 5 times a hour. Each sneeze if you take into account, the before, after, the sneeze itself and the time it takes to take out a tissue and throw it away – takes up about 30 seconds. So that equals about 20 minutes a work day. times 22 days a month is 440 minutes, over an average winter of 5 months that is 2200 minutes per worker. since 15% have a cold that is 30 million.

At an average wage of $20 an hour that is $22 billion dollars in lost productivity for the USA alone!!

Now if half of the people on twitter spent a third of their tweets on figuring out how to solve the common cold, just think how the value of twitter would go up!
On a P/E of 20, twitter would be worth TRILLIONS!
Posted by Pat Phelan 5th January, 2008 at 6:38 pm
We are in the wrong business Moshe
Lets get into cough bottles
Posted by Aidan Finn 5th January, 2008 at 6:54 pm
I’m guessing that the 11,000 requests per second figure that gets propogated comes from this presentation about scaling twitter from Railsconf 2007 (Slide 8).

Note that in the presentation this figure is described as the maximum number of connections achieved. The normal figure is 200-300 connections per second with spikes of up to 800.

Also most of these requests are to the API rather than visits to the website. According to this interview the API traffic is more than 10 times the website traffic.
Posted by Florian SEROUSSI 6th January, 2008 at 4:03 am
Bravo Moshe – you’ve just discovered that cold viruses are costing billions to society.
Enjoy link here : http://www.ur.umich.edu/0203/Mar10_03/15.shtml
Difference between twitter and sneezing – you can control Twitter but you can’t prevent someone from sneewing.
Anyway your analogy is good on one count. Both are viruses and I’m addicted
Hope to see you soon!
Posted by Florian SEROUSSI 6th January, 2008 at 4:08 am
BTW we can always discuss about the great benefits of cold virus – docs have more incoming in winter, flu shots, kleenex..
ok…off to bed
Posted by Stormy 7th January, 2008 at 7:51 pm
There’s what it costs and then there’s what it gains you. A few people use Twitter productively to interview/research communities, get answers to questions, bounce ideas off people, etc.
Posted by Bruno 10th January, 2008 at 7:55 pm
Interesting article. The figures you are using in your post are a “little bit” exagerated. For detailed comments have a look at this post on my blog : http://twitterfacts.blogspot.com/2008/01/whats-cost-of-twitter.html