Digg has been on a banning rampage lately. The most famous digger to get banned has been Zaibatsu. The first glimpse of what Digg was up to came when Brian Cuban was banned. By the count in our database this morning, there have been about 600 users banned in the last week or so. That figure could be a little off -- we may not have researched someone for a few months -- but it shows the magnitude of what Digg is up to.

They also rolled up ltdraper, donatpms, and olivertaco. According to the email we received from Digg, donatpms was banned not because that user did anything (we haven't run anything through that), but because it was associated with someone who had been banned. So if you've been banned, they don't ever want you back. Good luck with that policy Digg, DHCP is enough to keep users coming back as much as they desire. There are a lot of agencies out there running dozens if not hundreds of users through multiple proxies.

Perhaps that's why Zaibatsu says he'll be back.

Don't Put All Your Eggs in One Basket

One of the benefits of using a structured approach to social media marketing is that you're not building an account, you're building a set of relationships. When you're Stalking Big Game on Digg, the key is to find a diverse group of people that are likely to play the game. That doesn't mean "gaming the system," it means finding other like minded individuals that understand that there is an unstated quid pro quo in digging. I'll digg your submissions if they're good, and in return you'll digg mine. That's not to say that I'll digg any bit of spam that you want to post, but I will give you priority in what I look at when I'm digging. The scripting and the bots are really just about time savings, not explicitly gaming the systems. As we've always said, you shouldn't do anything with a script that you wouldn't do in person. It's just a macro for saving you time.

Likewise, you shouldn't be invested solely in a single network, even one as powerful as Digg. There are 1,000s of Social Networks to choose from when you're promoting your content. Pick a manageable number of those and spread your bets. Likewise, as a marketer I'd rather my company have several accounts on Digg in the 500 range rather than be a single Top 100 Digger.

Stop Using Scripts

The flip side of a crisis is opportunity, and this new rampage by Digg is an unbridled opportunity for social marketers. By shaking things up, they'll be removing the log jam at the top. If users start to rebel against the blind diggers as we suspect, "well behaved" social marketers will have a distinct advantage. The 80 users from the Top 1000 that have been banned for script usage just opened up a lot of slots for people to move up.

The next release of the PMS Social Suite is going to see some real changes in direction. For now, we're heavily suggesting to our users that they concentrate on the analytical features of the product and refrain from using the scripts. Digg has been rolling up script users by looking in their logs for Diggs coming from pages on their sites that do not have a Digg button. The Digg Friends Easy script started all of this, and our shoutback function used an improvement on that script. So for now, don't use that.

If you want to support your friends like MrBabyMan does, then go to the Manage Friends page, click the "Submissions" radio button, then click the "Go to Friend Page" button. Click each of the stories you want to Digg (you can set TabMixPlus to automatically open links in a new tab), then cycle through the tabs. This is pretty much what MrBabyMan does, and Digg isn't banning him, even though he has an 89.2% Blind Digging rate.

We'd appreciate some user input on whether we should try to come up with scripts that don't have the vulnerability that Digg spotted in Digg Friends Easy? But before you form an opinion, read the next section.

New Features Coming

Digg's crackdown on scripts is going to make things a lot better for PMS Social Suite Users. Given that it will take more time to support your friends, choosing which friends you support is going to be even more important. And instead of using free Greasemonkey scripts on Digg, you'll be much better off if you can do your analysis completely offline from Digg. The entire key will be to find users that will Digg your submissions -- you just can't afford to waste time with people that don't understand the game. If you've got the right tools, you'll have a distinct advantage over the people that have had the rug pulled out from under them.

Top Diggers will tell you that the key is to find the best content before anyone else does. To help our users with that task, the upcoming version of the PMS Social Suite will use a list of 200 sites that we've developed by analyzing what makes it to the front page of Digg. We have a database application that will be hitting that list continuously. When you visit our new dashboard, you'll be shown a list of "Hot Stories" that have not yet been submitted to Digg and are from a source that has Diggable content. Click the link and you'll get two tabs opened: one tab will have the actual article, and the other will have the Digg submission page with the URL filled out. You probably won't be able to beat MakiMaki to a post on Huffington Post, but your chances are excellent for being first to getting great content for your submissions.

Another key to building relationships on Digg is commenting. One of the best places to comment is on a story that has very few comments but is likely to go front page. Our dashboard will also have a section called "Hot Submissions to Comment." This is a list of submissions from the Top 100 Diggers with 3 or less comments. It also shows the current number of Diggs so you've got an idea as to whether or not it's going to hit. Chime in first with something witty and you'll get great visibility.

The Dashboard also shows the list of users that you're tracking and key statistics that are updated continuously. For instance, you can see a count of how many friends you have in the Top 100 and Top 1000. We've also calculated the number of friends you have that are "Solid" and "Weak" according to our algorithm.

We've also eliminated the need for you to run your own research jobs. We've set up a network of machines that cycle through our database and perform the research function for you. We currently have stats on over 26,000 Diggers for you to mine. We're doing much more in-depth research now, including finding Diggers with high rates of mutual friend support. We've got a list of hundreds of people that are very likely to become mutual and support your submissions. For each month of subscription you pay for, we'll provide you with a list of 10 high value friends. Sign up for a year and you'll start off with 120 very strong friends to seed your network.

But the biggest key to success is to establish an offsite friend network. The Top Diggers don't shout to each other, they send email and IMs back and forth asking for votes. The best friend that you can find is someone that has a very high rate of mutual voting, but also has a way to contact them offsite. Part of our new research service is that we look for links to known services such as AIM, email addresses, StumbleUpon, etc for a user. You can mark a user as an "offsite friend" and contact them through other means. You can store an email address for them in the database. Push a button and you can send an email to a list of users with the url of a story you'd like supported. It's just like what the Top Diggers do, but more efficiently.

And if you'd like to be considered as a friend to other PMS Social Suite users, you can mark your user as open in your profile. You'll see a list of stories other users are promoting, and you can mark your own stories to be promoted. Obviously, with the analytics you'll have a good idea of who is digging you, so be a good friend and you'll get back results.

How Soon?

Soon, very soon. A lot of this was already in the works before Digg started their rampage. I'd say we're 95% done right now. Stay tuned.

We've heard a comment from a number of "A-Listers" that all of your social media activity should be "organic." That you shouldn't use automation or do anything that isn't natural with sites like Digg, because somehow that's cheating.

Our question back is "What's so noble about carpal tunnel syndrome?" If you're using automation to do the same things you would do if you sat at the computer and clicked your mouse in a mind numbing session, what's the big deal? Is it the user's fault that most of these social networks have built such a brain dead and poor user interface that accomplishing even simple tasks requires minutes of clicking? Is it the user's fault that these sites take forever to load a page? Is it the user's fault that most of these sites have limited their APIs to the point of near uselessness?

What's the difference between using a script to accomplish simple tasks and hiring an intern or someone from India to do the same thing? Is an agency that pays a staff of people to mindlessly click on social sites all day somehow more magnanimous than the sole proprietor that uses a macro to accomplish the same thing? Do you really think that these big name consultants that charge several hundred dollars for a consultation are spending hours a day of their own time clicking their mice on social networks?

How about the use of a programmable keyboard or mouse? What's the difference between using a FireFox plugin like Greasemonkey that will click a few links for you and open a window and using a programmable keyboard that will do the same thing when you hit a function key?

How about using a browser plugin that automatically opens all links on a page in a new tab so that you can easily read the stories? That's a script, isn't it?

How about using a super high-speed internet connection? Doesn't that give you an unfair advantage over someone using dial up? Doesn't that put more of a load on the website? To be fair, shouldn't you be using a 56K dial up line to do your social networking?

If social networks would make simple tasks like unfriending 100 friends that are completely unproductive a one step operation, there wouldn't be a need to use scripts. Instead, they're trying to maximize page views. So frankly, using scripts helps them with that goal. If it weren't for automated scripts, a lot of their traffic and revenue would go away.

Do as They Say, Not As They Do

Don't think for a minute that the majority of the people pontificating about "organic" use of these sites aren't using automation themselves. We're not going to call anyone out by name, but by using our tool to analyze the friendship networks and voting habits of Top Diggers, it's quite clear that they're very automated and voting in blocks like crazy. Search your feelings, you know it to be true.

If you buy into the party line that only "organic" use of these sites is acceptable, you're just guaranteeing that you won't be able to compete with the "A-Listers" -- which, frankly, is exactly they way they'd like it. They're not in business to create competition. So if you'd always like to be in second place, listen to their advice.

I'll also point out that the same people that rail against using scripts to make social networking more efficient usually have installed ad blocker software. So who is really stealing bandwidth?

Won't I Get Banned?

True, if you do something crazy and Digg a few thousand stories in a few hours you're going to get caught. Especially if you're testing a script in development and it gets away from you! Not that I know anyone that has happened to or anything. But if your script has the appropriate pauses, you only vote a percentage of stories, and you do the same things a human would do then there's a very low probability of getting caught.

And frankly, you shouldn't be putting all your eggs into a single basket. Keep an offline record of your relationships. If you get banned, it's just a matter of a new IP address and adding back the relationships you've already built. Your tools can do that for you, can't they?

Keep in mind that the top users get forgiven when they get caught using a script. I've heard several instances of top diggers that got banned and reinstated the next day after promising to behave. They're still misbehaving; they're just doing a better job of not getting caught. But if you're not one of the top people, good luck even getting your emails answered.

It's How You Use Your Tools That Count

The same car that can be used by a drunk driver at 2:00AM can also be used to drive the kids to school at 8:00AM. The car isn't good or evil -- it's how it's used that matters. If you're using tools to spread spam the community is going to punish you anyway, so it's not going to work out. But if you use a tool to be more efficient and do the same things that you'd do anyway if you were willing to risk carpal tunnel syndrome and spend 10 hours a day clicking then there shouldn't be any problem.

The real question is "How much is your time worth?" If it's not worth $19.95/month to save a few hours a day of your time, then keep clicking. Otherwise, you really ought to look into automating some of your drudgery.

We're starting to add data from Social Blade on the Top 100/1000 Diggers to our PMS Social Suite. As they say, their data is only an estimate, but it seems to be a widely accepted measure for the Top 100 and Top 1000 Diggers.

The first place you'll see this is on our Add Friends tab in the freemium version. Scroll over to the right and you'll see a new column in the results grid: Rank. If it's n/a, the Digger isn't in the Top 1000. Otherwise, it shows their rank as of this morning. We've set up a job to refresh the stats each day. The next place is in the Manage Friends tab, towards the far right side of the grid as well.

Why Do You Care About the Top Diggers?

Because powerful friends are always a Good Thing. Many Diggers in the Top 100 got there because they have a circle of friends where they vote each other's submissions. If you can become a mutual friend with a Top Digger, you can get in on some of that action as well.

Not all diggs are created equal. The evidence is quite good that Diggs from shouts don't seem to count as much. Diggs from a "new" account don't seem to count as much. Diggs from the top Diggers, on the other hand, seem to carry more weight. Having more top Diggers in your circle of friends can be quite helpful to your efforts.

Interesting Things We Found Out

We've just started playing with this data. Did you know that 29 Diggers out of the current top 1,000 have been banned? Their accounts have been banned, but they're still in the top 1,000 based upon the momentum of their previous records. Some of them you can find with new accounts (and they're also in the top 1,000). Yes Digg, you've missed some people that you've banned who have come back with duplicate accounts.

Did you know that there are Diggers in the Top 100 that have shouts turned off, yet routinely shout their submissions? I'm not going to name names, but a little bit of research with the PMS Social Suite will point them out to you.

Finally, the level of overlap in friends among the Top 100 is astounding. Just do a "Friends of Friend" search on a Top 100 Digger and you'll see them heavily involved with mutual friendships with other Top 100s. Look at their voting activity and it's apparent that there is a very high level of cooperation among many at the top of the heap.

I've been thinking about this for a long time, and I just can't see how Twitter is going to make enough money to justify their venture capital investment (which is reported but not publicly verified to be around $20M) or $80M valuation. Five years from now we're going to look back at the Twitter phenomenon the same way we scratch our heads today when we try to explain Pets.com. If you can't look at the $80M valuation of Twitter and figure out that the Web 2.0 bubble is going to pop, then there's just no helping you.

A lot of people have been musing about how Twitter can make money. As users that's important, because we don't want to see the service disappear. But frankly, if you have to think long and hard about how a business idea is going to make money, it's probably not going to work. I'm really wondering what the elevator pitch was for Twitter, because after reading a dozen blog posts on this subject I still haven't seen a complete idea. Maybe I'm wrong and they've got something absolutely brilliant up their sleeve, but more likely the pitch went along the lines of "We'll have millions of users, that's got to be worth something!"

It Takes a Lot of Money to Be a Successful VC Investment

You have to keep this in the context of a VC investment. VC's don't invest to get a 7% return on their money. They're not in that game. They invest in high risk levels, and fully expect only 1 out of 20 companies to pop big time if they're doing a good job. Which means to break even, they define success as 20x return on investment. That doesn't mean they'll get it, but in order to justify the investment they have to be able to see a way that they'll get a 20x return. That means that Twitter has to sell for at least $400M in the exit. In that case, the founders probably get a pittance because the VCs are going to get the first grab at the money until they've met their goals. It doesn't matter that you've only sold them 20% of the company, you won't get your money until they get theirs.

What kind of revenue does a company with a valuation of $400M have to generate? It depends upon the multiplier, but in this environment a valuation of 10x revenue would be pretty strong. Or maybe 100x earnings. So Twitter has to be a $40M revenue company just to break even in the eyes of the investors. The general rule of thumb for silicon valley VC investments is that you want the company to get to $100M in five years to be a success. If you want to see an explanation of how VC investments work, go back to our oldie but goody post on Venture Capital Term Sheets.

Riding the Wave

There's no way they can hit those kinds of numbers. Not a chance. Let's keep in mind some of the major factors in their successful adoption so far:

• It's Cool - Twitter was riding a wave of coolness at the height of the Web 2.0 madness. Anybody who was anybody was Twittering. To quote Eldon Tyrell, "The light that burns twice as bright, burns half as long. And you have burned so very very brightly, Roy."
• It's Free - The barrier to adoption was miniscule. Just go to their page and sign up. They don't even collect much demographic data; you just need a nickname and an email address. Unfortunately, as Twitter is finding out, there's a huge difference between free and a nickel.
• Third Party Tools - They were smart and built an ecosystem for third party tools. They provided a fairly open API, which allowed a wide array of blogging plugins, readers, bots, etc to be built. There's only one problem with that: They killed their advertising potential. You can't serve banner ads to someone that doesn't visit your pages. Judging from the people I'm following, more than 75% of the Twitter power users are using something other than the web interface to tweet.

Basic Assumptions about Twitter's Business Model

Let's take a look at the basic business model limitations for Twitter. To do this, we need an idea of the number of transactions, users, customers, etc that they can support. Since none of this is publicly available, we'll have to make some guesses.

• How Many Twitter Users are There? - I've seen estimates of 3.8M users, but frankly there's no way the number of active users is that high. The 3.8M number may be the total number of people that have actually signed up for an account, but there just aren't that many active users of Twitter. Take a look at Twitterholic. The number one Twitter user in terms of followers is BarakObama, with 60,601 followers this morning. What percentage of active Twitter users are following Obama? 10%? I'll bet it's a lot higher than that because it's something cool to do. But if it's 10%, then there are 600K active Twitter users. If you look at the entire top 100 users and assume there is no overlap in followers between any of the 100 (in other words, just add up all the followers in the top 100), you get an upper limit of 1.3M users. Now that 600K is starting to look a bit high, isn't it? But I'm going to be generous and assume that there really are 600K active Twitter users, although it's completely apparent that there aren't. The actual number, which only Twitter knows, is probably a lot closer to 100K active users.
• How Many Pages Views a Day do they Get? - This is pretty hard to even guess. A SWAG on it would be that the average number of refreshes for their 600K users is 5/day? So 3M pages views a day? Evan Weaver did some playing around with Compete and came up with 71M views/month, which is a mere 2.3M pages views/day. Twitter's Alexa rank is hovering around 1,000, so 3M page views seems extremely optimistic.
• What Rates Can Twitter Charge for Advertising? - Pubmatic says the CPM for large sites is down to $0.67. I doubt very much that Twitter can command high CPM rates because people aren't on their site to look for advertising, they're focused on something else. The average CPM of large sites is $0.92 for the last three months, so let's be generous and say Twitter can get a CPM of $1.00 because they're so cool.
• How Many Tweets Could an Advertiser Send? - I'd be really surprised if users would put up with more than 1 tweet a day from a sponsor, and even more surprised if they'd take up to 3. But let's assume that Twitter can deliver 3 tweets/day as a sponsored advertisement.
• How Much Would Someone Pay to be a Twitter User? - This is tough because different users get different value from Twitter. For most users, anything over free would cause them to stop using the service. But as Andy Beal pointed out, he's got 3,000 followers so he'd be willing to pay $5/month. LinkedIn gets $19.95/month for their premium service, but there's a lot more utility and payback. When you're on a job search, $19.95 doesn't seem like much. Let's be generous again and say that Twitter could charge $20/month and get the top 10,000 power users to pay. That's pretty aggressive. It's more than Andy said he would pay, and he's a real Twitter nut.
• How Many API Users Do They Have? - It's a lot. The rumor is they have peaks of 12K/sec on their API services. My guess, based purely on sampling from my own feed, is that about 50% of the users out their are getting their Twitter fix without hitting Twitter's web page. That sorta fits with the 2.3M page views/day estimate and their 600K active users. That would be 300K users doing 7.6/page views/day, and the other 300K leaving their readers open and hitting the API every minute or so.

What Options Do They Have?

Andy Beal over at Marketing Pilgrim brought my attention to this in his article "Twitter Needs Your Help to Make Money". He summarized Ben Kunz's viewpoint article at Business Week that suggested 4 routes Twitter could take to monetize:

• Twitter Could ask Users to Pay - Alas, this one just won't generate enough revenue. If they can charge $20/month ($240 year! Wait until the wife sees that credit card charge!) and 10,000 of their power users that would see the value sign up, it's just $200K/month in revenue, or $2.4M/year. In other words, an underpaid CEO's salary would be 10% of their revenue. And the value to someone like Andy goes way down when his 3,300 followers start to bail from the service because it's not worth that much money to them. $5/month is much more reasonable, and that's only a $600K/year company. The bulldog will be mighty hungry.
• Twitter Could Get Paid for Messages - The idea here is to insert tweets into the twitter stream. Kevin Makice had a great comment on Andy's blog that suggested that Twitter could "make it a requirement to follow 2-3 (minimum) official sponsors in the same way and context you would any other friend or organization." Again, the problem here is numbers. 600K users getting 3 tweets/day at $1 CPM is $648K/year. But what is a 140 character, easily filtered message worth? Realistically, it's $0.50 CPM for $324K/year. That won't even cover the sushi bill. Worse yet, to get to just $10M in revenue at a CPM of $1 they'd have to send their 600K users 46 commercial tweets/day. Think about that. I doubt there would be many users left.
• Twitter Could Extract Money from User Data - Which would cause a backlash among users who seem to forget that the intimate thoughts they're tweeting every day are available for all to see. Besides that, the cat is already out of the bag. Google crawls Twitter heavily. Just do a site:twitter.com google search. I just can't see more than a few million in value here, and the risk of completely alienating the customer base. But let's give them $2M because they need it. This one is important to remember because it's bait for someone like Google to buy them.
• Twitter Could Sell Ads - Again, the numbers are even worse. They're getting at best 3M page views/day, so at a CPM of $1 they can get $1.09M/year in revenue. Ben Kunz came at the number in a very different fashion and came out with an upper value of $12.26/user/year. Using his numbers and the estimate of 600K active users you get $7.3M in revenue at a max. But his numbers require a CPM of $7, which I just don't see advertisers being willing to pay in this climate. And people getting their tweets through a Reader don't see the ads, so divide everything by 2.

What My Tweet Peeps Had to Say

I also asked this question of my Twitter Followers and additional ideas were:

• Charge for API Access - Twitter would charge API providers to have access to the API, perhaps on a sliding scale with a certain amount of activity for free. The basic problem with this is that whenever your business plan includes the concept of building a platform for someone else you're likely to fail. Missionary work takes a very long time -- much longer than Twitter has if you make a few guesses about their burn rate. But the bigger problem is that it's now a revenue split. Using our assumption of 300K API users, could the API vendors really extract more than $10/user/month in fees? Most API users would just stop if it required cash to use the tool. Trust me, it's hard to get people to shell out cash, even when you've got an awesome tool. And yet still, Twitter can only take a percentage of the revenue that the API using applications generate or they kill the ecosystem. A license fee of more than 10% is probably not sustainable. So 10% of 300K users at $10/month = $3.6M/year. And that's if all of their API users switch over instead of dropping out. If they only convert half, it's $1.8M/year. No way.
• Make Money From SMS - Communications companies make money when you receive text messages. A lot of money, because they get to use unused bandwidth to deliver your messages. It's not like voice where it has to have a guaranteed delivery time. So there's probably a model in there where they can get some money as a kickback for generating all that traffic. So you'd think Twitter could pull off a deal where they get paid to send SMS traffic. Unfortunately, the money goes the other direction, which is why Twitter had to abandon SMS Services in many countries. "Twitter estimates its costs to be as high as $1,000 per user outside the US, Canada and India." $1,000 for a user worth $12.26? But even if they could work out a deal with a carrier in the US, the revenue potential is less than that of banner advertising. Nobody is going to sign up for a paid SMS model to get Tweets about what someone is having for dinner at 10 cents a pop.

Andrew's Thoughts

Andrew Finkle posted a response to the Business Week article titled "Monetizing Twitter." He covered a lot of the same ground we already have, but here are a few of his unique ideas:

• The Roboform Model - He rightfully points out that RoboForm was very successful with the freeware model. The problem for Twitter is that there is a wide variance in the value proposition among users. While everyone gets the same utility out of the freeware model, only a small percentage of Twitter users get enough return on investment to justify any kind of cost. And the fewer users that convert, the less the value proposition becomes to the users willing to convert. Would Andy still pay even $5/month for Twitter if he only had 100 followers?
• Contextual Ads - This is a really interesting idea.

  Someone will "Tweet" about a great book they just read, and that Tweet will be tied to an Amazon affiliate link where others can purchase the book. Or perhaps the Tweet will be location aware - "Craving Pizza in NYC", and as GPS allows Twitter will attach ads from local pizza parlors in NYC.

  But again, the numbers don't add up for enough money to make it worth Twitter's while. First, only a small percentage of Tweets have any content that could be monetized. I did a somewhat random sample and came up with about 2% of the tweets in my feed that one could attack an ad to. But you'd have to analyze every single tweet to determine if you can overlay an advertisement, so we're dramatically increasing the processing power requirements on a system that's already struggling. And what will be click through rates be? I commented on Andy's blog that they might be lucky to get a 2% CTR on 3.8M users for 10/day. That works out to $3.4M in revenue for the context ads. And that's back when I was willing to give them 3.8M active users. Use the more likely number of 600K and it's $536K/year. I'll bet that there computing cloud charges at Amazon would go up more than that for this scheme.

The Real Problem for Twitter

The real problem is that "All of the Above" is not an option for them. They could do a combination of things, but some of these are competitive. For instance, nobody is going to pay $20/month for a service that bombards them with ads. Nobody is going to pay a user fee and also pay an API fee. What they probably can do is charge for API access, thus driving people to the organic site, and then place advertisements. So what's their revenue potential? Usually the best way to approach these things is to look at the high and low ranges of the very pieces of your business model and then do a best and worst case analysis.

The best case scenario for Twitter doesn't cut it. They took $20M in venture capital. If things go perfectly they're still at less than half the $40M in revenue they need for the VCs to think they broke even. Remember, the standard benchmark for a company that does well but isn't a home run is $100M in revenue after five years.

Here Comes the Fire Sale

So why should you care about whether the VCs are happy? Because to paraphrase, if the investors aren't happy, ain't nobody gonna be happy. They've got to get their cash out. They don't make these investments because they're nice guys. When the VCs start to realize they've made an investment that's not going to work out, they start doing these things:

• Bring in Outside Advisors - Who will wager that the analysis they did on the foreign SMS costs was driven by a VC board member who was aghast at their burn rate? Their last round was for $15M, which usually is supposed to cover the burn for 2 years. 4 months later they were looking to cut costs, which means that the VCs started getting worried about the burn. They realize they've got to make that $15M last for quite some time given the current investment climate. I wonder if that last round of $15M came in traunches?
• Bring in Adult Supervision - You can always spot a VC funded startup in trouble. The founder/CEO gets a new business card that says "Architect" or "Visionary" and a CEO with gray hair is brought in to fix things. Why VCs don't just require that startups have adults in charge is beyond me.
• Cut Costs While Looking for a Suitor - If the company can't make the big hit it needs to, the VCs will administer a "haircut" and get costs in line so that the company can be bought. The problem for the founders is that their exit is pretty much gone at that point. The problem for the customers is that the original vision is not going to happen.
• Sell It Off - It's always funny to note that the amount an underperforming venture funded company is sold for is closely related to the buyout value for the preferred investors. The company doesn't have to be failing -- it just has to not be in range of a major home run any more. It costs VCs money to give their attention to companies, so it's better for them to sell it off and make it someone else's problem rather than continue the care and feeding, even if the company was making a small profit.

So to all the well wishers who say "Twitter is going to be able to make revenue somehow": I hate to rain on your parade, but some revenue isn't enough. They are a heavily venture funded company. Less than a home run means the sharks will be circling. If they turn into a $20M a year in revenue company they're a failure. They'll be sold off in a fire sale.

And their problems go much deeper than that. Evangelical work is always extremely difficult in any market. They've already accomplished something hugely impossible -- they started with nothing and created a ubiquitous service. That's a home run. But now they need lightning to strike in the same place 4 times, because they have to build a new business model, switch everyone over from free, and somehow grow their user base, without a competitor knocking them out. And everything they do to monetize will make their user base numbers trend downwards. Their only way out is a fire sale.

Why won't Google or someone just buy them as a "hood ornament" as Kunz suggests? They may very well do so, but the price will be a fraction of what Twitter needs. What if Google decided to provide a competing Twitter product? It could integrate with Gmail, Reader, their social networking, even search. It's a slam dunk for them. And it would probably be less expensive for them to develop it themselves to work within their existing architecture than to even pay a fire sale price for Twitter. The perfect time for Google to launch this service would be the day that Twitter announces their new monetization scheme. Google could offer to migrate all of your data from Twitter into their system. They're already crawling Twitter heavily anyway. Does anyone think they couldn't do it? And why would users take a chance on Twitter if the venerable and reliable Google offered a competing service for free? The same goes for Microsoft and Yahoo. And given the way the market is right now, are any of the big guys going to make a hood ornament acquisition unless it's a steal?

So enjoy Twitter while you can, but don't get too attached to and certainly don't make your business reliant upon it. It's fun, but so was Igrocer, pets.com, and a thousand other sites that we couldn't figure out how they were going to make money.

I'll say it again. If you have to think long and hard about how a business idea is going to make money, it's probably not going to work.

I did a simple experiment this morning and it has already paid off. Have you come across profiles on social websites that have a grocery list of links to other social networks? I've read that this strategy can be useful, but I didn't understand just how useful until today.

Today I updated my LtDraper Digg Profile and added my Twitter, StumbleUpon, Sphinn, Delicious, and AIM accounts in the link section. It certainly can't hurt to send some link juice to those pages, but there are other benefits as well.

I'm a fairly active Digg user. I've had over 2,200 profile views. That's 2,200 opportunities to make contact with someone with similar interests that I've squandered. Well, not really because I've had links back to this site in my Digg profile forever. But today a not insignificant number of people that friended me on Digg also friended me on some of the other sites. You can see it happen because you get three friend notifications in a row from the same person.

The kind of people that I'm trying to meet are active in social media. The chances are pretty good that they'll be participants on other sites as well. There's no reason not to take advantage of the opportunity to expand your footprint on the other networks at the same time.

If someone friends you on one site, it makes sense to friend them back on a different site. From the point of view of each site you're not connected, but you've got a medium to exchange information (and vote requests). Let Digg try to figure out the voting rings that involve exchanging Stumbles for Diggs and Sphinns. As I've said before, tracking down the voting rings is impossible and the social media sites should just ignore it and let the market take care of the spammers.

After a lot of work and even more bug fixes, we released what we're calling Version 1.1 of the PMS Social Suite on Sunday night. Those of you who asked for features will see much of what you asked for. You can go back to the post that suggested you watch our FireBoard RSS Feed and see that we've delivered what was promised, plus a few more extras. Let's go through the new features:

• Cached Search/Research Cleaned Up - The Yes/No box for Research next to the Cached Search field in the Find Friends tab has been eliminated in favor of the more simple Research Button. This should provide a much easier user exerpeince.
• Skip Login Option on Manage Shouts - There's a new checkbox on the Manage Shouts tab for "Skip Login." If you know that you're already logged into Digg, you don't have to wait for the login/logout procedure (and recognizable footprint).
• Shoutback Articles Tracked - You can flag an article that should get a shout back to your friends. When performing shouts, if you digg a friend's shouts that has not dugg this article, it will send them a shout. You can specify the text of the shout with variable substitution, including URL of an article to randomly pick from the list of tracked and shouted articles. If you've got 5 articles in your shoutback queue and your friend has asked you to digg 5 stories, they'll get a shout back for each story in your queue.
• User Configurable Saved Queries - You can now name your queries and click "Save Query" and a new button will appear that loads that query for you.
• Track Whether a Friend Allows Shouts - There's a new field in the grid called "Allows Shouts", as well as a query filter. An interesting query to perform is Mutual=Yes and Allows Shouts=No. Those are people that can shout to you, but you can't shout to them because they've turned it off. Drop them! We've also added a button called "Check Shout Ability" which manually checks whether you can shout to them.
• Track Shouts From and Shouts Ignored - We now keep track of how many shouts we've processed from each friend and how many you've ignored (due to keyword filters or random percentage). If you've got friends that send you a lot of shouts but never digg your stuff, kick them to the curb!
• Friend Tagging - You can add custom "tags" to your friends on the manage friends and tracking screens. For instance, you might tag someone as "Reliable" if they digg a high percentage of your submissions. You can access your tags from the Multi Shout dialog via the GM Script in Digg, thus allowing you to select shout recipients according to how you've marked them. Need something dugg right away -- select everyone tagged as reliable and shout to them first.
• Article Tracking - There's a new tab called "Tracking" where you can keep stories that you're interested in. You can research who is digging these stories and even track buries in real time. Select a group of stories, then calculate which of your friends are digging those stories. You can enter a specific Digg URL, or the grab all the submissions of your user.
• Download to CSV - Premium users now get an option to download any table to CSV.
• Watch Articles for Buries - You can now watch for articles that are being buried in the tracking screen.
• Firefox 3 and Imacros V6.0.6.9 Now Supported - If you're still running FireFox 2, you still need Version 6.0.4.1 of Imacro to be safe, but we've now tested FireFox 3 and the Aug 1 (latest) version of Imacro. Consider that combination a beta. Everything appears to work, but give us your feedback.

Check out the Videos!

We're continuing to pump out videos explaining how these features work. Key videos you'll want to watch are:

• Friending People with Specific Keyword Submits on Digg - How to add a list of friends by just entering a keyword. This replaces the functionality found in the venerable Digg Friend Finder with something much more useful.
• Friending Top Topic Submitters - Want to follow the submitters of a topic on the front page? Add a list of friends based upon a Digg Topic
• Finding Friends Who Digg Stories - How to get the list of friends based on a URL of a Digg Story.
• Automatic Digging of Shouts - Process your incoming shouts the easy way.

And of course, you can browse through all of our videos from the Video menu link at the top of our page. Head on over to YouTube and subscribe so that you'll find out as soon as we release another one (which has been almost daily, lately).

What a Deal!

All of that, and we didn't even increase the price! In fact, we've released the tracking tab as a freemium feature. Consider that a free beta for a lot of new functionality, because at some point in the not too distant future we're going to pull tracking back into the Premium features. But for now you get to try it out for free.

If you check the PMS Social Suite Forum, you'll see that we still have plenty of new features planned. The question we've got for our users is which would you rather see: more features related to Digg, or should we start to implement the feature set we currently have on new social networks? What social networks should we go after next? StumbleUpon? Propeller? Mixx? What would you like to see?

Here's another question. If you're currently a freemium user, what would we have to add to get you to sign up for Premium?

As always, you can comment on this article, post in the forums or just contact us.

I got into twitter in a big way last week. My account had been around for a long time, but I wasn't doing anything to promote it. Then I started using our Twitter Greasemonkey Script and started following 2,000 people that were interested in the same things I was. After a few days I removed everyone that wasn't mutual (down to about 500) and started adding more. I was looking to build a large community of people with similar interests.

I soon found out that Twitter had adjusted my "Follow Limit" to 1,000. I couldn't follow any more than that. So I added another 400 or so friends, and shortly was up to 650 followers. Not bad for less than a week's work.

I've also started to get "organic" followers. People are interested in what I have to say, so they've started following me. So I cut down my list to just mutual friends (people that I follow were also following me) and tried to add some more.

They Gave me the Mark of the Beast!

Today I found that I was unable to add any more people to follow. I'm permanently stuck at following 666 people. They've given me the mark of the devil!

I guess that's how Twitter wants to play. From their blog:

Follow spam is the act of following mass numbers of people, not because you're actually interested in their tweets, but simply to gain attention, get views of your profile (and possibly clicks on URLs therein), or (ideally) to get followed back.

I really disagree with the use of the word "spam" in this context. The key element to spam is that the communication is unsolicited. People constantly degrade this definition by referring to things such as "blog spam" and "bookmark spam". Sorry, those aren't examples of spam. If you visit a blog, you aren't viewing anything that you didn't solicit. If you ask people to submit bookmarks and they do so within the bounds of your terms of service, by definition it's not spam. And there can be absolutely nothing that could constitute "follow spam".

Social Networks are Like a Party

Twitter is a huge party. Everyone with access is invited. You're free to wander around the party and meet people. At a real party, you can wander around and listen in on conversations, and if you find something interesting you join in and add something. It's the same thing at Twitter -- you meet people by looking at their interests, and you join in by following them. If they don't want to talk, then just don't follow them back. They'll eventually go away, just like a real party. If people weren't interested in you, then they wouldn't be clicking on your profile and then to your web page. The fact that following lots of people will bring your site traffic and subscribers is proof that these attempts at communication are NOT spam -- the contact is obviously wanted if people follow it up with a visit to your web site.

Many people who are seeking to get attention in this way have even created programs to do the following on their behalf, which enable them to follow thousands of people at the blink of any eye.

Perhaps Twitter should re-read their TOS, because there's absolutely nothing in it that disallows the use of macros, scripts, bots, etc. In fact, they encourage this by publishing an API. A large factor in their widespread adoption has been the availability of third party tools. Because let's face it, the Twitter HTML interface is pretty clunky and badly needs 3rd party support.

Maybe there is a way to add "thousands of people at the blink of any eye", but the Greasemonkey Script that we provide actually adds friends more slowly than a human can do so by clicking the mouse. Our approach is easier on their architectural limis than their own interface. Either way, everyone is limited to their 100 API actions per hour limit, so what's their problem?

Will the Real Spammers Please Stand Up?

In less-extreme cases, they simply annoy thousands of legitimate users who get an email about this new follower only to find out their interest may not be entirely...sincere.

Uh, isn't it Twitter that's sending out those annoying emails? They're not unsolicited since every user can set their own preference to be notified by email. So what's the big deal? If you think a follower's interest is not "sincere" then just don't follow them back. The fact that so many people do follow you back when you follow them indicates that they're interested in the communication.

And for the people that are concerned about people following you that you aren't interested in, is this any worse than constant updates from some guy wondering whether he should have granola or wheat toast before going to the gym? Nothing says you have to go click on a new followers profile page and then on to their website. It's a lot easier to avoid.

Andy Beal just published this scenario about spamming on Twitter:

If spammer "Viagra4U" followed 10,000 other Twitter users, the chances are that most of those users would have their account set up to alert them of any new followers. Now, Viagra4U's profile includes a spam/trojan link, and his updates likewise do the same. If enough people clicked through to view just who "Viagra4U" was -- and why did he follow them -- some of them might just click on a link. You may be savvy enough to not fall for the above, but plenty of others don't share your mad Twitter skilz.

That approach wouldn't work for the spammer, unless enough people actually were interested enough in the ads to buy something. And if they were interested, then it's not really spam, is it? The twitter user actively went to that site and then make a purchase. More likely, the campaign would end because its not very effective to spend the time adding all those people if they're not going to be interested in what you have to offer.

Back to the Twitter blog:

We do our best by taking a multi-dimensional approach. We look at a number of factors -- including how many people are following you back -- before applying limits. We don't reveal exact limits, because it's somewhat complicated and, more importantly, if you were to tell spammers exactly what the filtering rules are on your email or, say, Google's PageRank, they'd just engineer their way around them much more easily.

Well guys, your approach is broken. Because I've got more followers than I'm allowed to follow. And I'm getting more followers all the time, so obviously there's some interest in what I have to say.

The bad news for some is that it's possible you'll run into a limit and get frustrated. If that happens, please let us know. We want to learn how people want to use Twitter. (Note: We intend to allow you to follow at least as many people as follow you, though there are cases where that might not yet be the case. We will fix that.)

I filled out a support ticket this morning. So far no answer. You'd think they could at least have an auto-responder say "We've received your ticket and are working on your problem." It seems to be a common theme with young, hip Web 2.0 companies that they are completely clueless about customer support. That's probably because since they aren't making any money from us they don't think of us as their customers. Much like TV networks think of viewers as something else than customers. I'd like to think they'll get to it, but there's a comment on their blog showing it's been a long time since they've answered someone else's problem report.

Either way, code that would allow the current situation must be pretty badly broken, which doesn't make me feel very good.

By the way, this is only a small part of our approach to spam in general. We'll be talking more soon about other measures we're taking. Thanks for hanging with us as we figure everything out.

It must be nice to have a big pile of VC cash to sit on while you're figuring things out. From someone that's been there, done that, let me give you this advice. Figure out how to start making money. The VC cash is going to run out, no matter how cool and hip you are. And you're going to find out that making money is a lot harder than getting the system up and running was.

I'll give the CEO of Twitter another hint: The people that you'll end up making money from are the business users. If you start charging for access, the users that want to post about their breakfast choices are going to go away really fast. They won't pay, they won't even put up with advertising. If you think your users are disturbed by a few extra follows, just wait until you start trying to monetize your site. The people that are using the service to further their business are the ones that will be able to make a financial justification to feed into your business model, whatever that ends up being.

One of the rules of being a VC funded entreprenuer is that you won't realize the value of these nuggets you get from people until several years later. Enjoy your ride.

The Good News

The good news in all of this is that I was able to use our Greasemonkey Twitter Script to reach a critical mass on Twitter. There are now enough people following me that I can actually have conversations that I'm interested in. And people continue to add me (I can tell, because I keep getting those annoying emails every 10 minutes). I'm hoping that Twitter can figure out that I'm not some evil spammer and just want to participate in a wider community and remove these silly limits.

You should seriously consider effectively communicating with the people that follow you on Twitter.

There's a twitter account called RU4real that claims to be an experiment. Here's the only thing they've tweeted:

DO NOT FOLLOW THIS ACCOUNT. It is an experiment to see how many people read the pages of the people they follow. You are a tool.

The problem is that this experiment isn't proving anything other than that people out there are using things like TweetLater, an excellent utility that allows you to automatically follow anyone that follows you. You can send a nice little direct message to your new follower as well.

Most people seem to auto-respond with something along the lines of "Hi! Thanks for the follow. Look forward to seeing your tweets!" While that's certainly cordial of them, I think they're missing out on a great opportunity. Someone has contacted you with a follow, and you'll get their attention for 140 characters. Why not use an automated message along the lines of:

Thanks for the follow. Please consider http://feeds.feedburner.com/PromoteMySite for your reader, you'll enjoy it.

We've been using our Greasemonkey Twitter Script and over the last week Oliver and I have picked up about 800 new followers. Getting into even a small percentage of those follower's daily read can have long term benefits for your site. (Watch the twitter video on the Promote-My-Site YouTube channel)

The same tactic will work on other social networks as well. One of the nice features of our PMS Social Suite is that you can select everybody that recently became one of your fans and send them a shout. It's the "Welcome to being my fan" shout. Ask them to vote your favorites, point them at your blog, whatever. Just be sure to take advantage of taking part of the conversations that you're trying so hard to start.

Perhaps some of the people that are following ru4Real got there because they've been following a random strategy of following anybody and everybody. If they'd been using our Greasemonkey script, they would have unfriended ru4Real because they didn't become mutual. Their reward for the bad strategy of not using our script is to be "A Tool".

Yes, it's another cool Greasemonkey script from Promote My Site to improve your social media experience. This time it's for Twitter.

If you're new to Twitter, the first thing you find out is that you start off without anyone following you. So posting is like talking to yourself in the forest. Sure, your voice sounds great, but what's the point?

There are two basic strategies for getting people to follow you on Twitter. The first is to be famous. If you are Matt Cutts, Rand Fishkin, Jeremy Schoemaker, or Darren Rowse, all you have to do is hop down to the local pub, scrawl your twitter address on a napkin, and leave it on the bar. In a few days you'll have thousands of followers.

For the rest of us, it's a bit more work. Sure, you can mention the fact that you're now on Twitter on your blog and in various social media circles, but if you really want people to follow you, you need to start off by following other people. The easiest way to get into a conversation with a lot of people that share your interests is to find other people that share your interests, and then start following them and their followers. Eventually some of them will follow you back and you're off and Twittering!

This of course involves a lot of drudgery and mouse clicking, so in typical Promote My Site fashion we've built a Greasemonkey Script to Add and Manage Your Twitter Friends. That link points to the Fireboard Forum thread that will always have the latest news and versions. And of course, we've done a YouTube video on how to use it.

After you've followed a bunch of people, just sit back and watch the follow backs roll in. We've found that about 12% of the people with an interest in SEM have an automatic follow back set up. More will follow you as the day goes on. Give it a few days, then go to your followers page and drop the ones that aren't mutual. If they're not in to you, then it's time to just move on.

I started the week with around 50 followers. After a few days of testing this script and really not working very hard at it I'm coming up on 500 followers. Sure, I'm no rock star, but having a conversation with 500 people that share my interests is, well, interesting!

We're thinking of all kinds of things we could put into the premium version of the PMS Social Suite to expand this concept. If you attach a database to this you could do some brilliant things. If you've got any ideas, please drop us a note.

A lot of "experts" in social media have made the assertion that if you participate in a voting ring on any of the major social sites, you'll get caught. There is a mystique around the all-knowing data centers that can track your activities on their site. If you cheat, you'll get burned. It's that simple.

I'm not going to pass judgement on whether or not you should participate in voting rings. It's probably not good for your karma. But I am going to say that there is a lot of voting ring activity out there, and if you don't understand the issues around it you're going to be at a disadvantage.

The Rings Exist

It doesn't take much in the way of google searching to turn up a number of vote exchange networks. They're pretty blatant about it. Here are some of the major ones that I found with a cursory search:

• Piqqus - Formerly known as DiggBoss, Members exchange social votes on Digg, StumbleUpon and Propeller.
• SubmitterBot - Exchange Digg and StumbleUpon votes, part of a larger service
• 1rst Link - Exchange links on a huge list of social neworks, as well as a no-reciprocal link exchange.
• Spike The Vote - Formerly a Digg exchange site, was sold on Ebay and purchased by a Digger for $1,000 who shut it down.
• Stumblebot - Appears to be software that will generate stumbles. Not sure if this is a network or just a bot.
• Social Traffic Exchange - A forum for exchanging votes on several social media sites

There are lots more, but you get the idea. You'll notice I nofollowed those links because I don't want to encourage them. But the exchanges aren't limited to just forums and applications. Do a search for "social media" in Google and Yahoo Groups and you'll find several mailing lists all targeted at the same kind of activity.

This is Cheating!

Perhaps, but there is a ton of it going on. Is participating in one of these rings any different than the "A Listers" who send out 25 IMs in the morning to get the 15 votes on Sphinn required to get their articles to the Up and Coming section? Why is it always the same people getting to the front page on these sites? If you don't think there's some offsite networking going on in the social media world, you need to pull your head out of the sand.

Is it cheating when the system has become so corrupt that the way the "Big Names" get their stuff to the top is to rely upon soliciting votes from their friends? It's a self perpetuating cycle, because the people with offsite friend networks are the ones that get to the front page, and front page exposure on these networks is what leads even more people to follow you.

If you think it's possible for "great content" to simply rise to the top, then try this experiment. Go find the greatest Digg bait in the world, something that just can't miss. Submit it with an account that has no history and no friends. The only thing that's going to happen is that some other, more popular Digger is going to find your content and submit it again (ignoring your duplicate), and then it will get popular. This is a popular complaint about MrBabyMan -- people claim that he finds the gems with only a few votes and resubmits them in a different category.

The simple fact is that even the greatest content in the world requires promotion in order to get seen.

Analyze the Top Diggers

Here's an example of the activities of a top 100 Digger. You'd recognize the name, but I'm not going to out them. If you look at their history, they've been digging about 85 stories a day for the last two years. 39% of their submissions go popular.

How much work is 85 Diggs a day? If you put in 6 hours a day on the site, that's a Digg every 4.3 minutes. No breaks. No vacations. If you're taking the time to read the stories you're digging everything you read. This person also submits about 5 stories a day. And they blog a lot. And they participate in a lot of other social networks and are at the top of those too. And they've got a full time job. They either work 20 hours a day, or they've got some special help.

I suppose it's possible that they're just super-human and can Digg like that, but it's much more likely that they've got a bot or a Greasemonkey script that handles a lot of the load. Or there's an entire agency behind that persona doing all that work. Just vote the first five pages each day or the submissions of other popular Diggers, with a 4 minute delay. When you submit something, send an email blast to 25 buddies to get those first votes. Enough people follow this person that they can get most anything to the front page. They also do a good job of submitting Diggable material, but one wonders how the heck they're making money at it. Negative stories about McCain and Bush will always do well with the right care and feeding, but it's tough to monetize them.

Why Can't Social Sites Catch These People

It's mathematics, pure and simple. The problem is simply not computable in any reasonable amount of time.

Let's take our Top Digger in the above example and see if we could catch them by looking at the voting behaviors on their stories. The trick is that they send out 25 vote requests, but the pool of people they can request from is much larger, say 250. So for any given story, there's a 10% chance that a person out of the group will vote for it. And the average story gets a few hundred votes because they've become popular, so we're looking for 10% out of that.

This is a well understood problem in computer science. What we're trying to figure out here are the functional determinants in the data. We're saying that a submission by A leads to votes by B and C. If the variance is 0% -- in other words, every time A submits B and C vote, then it's pretty easy to spot. You can take a small sample of data, and just iterate through A,B,and C's behavior a single time and you'll find that there is an exact correlation. We can see that A functionally determines B and C.

But what if B & C only vote for A's stories 50% of the time? Now our nice and neat functional dependency algorithms won't work. We can't use a small random sample of data, we have to look at a much larger set in order to spot the trend. So instead of looking at 25 submissions to spot the trend, I'd have to look at all 2,500. And remember, out of the 1,000s of people that ever voted on a story submitted by A, I don't know who B & C are ahead of time. So I have to look at everyone that has ever voted on a submission by A. Now work the numbers if our voting pool only votes 10% of the time. If I look at our Top Digger's friends page I see that there are over 22,000 recent Diggs by people in their friend network. And that's a very small amount of Diggs compared to the total number of Diggs across all of their submissions. It's just not possible to spot the rings. If you had a billion dollars in venture capital and a giant supercomputer you still couldn't police it.

What Can Social Networks Do?

What is possible is to spot a ring if you have a hypothesis about who to look at ahead of time. For instance, let's say A is silly and submits something that is clearly spam. It gets 5 votes before it is marked as spam. Now checking the voting behavior of A vs 5 people is quite easy. And if you roll them up, what does it mean?

• You've taken out 5 people from a group of 250, which is pretty easy to rebuild.

• If you ban the Top Digger, you're opening yourself to the ultimate black hat attack. Want to take someone down? Just set up 5 fake accounts and have them digg the Top Diggers submissions 100% of the time. Then send a complaint to Digg that you've spotted a voting ring.
• Your process required manual intervention, which is quite expensive.

You can also send out employees to join these networks and participate, looking for people that are asking for their submissions to be voted up and banning them. They don't generally do this because someone can just ask for votes for someone else's submissions and have them wrongly accused of participating in the ring. If the sites are smart, they'll periodically insert stories from top users to be voted up. A black hatter could lay waste to hundreds of competitors by submitting their stories to various voting rings.

Likewise, they can track activity. If you vote a story every 2 seconds you're leaving a clear footprint. Except that people do that all the time without consequences on Digg. Witness the Greasemonkey scripts used by the bury brigade that automatically bury stories than contain certain keywords or from certain users. So if you're a top digger they're likely to check your history and if you do something like digg a bunch of stories without a pause you'll get caught.

There's no way they can catch everyone. They can't even catch a small percentage. What they can do is concentrate on policing their top users and clear spammers very carefully, and if they catch someone make their ban very public pour encourager les autres. And they can keep fostering the fantasy that anybody that cheats on a social network is going to get caught, aided and abbetted by "A List" people that did exactly that on their way up.

But if users stay away from submitting stories that are clearly spam, insert pauses in their voting, and limit their ring activity to around 10%, there's no way they're going to get caught. At least not until we get a few orders of magnitude in compute power available.