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Twitter is sitting on a lot of valuable user data — what we tweet about, what we share, where we share it from — and for the past four years, it has been letting outside companies make money from that information by selling it to marketers looking for an edge.
But over the weekend, Twitter told Re/code that it will cut ties with these data resellers beginning in August. The reason is simple: Twitter now owns one of those resellers, Gnip, a Boulder-based startup that was an official partner for the company.
With Gnip in the fold, it no longer makes sense for Twitter to let anyone else in on the business. It’s a strategy the company has used before, like when its Tweetdeck service eliminated other reader services, or when it tried to kill Twitpic (before then deciding to buy it after people got upset).
The decision to bring data selling in-house left a few casualties, including DataSift, one of just two independent Twitter resellers that will lose access to the company’s Firehose come August. In a blog post Friday, DataSift CEO Nick Halstead wrote that the change was “extremely disappointing.” DataSift has been reselling Twitter data since 2011.
But despite Twitter’s decision, DataSift is far from dead, Halstead told Re/code. The company has a data deal with Facebook to sell anonymized post and comments data beginning in May, a product Halstead claims will be ten times the size of the company’s Twitter business.
Re/code interviewed Halstead to discuss the Twitter relationship and what the end of the partnership means for the company. The following interview has been edited for length and clarity. Twitter declined to comment.
Re/code: How did your relationship with Twitter first start?
Nick Halstead: We were the inventors of the retweet button (through TweetMeme*) — we sold that bit of the business to them in return for access to this data. God knows how many users we helped grow Twitter to over the few years we were running the retweet button business for them. In the end, they can say everything publicly about being developer friendly but the facts are very different.
You say that DataSift isn’t in trouble despite losing its Twitter partnership. Why not?
If you’re gong to work where you are dependent on [other] platforms, you need to be independent of any individual [partners]. Over the last four years we have become absolutely independent of working with just Twitter. We have 20 other social networks with Facebook.
You believe that selling Facebook data is much more valuable to you than selling Twitter data. Why?
We’re the only people selling it. We take all the revenue from selling it — Facebook isn’t taking any revenue from us on that. The key is that this is a market to ourselves. If you look at Twitter’s revenue from the last year, they’re doing $180 million in revenue [from data sales]. What is Facebook data going to be worth? To us, obviously a lot.
(Editor’s note: Facebook’s deal with DataSift is not exclusive, which means the social network could partner with other data resellers down the road.)
In your blog post, you wrote that DataSift and Twitter were having ongoing conversations about a renewed partnership. What were those conversations about?
It was about Pylon**, which is the technology we power Facebook with. We believe there was a model that would have helped the Twitter ecosystem to serve a much higher-quality data feed using Pylon. They initially loved the idea and we spent quite a few meetings talking about it. But out of the blue a week later they then said “no” which was a massive surprise to us.
I heard that Twitter first told you this partnership would end almost a year ago. Why, then, were you so surprised?
It’s true obviously that they told us we had one year on our contract and that’s standard practice. We have 30 or 40 contracts that are renewed yearly. And it’s a little disingenuous of them to say that “oh we told you.” All contracts have an expiry and you negotiate the last couple of months to renew it again. That’s standard practice.
So they told you but they didn’t lead you to believe it was anything other than a typical one-year warning that you would get from any other partner?
No. Because we then immediately started negotiating. We talked and negotiated throughout it and had a great relationship during that time.
(Editor’s note: Mark Suster, a DataSift board member, wrote in a blog post Sunday that Twitter “had these conversations directly with us and even though we were surprised at the unexpected timing since we were negotiating a continuation with each other in good faith — they have privately made it clear to us over the past year what their long-term desires are.”)
Didn’t the Gnip acquisition raise any red flags for you that this might be coming?
They rang us up and told us before that there was nothing to worry about. Twitter told us it would change nothing in the market. [This was] at the point of the acquisition. We had to be public about this because we don’t want Twitter to say “we told you so” because we’ve been told over the last year that there was [a chance at a partnership]. We wanted to make sure the customers understood.
* TweetMeme, which later morphed into DataSift, provided a button for websites that allowed users to share articles directly to Twitter.
** Pylon is the technology DataSift uses to provide clients with bulk, anonymized information on Facebook users and what they are saying.
This article originally appeared on Recode.net.
