Benjamin Kunkel in n + 1:
On Wednesday, November 6, Twitter, the so-called microblogging service, went public, in the private sense. Shares initially offered at $26 were by the end of the day trading near $45, giving a company with fewer than 900 employees a market value of more than $31 billion, and meaning that each of the service’s 230 million users—who are also, in a real sense, its producers—could be considered to be contributing $135 to the company’s value. That value is almost certain to fall, since Twitter shares appear ludicrously overpriced. As John Cassidy of the New Yorker calculated, “Investors were paying forty-nine dollars per dollar of revenues, and five hundred and forty-one dollars per dollar of cash flow . . . Apple, the most valuable technology company in the world, trades at less than three times its revenue and eight times its cash flow.” But large for-profit social-media services are contradictory entities at any price, because they attempt to profit from activity that, precisely because it is social, is basically non-economic and non-productive. Social media can either be profitable or it can be social. In the end, it can’t be both.