Twitter logoIt seems that a lot of people ask the question that my boss asked me recently: “What is Twitter’s business model?” It seems for now they don’t have one for public consumption. They pay for their servers with venture capital money which means that somebody with money thinks they can succeed and be profitable. From their own About pages, Twitter says:

“…we are holding off on implementation for now because we don’t want to distract ourselves from the more important work at hand which is to create a compelling service and great user experience for millions of people around the world.

…we are also very much guided by our philosophy of keeping things simple and intuitive so we like to restrain ourselves with regard to features.

We plan to build Twitter, Inc into a successful, revenue-generating company…”

But for now it’s all free. Below are a list of blog posts about this topic. I read threw these, and they all make some good points.

I have to say from my point of view, Twitter should never charge. They can’t. Once they start charging users people will stop using. I think they know that and that’s why they don’t. Look at Google. I remember in the 90s when Google was this really simple vanilla search engine that was better than Yahoo!, Alta Vista, HotBot and all the others that were popular then. Today, Google’s core is still that awesome plain vanilla search page and it’s still free and ad free. How are they making money? They have learned how to take their core tech and apply it to other areas that big business will pay for (ex: Google Analytics).

If you ask me, Twitter has this same potential. They collect mini conversations and thoughts of millions users. Looking at individual posts, who cares. Stepping back away from the trees to see the forest, you start to see your customers giving their unbiased feedback about your products and services. You find patches of people talking about the new big technology and how they can use it. You see entertainment venues running contests and surveys, thus driving customers to their sites and store fronts to spend money. This information can be melded into real time political polls. The best part is all this information is free. We the users are already funneling it in as I type.

I suspect the venture capitalists see this same potential. My old boss always said, “he who owns the information, drives the business, and makes the money.” At this point Twitter is stock piling that information. If they can now produce or acquire technologies that allow people to mine that information, to look at it in different ways, and to pipe it into their own products and services then they can charge for that. Then they can make money.

What does all this mean for us? Well for now not much. The big concern is if Twitter is truly stable enough to build off of today? Can we depend on it being around 5 years from now. Probably. It has a huge following, it’s simple, and it has money behind it. All aspects that Google had in 90s. For the time being, it’s free. Our only investment into Twitter is any time we put into it. I see it as a free, fast, and popular way for a company to drum up excitement about it’s products and services, its public events and social good deeds. I see it as a way to gather peoples opinions about my company’s goods via mini-surveys. I see it as a means to distribute deals and run contests. That is how I see myself and my company using Twitter today. It will be up to Twitter as to how we can use them tomorrow and at what cost.

Here’s what others are saying about Twitter future revenue stream:

http://www.scripting.com/stories/2008/01/02/twittersBusinessModel.html

http://www.centernetworks.com/twitter-business-model

http://www.avc.com/a_vc/2008/01/twitters-busine.html

http://calacanis.com/2008/01/02/the-three-business-models-that-make-twitter-a-billion-dollar-bus/

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