How could it be that millions of users sign on to a service like Twitter and voluntarily impose upon themselves a constraint to talk in no more than 140 character dollops at a time?  Of course the answer is that they want access to the network, Twitter owns it and Twitter sets the rules.  But then the question is why is a restriction like that the blueprint for a successful network.

Here’s an analogy.  Imagine that you own a vacant lot where every weekend people meet to buy and sell stuff.  You don’t charge any entry fees and you don’t take a cut from any transaction, you simply want to be the most popular vacant lot in town.

Every seller who is there selling stuff contributes value to the market as a whole and you internalize that overall value.  But you and the sellers have a basic conflict of interest because they are maximizing their own profits and not the overall value of being in the market.  When they raise prices they extract surplus from the people willing to pay high prices and in the process reduce the surplus of people who don’t.

From your point of view the extracted surplus is just a transfer of value from one member of your club to another, and what you really care about is the lost value from the excluded sales.  So you will generally want lower prices than the sellers would set on their own.

Now think of each message in a social network as having two components:  information and self-promotion.  People follow you if you provide them with useful information.  And if your information is useful some would even be willing to wade through some self-promotion to get to your useful information.  But not all. The self-promotion is the price of the information and its a transfer of value because it costs the follower his attention and enhances the followee’s reputation.

From Twitter’s point of view the users are a bunch of tiny monopolists willing to exchange a little bit of overall surplus for a bit more of their own.  140 is like a price cap imposed by the owner of the vacant lot which boosts the information/self-promotion ratio of tweets.

The surprising thing is that some users aren’t just outright banned.

Advertisements