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Tue November 5, 2013
Twitter Looks To Its News Role In Upcoming IPO
Expectations are high this week as Twitter gets ready to go public.
The company raised its initial public offering price yesterday to $25 a share, up from $23. That would put the company’s value at around$13.6 billion — almost 12 times the value of its projected 2014 sales.
Twitter has 230 million users and not all of them are following Lady Gaga or Justin Bieber. A new Pew study shows 8 percent of Americans use Twitter to get news.
JEREMY HOBSON, HOST:
From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.
Twitter is getting ready to go public this week. The company has raised its initial public offering price to $25 a share, up from 23. That would value the company at around $13.6 billion. And there is going to be a lot said about Twitter over the next couple of days. But right now, we are going to focus on one part of Twitter's business, the part that involves the news. Jason Bellini is a reporter with The Wall Street Journal. He joins us now from New York to discuss. Jason, welcome back.
JASON BELLINI: Thanks, Jeremy.
HOBSON: Well, how much of Twitter's business right now is about people getting the news?
BELLINI: Well, you know, it's interesting. There's a new Pew study out right on the - almost the eve of this IPO that finds that about half of people who use Twitter use it to get news. And so it comes about 8 percent of Americans who are getting their news from Twitter. Now, I mean, that not a huge number, but it is a really important part of the business because, really, they're reaching a lot of young people who are using it to get news.
The study also found that this audience that's using Twitter to get news are really young. They're younger than the Facebook audience, which is what advertisers love. The advertisers also love that it's a wealthier group of people. Forty-eight percent of people who use Twitter to get news earn $75,000 or more, also better educated. Forty percent holds at least a bachelor's degree. That compares to 29 percent of the U.S. overall. Facebook, 30 percent have college degrees. So they see a lot of opportunity there to reach the right people.
HOBSON: And, you know, Twitter knows this. They've been thinking about this for a while. I spoke with the CEO of Twitter, Dick Costolo, last year, and asked him about this very thing. What are you? And he mentioned the news. And he said, but it's different because Twitter offers people a multitude of perspectives on what's going on in the world. Let's listen.
(SOUNDBITE OF ARCHIVED NEWS)
DICK COSTOLO: I think the major transition for society has been one of from a single point of view in a filtered way to a multi-perspective, inside-out, unfiltered view of what people think of the event.
HOBSON: So that's the way that he sees what Twitter gives people when it comes to news. But how does Twitter make money on delivering the news, not even delivering it, allowing other people to deliver it?
BELLINI: How they make money on multi-perspective, inside-out, unfiltered?
BELLINI: A lot of words he uses there. He may be going over the Twitter limit. Well, there are two ways. One, advertising obviously. That's how they make most of their money. But 85 percent of their revenue comes from advertising on the site. You know, companies and individuals, they can promote a tweet that'll appear in people's timelines. They can promote a whole account or promote a trend. And they also have this sophisticated bidding system. So advertisers compete to appear in a particular space.
The other way they make money is through the data, all of this data that they're collecting from people tweeting out there, tweeting their locations. There are advertising firms now that are specializing. I speak - just spoke to one. Their expertise now is crunching data, which is bought from Twitter. They can analyze that for consumer trends and get insight on brands and companies.
HOBSON: Well - and if they're analyzing that data, then they are probably going to find out that there are a lot of people who do not use Twitter for news, that would much rather just follow sport stars or celebrities or all kinds of other people that have nothing to do with the news.
BELLINI: This is true, although these things - it seems like almost everything has something to do with the news. I think that also one of the things that Dick Costolo was referring to when he says that, you know, you're getting multiple perspectives. You'll get Justin Bieber. You know, he's maybe not, you know, tweeting about health care, but he's, you know, reacting to the news. And maybe he's not the best example, but many people out there are reacting to news events and guiding people to articles, to reading news. So you might get to read the news through back channels.
HOBSON: Jason Bellini, reporter with The Wall Street Journal. Thanks as always. We'll be watching to see what happens with Twitter's IPO.
You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.