My Take on Twitter’s Business Model "Problem"

Ryan Spoon has a good post today about the discussion around Twitter’s business model.  Here’s his take on it:

Instead of charging users for usage, I am a firm believe that Twitter should charge users for data… and perhaps this is where the business model arrives from power users. Let’s use @techcrunch as a continued example. Arrington often pushes out new posts through his Twitter account – reaching 20,000 new potential readers. But, based on my experience on a much smaller scale, he likely has little to no understanding of what happens next. Users start coming in from so many disparate sources that measuring the impact of his Twittering is damn difficult (or even currently impossible). Would Arrington pay for more detailed information about what happens after the tweet? How about relevant on-Twitter search data? Or competition?

It’s an interesting model, akin to the one that WordPress uses to maintain a mostly-free service with a few additional paid options for power users.  To me, since Twitter is a cross between a blogging platform and an instant messaging client, they’ll likely end up with a monetization model that is a hybrid model as well.  Start with the tried-and-true freemium model like Ryan describes that has been proven for blogs, and once the user base gets high enough, toss in some banner ads on the site.  As for all the clients that have built up around Twitter’s API, I think the only option is to build in a usage cap of x million API pulls per month, and charge for commercial use beyond that.  This way, they can still allow indie developers to experiment with interesting new services for free, but once they really make it big, then they rightfully should be funneling some of their own profits back to Twitter. 

Sure, it’s not a Google-esque multi-billion dollar model.  But it’s a solid 10-20x ROI as a reward to investors in Biz and team for building up a nice little niche service. 

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3 responses to “My Take on Twitter’s Business Model "Problem"

  1. If a blog started in the woods and it wasn’t clear who the author was, would it get any readers or comments?

  2. Hi Louis – thanks for the reminder/koan.

    I’m still kicking the tires on this thing and just got the “About Me” section up this morning. Spoiler alert: my name is Kevin Leneway, I’ve been blogging for awhile now over at http://www.astartupaday.com, and wanted to try out some more traditional tech blogging over here.

    I’m a big fan of your blog, btw, thanks for stopping by.

  3. That’s an interesting thought around charging for data. This reminds me of Flickr, where you can pay for a larger account with more stats for an annual fee. Although I’m not a power user of Twitter, I use Flickr heavily and gladly pay the US$24.95 to host my photos. Twitter’s a great tool and I hope the “problem” is addressed before it actually becomes one.

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