A few weeks ago, Twitter shares plummeted and wiped out more than $4 billion in market value, as insiders and early investors started to sell the company’s stock after the six-month “lock-up” period expired. On June 5, Twitter VP Luca Baratta sold over 1,000 shares. Cashing out by the people who understand Twitter’s prospects best is an ominous sign for the company and adds to the very long list of concerns about its future. Twitter has already lost more than half its market value, a staggering $18 billion, since late December. Users are abandoning the service, growth has been stagnant and social media pundits wonder if Twitter is heading toward irrelevance.

Like AOL, which soared across the Internet landscape before becoming an afterthought, Twitter had a game-changing impact when it arrived on the social media scene. But barring a quick turnaround, or incredible success in emerging markets like India, Twitter’s star seems to be fading fast.

>Twitter owes what popularity it has to incessant free advertising on mass media.

The Rise and Fall

In my research, I found that Twitter owes its popularity to incessant free advertising on mass media. In 2008, CNN became the first major news outlet to integrate Twitter into its programming and featured a ticker of tweets across the screen. This triggered an uptick in Twitter’s popularity.When the horrific terrorist attack in Mumbai took place in November 2008, users flooded the site with updates including details about casualties and other crucial information, demonstrating that users on Twitter could report crucial information faster than reporters. Local and national media leaped on board wanting to boast about their relationship with Twitter. “Follow us on Twitter” has become a ubiquitous catch-phrase for every media outlet, giving us the impression that Twitter is incredibly popular, far more than it actually is. Numerous celebrities, starting with Ashton Kutcher, gave Twitter additional boost by becoming power users.

#### Misiek Piskorski ##### About Mikolaj "Misiek" Piskorski is an Associate Professor at Harvard Business School and author of the upcoming book "[A Social Strategy: How We Profit from Social Media.](http://www.amazon.com/Social-Strategy-How-Profit-Media/dp/0691153396)"

But Twitter’s popularity with the media and celebrities has become one of the key sources of the site’s current troubles. By now just about every organization that wants to have its voice heard is on Twitter, resulting in a cacophony of noise that does not add up to much. Facebook had that same problem, but it worked really hard to develop a better way of figuring out what users find relevant in the newsfeed. But Twitter has not done that, so now when you go on Twitter all you see is a mish-mash of commentaries that most users do not really care about. The onus is on the you to curate who you follow. Twitter’s inability to provide an effective search function that would allow users to search for relevant tweets has added to the disillusion. Tired of this barrage of badly targeted information and knowing that similar information can be found elsewhere on the Web, users leave, never to be seen again.

What’s more, we have become accustomed to being passive recipients of information from media and celebrities so we do not even think to produce content ourselves on Twitter. In addition, most of us are gun-shy about what to say when the entire world is watching, so we end up just keeping quiet. The difficulty of saying anything meaningful in 140 characters makes the matter only worse. Data I collected on Twitter bear out just how big the problem is. The median number of tweets is one (think “Hello world!”), and tweeting is concentrated in a small number of producers: the top 10 percent of users produce 90 percent of the content, as compared to 10 percent of users producing 40 percent of the content on Facebook. So, unlike on Facebook, where we keep coming back day in and day out to share photos, life events, opinions and yes, cute cat videos, with our friends and family, on Twitter that behavior is absent. And those of us who try our luck and tweet quickly realize that what we just shared goes unseen or unnoticed in the ocean of noise. Soon after, Twitter loses its appeal to its users.

So, when we think of Twitter, we see that the brand is visible, and the bird logo ubiquitous, but the product is not attractive to many people, and the main source of traffic to the site—other media outlets—are not bringing Twitter enough new users. Can Twitter save itself before it’s too late? In my view, the company has two options: find new sources of traffic, or evolve the product.

Finding new traffic sources in the U.S. will be tricky. The U.S. market is saturated and growth opportunities are nearly exhausted. If I were Twitter, I would go after India, which has over 250 million users, but only 30 million of them currently use Twitter. Getting media attention in India would get Twitter many valuable users, but the company has to move fast. The media there has opted for the faster, more mobile friendly messaging service WhatsApp, which has nearly double the number of users as Twitter, and which Facebook recently snapped up for a hefty $19 billion.

The other option is to focus on what Twitter does best. With 250 million users, Twitter’s management has grown complacent and has essentially ignored the reason that early users experienced that “Twitter moment”, the connection between strangers when someone posts a tweet and unexpectedly receives a positive response. This is when users fell in love with Twitter and became evangelists for the service. But like AOL, which rested on its early laurels and then shrank into Internet irrelevance, Twitter’s inability to enhance that Twitter moment has triggered its decline. If may not be too late to catch a new wave of users. But the window of opportunity is closing quickly.