Yesterday I wrote about ambient intimacy as a first response to Tim O’Reilly’s post about why he loves Twitter.  Today I’m going to tackle his contention that the value of social media sites lies in the data rather than the interface.

He describes it thus:

In many ways, Twitter is a re-incarnation of the old Unix philosophy of simple, cooperating tools. The essence of Twitter is its constraints, the things it doesn’t do, and the way that its core services aren’t bound to a particular interface.

It strikes me that many of the programs that become enduring platforms have these same  characteristics. Few people use the old TCP/IP-based applications like telnet and ftp any more, but TCP/IP itself is ubiquitous. No one uses the mail program any more, but all of us still use email. No one uses Tim Berners-Lee’s original web server and browser any more. Both were superseded by independent programs that used his core innovations: http and html.

What’s different, of course, is that Twitter isn’t just a protocol. It’s also a database. And that’s the old secret of Web 2.0, Data is the Intel Inside. That means that they can let go of controlling the interface. The more other people build on Twitter, the better their position becomes.

Intuitively I buy this.  The data is what gives Twitter it’s vibrancy and is the hard bit to re-create.  The interface though, is important ad based for monetisation – you need the real estate.

Tim points out that Facebook is becoming a ‘ghetto’ populated by a bunch of other apps (not least Twitter, which is the source of 60% of Scoble’s friends’ FB updates), but they are at least generating some revenue from that traffic.

When I think about the web businesses which have been most successful to date they have all owned the interface to good effect – AOL, Yahoo!, Google, and now Facebook.  All of these have great data at their core – everything great at Facebook stems from their social graph data and Google is in many ways all about data – but monetisation comes from the real estate.

By contrast no-one has made much money directly from the protocols Tim likens to Twitter: TCP/IP, telnet and FTP.

So it seems to me that owning both data and the interface is ultimately the best route to building a big and valuable business.  I get that the way Twitter has encouraged people to develop their own interfaces by having a very open API has been a big driver of growth for them, but I wonder if the trade off with monetisation potential is worth it.

All of this is a very narrow shareholder driven view.  From the different perspective of changing the world rapidly then the protocols listed above have had more of an impact than the successful companies I mentioned, and Twitter’s extremely open strategy is spot on.

What do you think?  This is a new area for me, and very interested to hear your views.