Wednesday, September 15, 2010

The reason why 99.8% of all 'get rich instantly on Twitter' claims are hoaxes.

I purposely exclude 0.2% of 'make-money-off-Twitter' plans from the "hoax" category, because I'm sure some very smart person out there will go and prove my generalization wrong. Until that blue moon arrives, I'll explain why all the Tweet-gurus offering to make you big bucks for doing nothing are just yanking your chain.

Not familiar with the "instant money on Twitter" phenomenon? In my endless quest for self-publicity, I've stumbled across a lot of statuses like
"Making $500 dollars per week from home off Twitter while on autopilot. Come see how!!!!" 
or similar. Sounds appealing, but is it too good to be true? Yes, yes it is. Some economic thinking can reveal why.

1)  There are no barriers to entry on Twitter. All it takes is an e-mail address and lack of respect for grammar (just kidding) and you can start a Twitter account. Economists would describe this as an open market. Entry and exit are free, and there are are large number of Twitter users - over 75 million now - but that number could easily grow (or decline) in the future.

2)  Large amounts of cash for sitting at home is a tempting opportunity for most people. In an open market, positive profits cause new suppliers (Twitter users) to enter until the price for their product drops, and profits return to zero in the long run. Intuitively, everyone desires more pay for less work; if easy money opportunities really exist, why haven't they already been snapped up by some other Tweeter? The supply of users is so large that any actual profit opportunity would be almost instantly utilized if they're believed to be legitimate.

What does this amount to? Twitter is an open market situation, so the easy opportunities have most likely been exploited already. In the lingo, it's reached a Pareto-efficient state, where new transactions will cause one person to gain only at the expense of another. In Twitter-context, all that's left are scams that can make one rich by taking from many. In other words, a pyramid scheme (or in light of recent events, perhaps it should be re-dubbed 'the Madoff Special'). Given Twitter's booming follower base, even an extremely low response rate by potential marks might be enough to keep a scammer in business.

A pyramid scheme produces nothing tangible, so the possibility for mutual gain is zero. I haven't tried any of the get rich quick plans that various Twits have offered because, if the above logic holds, it would be a stupid waste of time and money. Basically, if someone is really making $500 a week on Twitter it's because they conned the gullible into giving it to them, and they're probably hoping you'll be their next payday advance.

Caveat: Just to avoid confusion, I'm not claiming it's bad to generate company profits off Twitter. Used properly, Twitter is a valuable tool for social marketers to network and promote a business. Such people have a useful service available and just need a medium to get the word out. In these cases, Twitter can facilitate sales that otherwise would not have occurred, which is more economically efficient -- those social media specialists contribute value and earn their money. The distinction between established firms marketing a product versus scam artists promising an easy buck shouldn't require any further explanation.

1 comment:

  1. I'm curious to see how Twitter is able to handle spammers, bots and the whatnot as they continue to become more and more sophisticated, just as e-mail spammers have over the past 20 years. Soon there will have to be spam-filters and junk tweet folders.

    Hell, the very first e-mail chain letter was called "Make Money Fast" (