Why Twitter bought We Are Hunted

Twitter’s move into the online music scene is unlikely to be the last expansion we’ll see from the micro blogging company this year.

Late last week, Australian start-up We Are Hunted formally announced that it had been acquired by Twitter, and that the social networking site would be launching its own music service.

Twitter’s sudden growth spurt may come as a surprise to some, given that it launched another service – a six-second video offering called Vine – just three months ago.

But then again, wouldn’t you be doing the same do if you had a pile of spare cash in the bank and an IPO looming over the horizon?

It may be hard to believe, but yes, Twitter has a cash pile. Despite the gloom still emanating from Facebook’s botched IPO, Twitter is still very much a success story.

A recent study from IDC ranked Twitter as the third largest mobile advertising company on the planet. The platform earned around $100 million in mobile ads in 2012, around half of what its two (rather larger) rivals Facebook and online radio company Pandora earned in the same period.

In fact, Twitter is doing so well that another report from eMarketing, earlier this year, suggested that that the company was beating its own internal ad targets. In other words, its revenue is on the rise.

So with its cash pile growing and an IPO on the horizon, it’s no wonder Twitter is moving to expand its offering with service like Vine and now Twitter Music.

The Twitter Music guessing game?

It’s really anyone’s guess as to what Twitter’s new music offering will actually do. We know it exists because of a statement on We Are Hunted’s website and because Twitter has launched a homepage for the service.

But that’s about it, the rest is just speculation and We Are Hunted isn’t willing to spare any information on the deal.

“We wish we could say but we're not yet ready to talk about it. You'll hear more from us when we are,” the start-up wrote on its site.

Given We Are Hunted’s core business, it’s a fair guess that the service will include some form of chart that will rank music based on what people around the world are listening to.

Even the celebrities who were given early access to the app to help promote it have been rather sparing with their descriptions of it. American Idol host Ryan Seacrest tweeted that it “shows what artists are trending [and] also has up and coming artists”.

As for  blogosphere’s input, designer Youssef Sarhan delved into the home page’s source code and says Twitter’s offering will integrate with a couple of popular music services like Spotify and iTunes as well as services that are used to promote up-and-coming artists, like Soundcloud and YouTube.

Then there’s the matter of launch date and on that, nobody seems to be in the know. AllThingsD contended that it was supposed to launch last weekend, but that didn’t come to pass. There’s talk now that it might happen next week.

When it does finally hit the market, it will be interesting to see whether Twitter’s service will actually sells digital music, or whether it will just serve as a hub for it.  

Given Twitter’s current success with online marketing, it’s more likely that it will want to stick to this revenue stream rather than branch out into digital music sales. Twitter will simply use this service to draw more users to its site.

What’s next?

Expect Twitter to launch even more services as it works towards a predicted early 2014 IPO.

And it’s set to be a big one, with Greencrest Capital saying that by late 2013, early 2014 the company will be worth around $US10.5 to $US11 billion.

In order to improve its valuation, Twitter now needs to focus on drawing more users into its service. It’s already found a way to profit of mobile marketing, so now it just needs the user numbers to grow it. And that’s where services like Twitter Music and Vine come into the picture. They simply give users another reason to sign up for Twitter.

Who knows, if the model for Twitter Music works, Twitter Movies could be just around the corner?