There really is nothing like live, as the past calendar year has shown. Many of those moments have been, as you might expect, sports related: LeBron James blocking Andre Iguodala at the end of Game 7 of the NBA finals, the Cubs coming back to win the World Series in Game 7 after a rain delay, a historic comeback in the Super Bowl. Last night’s Academy Awards ceremony provided drama that was itself worthy of an award:

In case you don’t yet know what happened, you can read the New York Times story here about how the wrong ‘Best Picture’ winner was announced; you can’t, though, truly re-live the experience.

What, though, is “the experience”? There is the actual viewing — once upon a time you could only see something happen once — although the fact I embedded a video of last night’s Academy Award moment reinforces that this is no longer a differentiator. More important is the sheer shock: that can never be reproduced, and said shock — and the associated potential — is very much what drives live sports viewing. What is perhaps surprising, though, is that the reactions of those you care to follow is just as fleeting.

Twitter’s “Live” Strategy

One year ago Twitter committed to a “live” strategy; management wrote in a letter to shareholders:

We’re focused now on what Twitter does best: live. Twitter is live: live commentary, live connections, live conversations. Whether it’s breaking news, entertainment, sports, or everyday topics, hearing about and watching a live event unfold is the fastest way to understand the power of Twitter. Twitter has always been considered a “second screen” for what’s happening in the world and we believe we can become the first screen for everything that’s happening now. And by doing so, we believe we can build the planet’s largest daily connected audience. A connected audience is one that watches together, and can talk with one another in real-time. It’s what Twitter has provided for close to 10 years, and it’s what we will continue to drive in the future.

I call out this strategy in the context of last night’s Oscar screw-up because it really highlights what I and so many others mean when we bemoan Twitter’s product stagnation, and how said stagnation so severely limited the company’s long-tem prospects — and, on the flipside, how to think about innovation and the disruption of what came before.

Internet-Enabled Businesses

I’ve long maintained that Twitter was, paradoxically, handicapped by how good its initial idea was. Back in 2014 I quoted Marc Andreessen’s famous blog post on product-market fit and added:

I think this actually gets to the problem with Twitter: the initial concept was so good, and so perfectly fit such a large market, that they never needed to go through the process of achieving product market fit. It just happened, and they’ve been riding that match for going on eight years.

The problem, though, was that by skipping over the wrenching process of finding a market, Twitter still has no idea what their market actually is, and how they might expand it. Twitter is the company-equivalent of a lottery winner who never actually learns how to make money, and now they are starting to pay the price.

The shareholder letter above is an example of exactly what I mean; Twitter is still selling the exact same value the service offered back in 2006 — “live commentary, live connections, live conversations” — and the only product ideas are to do what old media like television does, but worse: becoming the first screen for what is happening now means a screen that is smaller, more laggy, and, critically, in the way of seeing the actual tweets one might care about.

It’s also an example of the worst sort of product thinking: simply doing what was done before, but digitally. The classic example is banner ads: back when we viewed content on paper, the only place to put advertisements was, well, on the paper, next to the content. And so, when the web came along, folks just mimicked newspapers, putting advertisements next to content; the result was web pages that suck and an industry in crisis.

Facebook, meanwhile, thanks to mobile, discovered that advertisements in a feed are far more effective: they take over the whole screen, engaging the user’s attention in a way ads off to the side never did, and the miracle of never-ending content and ever-present data connections means the feed never grows stale. In-feed advertisements — just like Google’s search advertisements — are uniquely enabled by the Internet; it should come as no surprise that said uniqueness is strongly correlated with actually making money from advertising.

This is a pattern you see repeatedly from the successful technology companies: both the products and the business model are uniquely enabled by the Internet. Netflix, for example, commoditized time: the company’s entire catalog is available to any subscriber at any time, in a way that was never possible on linear TV. Airbnb commoditized trust, elevating beds, apartments, and homes to the same playing field as traditional hotels. Amazon commoditized product distribution, creating a storefront with infinite shelf-space and unbeatable prices.

Moreover, all of these companies are evolving (or have evolved) their original offering in a way that takes ever more advantage of the Internet’s unique capabilities: Amazon used to predominantly hold inventory like a traditional retailer, but today an ever-increasing portion of sales come from 3rd-party merchants using Amazon as a platform. Netflix’s value used to be not unlike Amazon’s: the infinite shelf space of the Internet meant the service had any DVD you wished to rent; today the company is the inverse, differentiated by its own exclusive content. Airbnb is earlier in its transition to a full-on experience provider, of which lodging is just one piece, but critically, it is evolving.

Commoditizing “Live”

“Evolving” is a word that has never really applied to Twitter. Consider the Oscars: according to Twitter’s statement of strategy the ideal outcome for Twitter apparently would be live-streaming the Oscars, much as the service live-streamed a few NFL games and the Presidential debates, making the service the “first-screen” instead of the second. In other words, Twitter wants to make a better banner ad (that, as noted above, will in reality be worse). What makes this so frustrating is that Twitter’s goal of owning “live” could mean so much more: how might the product evolve if Twitter had the sort of product mindset found at companies like Amazon, Netflix, or Airbnb?

Consider the observation I made at the beginning about last night’s Academy Awards gaffe: what made it special in the moment was not just seeing it happen (one can replay it forever), and not just the shock (which truly is unique to “live”), but also the incredulous reaction on Twitter (and the host of jokes that followed). That reaction, though, is completely lost to time.

Imagine a Twitter app that, instead of a generic Moment that is little more than Twitter’s version of a thousand re-blogs, let you replay your Twitter stream from any particular moment in time. Miss the Oscars gaffe? Not only can you watch the video, you can read the reactions as they happen, from the people you actually care enough to follow. Or maybe see the reactions through someone else’s eyes: choose any other user on Twitter, and see what they saw as the gaffe happened.

What is so powerful about this seemingly simple feature is that it would commoditize “live” in a way that is only possibly digitally, and that would uniquely benefit the company: now the experience of “live” (except for the shock value) would be available at any time, from any perspective, and only on Twitter. That such a feature does not exist — indeed, that the company’s stated goal is to become more like old media, instead of uniquely leveraging digital — is as good an explanation for why the company has foundered as any.

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More broadly, a foundational principle of Stratechery — one I laid out once again last week — is that the Internet is fundamentally changing the rules of business:

Today the fundamental impact of the Internet is to make distribution itself a cheap commodity — or in the case of digital content, completely free. And that, by extension, is why I have long argued that the Internet Revolution is as momentous as the Industrial Revolution: it is transforming how and where economic value is generated, and thus where power resides. In this brave new world, power comes not from production, not from distribution, but from controlling consumption: all markets will be demand-driven; the extent to which they already are is a function of how digitized they have become.

The companies that thrive in this new world are those that build new businesses uniquely enabled by the Internet; those that struggle are those with businesses built on old limitations — like, for example, the idea that “live” can only be experienced, well, “live.” That Twitter would seek to leverage its only-on-the-Internet initial product insight — the fact that anyone anywhere can read the musings of anyone else, and broadcast in turn — into an old-world business (“live” when live) is the best evidence yet that the company was the product of more luck than insight.