UPDATED 11:34 EDT / SEPTEMBER 01 2009

StockTwits’s Growth is an Indicator of the Coming Move to Federation

I’ve been talking a lot recently about the impending move of status-update-centric networks to a federated system, either with or without the consent of the networks themselves. In a move chronicled by Techcrunch today, StockTwits shows us a sneak preview of what this migration might look like down the line.

The story is that StockTwits launched their own third party app to access Twitter as well as the data that they generate around finance and stocks.

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Here’s the interesting bit of copy from MG’s writeup, though (emphasis added):

imageAnd this new Adobe Air-based app gives them the terminal from which to do it while intermixing the very casual traders with the more serious folks. Lindzon envisions this as the “Social Bloomberg” or the “Facebook for Finance.” But it has always been kind of hard to get the more hardcore financial folks to take a service seriously when it is tied to Twitter, with its famous un-reliability issues. So StockTwits has built up an entire backend that is wholly separate from the messaging service. Yes, StockTwits is slowly breaking away from the service that inspired its name.

If you recall, I talked about this sort of thing happening on a wide scale in a couple of posts, recently, on the federation of microblogging.

Third party clients: The most popular way to access Twitter isn’t through the web interface – only 27% of Twitter users back in April chose to interact with it that way. Clients like Seesmic and Tweetdeck wield an unruly amount of influence. Many of the third party clients also support other social networking platforms like Facebook.

These clients sit in the enviable position, or at least might soon sit there, of determining exactly what it is that most real time web users get to interact with. Seesmic, Tweetdeck and the top three or four iPhone Twitter clients could form a consortium and suddenly mirror everything that takes place on Twitter to a third party or federated platform – in essence deprecating Twitter and Facebook in one fell swoop.

When it’s in the business interests of those who rely on Twitter and Facebook to make this move away from the networks that spawned them, as we see with StockTwits, it will happen.

What conditions will need to exist to expedite this change?

  1. A climate of pressure from the users. People need to be frustrated with the fact that their services don’t work as advertised, or are in a constant state of user revolt.  These two things are commonly seen at Facebook and Twitter, and were exacerbated by the purchase of Friendfeed. It’s an important element to push this change, but it isn’t the totality of what’s need for a mass move – markets aren’t ruled entirely by user revolts.
  2. A viable alternative common platform. In the past, I’ve discussed WordPress as a possible future alternative.  That’s a definite possibility down the line, but architecturally, it’s not presently a viable alternative for microblogging on the scale of Twitter (it lacks a compatible API and standardized federated features). There does exist the Laconica project
  3. An economic incentive for continuing their business. Most of these third party clients are VC backed right now, and the skin in the game isn’t particularly real to them, in that there isn’t a 1:1 relationship between major paradigm shifts they undertake and their bottom line.  Tweetdeck is an exception to this rule, though the exact nature of their profit and loss sheets are nebulous to the public.  They do have a (presumably) working business model around their third party client, and would likely be the ones leading the charge on such a move.

Once we see three of these conditions present simultaneously, soon after you’ll hear of the clients independently announcing support for a third party federated system, or alternatively they’ll be colluding in secret for a group move to said system.


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