Rumors have been flying around that Google is hot to buy Twitter.  Makes sense to me, since I see Twitter as a real-time search tool with a billion points of light (users) who can get the most up-to-the-minute answers to almost any question.  This has cooled off in the last week or so — but it still makes more sense to me than some of Google’s other acquisitions.  Why not own your most threatening competitor (much as I would not like to see that happen)?

In the past couple days, though, other stories have emerged that suggest that Twitter and Google might be dancing to a different kind of tune.

First up, in a Google to Acquire Twitter post from a couple weeks ago, Techcrunch‘s influential Michael Arrington said that Twitter and Google were in “late stage” negotiations on a purchase in the neighborhood of $250 million.  Arrington also believes Twitter is a search engine, like I do, and thinks it makes good strategic sense for Google.  But:  Twitter insiders apparently think the company’s value is closer to $1 billion — plus it’s beginning to dawn on people that Google acquiring Twitter might raise anti-competitive warnings among regulators.  On April 3, Twitter’s co-founder Biz Stone posted a brief reply that of course they were talking with other companies, but that they had every intention of building their own firm.

Then, on April 9th, Kara Swisher published a long article called Who Will Be Twitter’s Best Search Friend? with the remark that the hot property of the moment in Silicon Valley has been pursued before (notably by Google and Microsoft – who obviously have some of the deepest pockets) – she mentions Microsoft’s purchase of a tiny part of Facebook for $240 million after a lengthy battle with Google (who won that battle is an open question).  Finding a way to get ad distribution on Twitter would be a coup for either of the biggies — if there is a model that works.  The attraction of Twitter is that huge and growing audience, and the fact that it has a model whose applications are continuing to grow.  Lots of big companies are buzzing around it, attracted to all that mindshare.

Updating all this, Claire Cain Miller published an interview with Fred Wilson, one of the investors in Twitter, in the April 16th  NYTimes, with the summary that:   Yes, Twitter is talking to big Internet companies about forming partnerships with them. No, it is not looking to sell itself. Wilson says that Twitter has reached the scale (#3 social site in the US now, after Facebook and MySpace) that other people take seriously, but it is working to find out how to leverage its scale and model in distribution deals with other large properties like Google and Microsoft.

Then, finally, today sees an NZ site called The National Business Review reporting on Google’s recent healthy profits and Eric Schmidt’s (Google CEO) praise for Twitter. They note that this could be part of the competition with Microsoft, trying to butter up Twitter to favor a Google deal for ad distribution.  On the other hand, they also report that rumors persist that Google and Twitter are still in purchase talks, stalled over price.

I hope Twitter stays independent, much as I like Google.  I don’t see how Twitter could replace Google’s archive search, or vice versa, but melding the two would still reduce competition in this market.

The Twitter phenom is still gaining traction, and here’s why (imho):  user generated search.

When I first signed up for a Twitter account, my very first impressions were a lot like the ones comedians make fun of Twitter for:  someone told me every personal thing they did in tweet after tweet — and I stopped paying attention.  I have been a poor follower and worse tweeter (twitterer?) since.

But reports keep rolling in about how effective Twitter is as a real time communication tool, and most of these are about one thing:  search.  Our friend Martin  in Portland talked about how his team, working with the tourism industry in Oregon, started something called the ‘Twisitor’ Center (in this blog, you will also find posts about how Visitor Bureaus across the country are using Twitter).  You simply Tweet a question including the #inpdx hash to have your query posted to everyone following that conversation — and almost immediately you have an answer.

Most of the other success stories I hear about are similar.  Someone at a conference needs a laptop charger.  Someone else there has one.  They connect and problem solved.

I know the other famous stories about Twitter are things like the fact that the first reports of the Mumbai terrorist attacks were sent in tweets.  These real time alerts are important, but for the day to day, I think the search function is the killer app. It’s a perfect extension of the interactive logic of the Internet.

So, Web 3.0?  If we can have user generated content = Web 2.0, why not user generated search = Web 3.0?  OK.  I agree,  neither one is really a game changer in the biggest picture.  But the growth of the Internet tools we have — enlarging and enriching the network — is pretty amazing.

John Battelle is pretty dismissive in his recent post about Twitter.  Not dismissive about Twitter — the opposite:  he’s dissing a report in the NY Times by Sanford Bernstein analysts that Twitter will never develop a revenue stream. Sanford Bernstein says that Twitter is unlikely ever to generate positive cash flow, and will either just fail or last until it is overcome by the next web 2.0 phenomena.

In retort, Battelle says:

Twitter is a very promising service directly in the center of these trends [web 2.0 business applications], trends the “analysts” at Sanford Bernstein clearly do not grasp.

Battelle lists 3 ways Twitter might monetize its traffic:

1. Tweetsense – an advertising platform somehow linked to the content of the tweets.
2. Branded licensing – Twitter collects fees to promote Twitter-based services, for example.
3. SMS revenue sharing – Twitter drives millions of SMS to mobile devices, and there may be some leverage for them to share these revenues.

This deal is not done, but from Battelle’s history with search and the evolution of the online conversation, I wouldn’t bet against him on this one.  And it doesn’t take much imagination to see how powerful Twitter can be as a conversation-carrier that is loaded with search and linking potential.

In case you were wondering why anyone would want to use it, here’s a great report from Lisa Barone on Twitter.  She’s literally reporting the content of speakers’ presentations at PubCon, a conference for Internet marketers in Austin.  It’s clean, cut to the chase kind of stuff.  Twitter is one of those innovations that seems inevitable — after the fact. (btw, this kind of post is sort of like a re-tweet, which you will learn about in her nice long story)

Here’s a link to social network traffic reports by Nielsen Wire, courtesy of Jeremiah Owyang.  These are all still growing like the emerging markets they are (fast, in other words), with MySpace still king of the hill.  But MySpace is too big to grow fast (“mature” doesn’t seem right for it, somehow, but that’s the analogy to the stage of economic development for you).  Twitter is the growth leader, followed by tagged.com, Ning, and LinkedIn. Interesting tidbit on the network profiles:  Facebook, LinkedIn, and Reunion.com are most popular among visitors ages 25-34, 35-49, and 55-64, respectively.

Chris Brogan adds another  good post in his quest for 100 relevant posts on social media with this list of how to use Twitter in a business context.  Good stuff — as always, though, easier to read than do.

Here’s another worthwhile Techcrunch post, this time about how Twitter gets the Audience idea right. The post is by Gregor Hochmuth.

I have my own ideas about why Twitter works, but I’ll save them for another post. The one by Hochmuth gets to much the same point: In Twitter, you have connections to a known group of people, and you can get a message to them whenever you want to. No filtering, and no anonymity (at least in the public stream). Hochmuth’s post is a good analysis comparing Twitter with Facebook and Friendfeed as to how they connect with Audience. That’s an important idea for a marketer to think about.