Why Twitter Should Be Worried

Without the ability to charge the vast majority of their users (if any), social media companies face the same dilemma that pretty much all media companies are confronted with today. Freemium business models mean that social networks have to demonstrate massive and sustained audience growth in order to convince advertisers and other business partners that they're worth spending money on.

This isn't as much of a problem for tech giants like Facebook and Google anymore, since they've managed to carve out unique spaces for themselves that have rendered their services, for all intents and purposes, irreplaceable. Twitter, however, is still caught in a bind. While it's an incredibly valuable service for its power users, the non-crazy people among us don't really seem to get what the network is all about. And while the company always manages to get a lot of media attention, whatever cultural prominence it attained leading up to its initial public offering last November hasn't translated to building itself a bigger audience at a faster clip. In fact, according to a new report from the research firm eMarketer released last night, it's slowing down—at least in the US.

One-fifth of US internet users currently access Twitter at least once a month. It gathered much of that audience in a relatively short burst during its early years of "explosive growth," the Wall Street Journal notes. In 2012 alone, the US audience grew by 43.4 percent. By the following year, however, growth was down to 19.4 percent. eMarketer expects growth to dip below 10 percent in 2015, falling as low as 6.4 percent by 2018.

The character of Twitter's audience is gradually changing as well. The user base is "maturing," in eMarketer's words, which means a few things. "Steep growth is in the rear-view for Twitter in the US," the report said. But it's also pulling in an older audience who are more attractive to advertisers, both because they have more disposable income and, as a result, are more likely to engage with ads.

“A well-established user base can also be a less volatile user base, and Twitter’s maturing users not only in numbers but also in age could influence its advertising revenue potential," eMarketer said.

But that's not a guarantee. Given the frenetic pace at which I consume content on an average visit to Twitter, the entire concept of a "monthly active user" seems irrelevant. Services like Facebook or Gmail are more open to a meandering pace, which opens them to different types of audiences and thus different types of monetization. Twitter has already revealed it's trying to change that by revamping its aesthetic and user experience. But that also means it's not really going to be the same Twitter its core audience knows and loves.

That might not be such a huge issue considering that the service is consistently expanding outside of the US as well. In 2013, 78 percent of Twitter users were international, after all. CEO Dick Costolo has often said he wants it to be the "global town square," not just the go-to service for New York and Silicon Valley types.

But that's where the often-perverse relationship between finance and culture comes into play. Wall Street was generally unimpressed with Twitter's first earnings report earlier this month. If it's growth truly is slowing as much as eMarketer suggests it is in the world's largest economy, it's going to have to figure out another way to win the financial community over.