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Dick Costolo prescribes a fix for Twitter's growth pains

The CEO explains how 'a better Twitter,' not fundamental changes, might woo new users

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New figures released by Twitter on Wednesday suggest the company may be struggling to keep its users engaged, but CEO Dick Costolo has outlined some ideas to make the service more inviting.

On Wednesday Twitter reported its first quarterly earnings since going public, showing a doubling of revenue. But following the announcement, Twitter's stock plunged 18 percent in after-hours trading, to US$54.16 at the time of this report.

Investors are apparently nervous that Twitter might have a growth problem. In its earnings report, Twitter said it had 241 million monthly active users at the end of December, up less than 4 percent from the quarter before. And views of its timeline -- a measure of how engaged users are with the service -- decreased for the first time, by nearly 7 percent.

For a still-young company under pressure from investors to perform, those weren't very impressive numbers.

In 2014, Twitter hopes to make improvements to its service and "change the slope of its growth curve," Costolo said during the company's earnings call.

"We don't think we need to change the character of the platform. We simply need to make Twitter a better Twitter," Costolo said.

Twitter will add more features to make the site more interactive, he said. For instance, it's looking to provide improved tools for organizing content around topics rather than just the time the content was posted. It will also make it easier to follow conversations, he said.

He pointed to recent changes that he said have led to increased usage in areas like retweets, direct messaging and search. They include making more photos appear and making direct messaging a more prominent tool within the Twitter mobile app.

The changes are designed to help users get more value from their Twitter timeline, Costolo said. That might address the problem of people signing up for Twitter but not using it much because they don't get enough out of it.

Twitter didn't say how many people stop using the site after they sign up. But, "we need to bridge that gap between awareness of Twitter and deep engagement on the platform," Costolo said. It wants people to understand how its service works not in their first weeks or months on the site, but from the first moment they use it.

Costolo seemed open to launching separate apps that offer distinct functions to complement Twitter's core service. Facebook is pursuing a similar effort, having launched its new Paper app this week.

It could be a tough area to succeed in, however. Last year Twitter launched a standalone music app, but reports have suggested it may be shutting it down because of lack of interest.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com



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