As Buyers Circle, Could Twitter Be Better Off As A Nonprofit?

Despite having more than 300 million users, Twitter has struggled to make a profit and keep its investors happy. Yet, the service has arguably been good for public dialogues and news gathering.

So as Twitter considers a sale, maybe it's worth pondering the idea of Twitter getting out from under the pressures of Wall Street and turning itself into a nonprofit.

Twitter at crossroads

Grassroots movements have made great use of Twitter.

Take sexual assault victims. Laura Palumbo of National Sexual Violence Resource Center points to one hashtag, #Cosby, that trended when there was a lot of discussion of accusations against Bill Cosby. Palumbo says victims used it "to contribute their perspectives to the same threads as media, lawmakers and the other audiences who are following these stories."

These grassroots contributions often affect media coverage and create new movements. The Black Lives Matter movement took off as a hashtag on Twitter.

But as pressure has increased on Twitter to grow and become profitable, it's had to adapt.

Like other social media companies, Twitter makes its money from serving up personalized ads to its users. However, at just over 300 million users, it's way behind Facebook, which has some 1.7 billion users. So, Twitter has made changes. For example, the company's algorithms now sort tweets according user interest rather than just a timeline, hoping it helps users feel less overwhelmed so they keep coming back.

But that also means a journalist or politician could miss an alternative point of view. That troubles Palumbo. "People are becoming more and more adjusted to the input of ads and brands on their social media pages," she says. "But I think people also want to retain finding these spaces for an open exchange of ideas."

Since the company is struggling to make a profit anyway, maybe there's another route. Perhaps there could be a nonprofit version of Twitter, free of investor pressure.

Precedents exist

Right now, no one is seriously proposing a Twitter nonprofit, and investors say it's unlikely to happen. Twitter is still a big business with a lot of cash on hand, streaming deals with the NFL, and partnerships with the music service Soundcloud — but there are precedents in tech for a nonprofit spin out.

Years ago — back in the ancient days of the Internet — there was a battle between the Netscape browser and Microsoft's Internet Explorer. Microsoft won. But a nonprofit called Mozilla spun out of Netscape and created the first real competitor to Internet Explorer: Firefox, which was free and open.

"And that is an area where the nonprofit nature of Mozilla was very important," says the Executive Chairwoman of the Mozilla Foundation Mitchell Baker. "No venture capitalist would be investing money in a browser to compete with Microsoft and its 97-99-percent market share."

In 2009, Firefox became the world's most popular browser, and Baker says it still holds 15 percent of the world market. And all its work continues to focus on its mission of keeping the Internet open while staying financially solvent.

"Financial sustainability is not the same as endless growth and profit," Baker says. "So it fundamentally colors the nature of the organization. It allows us to make a range of decisions that would be difficult otherwise."

Other struggles

Still, some of Twitter's problems may have nothing to do with pressure from investors.

The company has struggled to deal with online harassment and its use by hate groups. In a recent high-profile incident, Twitter permanently banned right-wing commentator Milo Yiannopoulos from the service after his continued attacks on comedian and Ghostbusters star Leslie Jones.

Kelly McBride, with the nonprofit journalism think tank Poynter Institute, thinks Twitter isn't growing its user base because it's got competition.

"Their app just isn't that awesome to use on your phone," she says. "It doesn't give you the type of emotional feedback that Instagram, or Facebook, or Snapchat gives you."

But for those who love Twitter and find its 140 characters and openness a great way to connect and debate, none of those other companies have quite the right formula.

There's talk that Twitter could be acquired by Google, Disney or Salesforce. But can Twitter even entice those companies? In the second quarter it lost more than $100 million — so perhaps it already is a nonprofit.