Scripting News - Latest Comments in Twitter's business model (Scripting News)

Re: Twitter's business model (Scripting News)

Al — Fri, 25 Jan 2008 08:35:59 -0000

What can you say in 20 characters that drives attention and prompts action? Lots
Why 140 characters only when SMS allows for 160? For advertising
Do advertisers value what you´re doing as of this moment? Yes
Do advertisers seek customer intelligence? Yes
Do advertisers care about engagement? More everyday
Being viral is important ? Absolutely

Twitter and ads fit.

Re: Twitter's business model (Scripting News)

Ian Bell — Thu, 10 Jan 2008 16:15:36 -0000

Commercial Syndication might be an interesting model, Dave.

Skype tried this in syndicating their network to an ecosystem of handset and device makers. Their execution was generally poor, and their APIs and SDKs were the greater limitation due to the fact that they were client-driven, and not network APIs. But with Twitter I think there is greater hope.

Under such a program, if NOKIA wants to bake Twitter (publish and subscribe) into their devices (and they should) they would need to do a licensing deal for Twitter access. If Tivo wants their devices to subscribe to Twitter updates, they would license the access and logo, etc. from Twitter. I suppose this could work, though it might inhibit growth.

The API would always be free for bloggers, etc. (and thus would continue to make Twitts omnipresent and useful) to syndicate, but for commercial syndication there'd be a small fee. The program would be easy to administer, generally, since the API is easy to use and well-understood.

But I'm not sure this immediately translates to making Twitter a billion-dollar company.

Re: Twitter's business model (Scripting News)

dshaw — Wed, 02 Jan 2008 18:44:00 -0000

I would gladly pay ~$20 for a "Pro" account... even if there were no additional features.

Re: Twitter's business model (Scripting News)

Ryan — Wed, 02 Jan 2008 18:26:40 -0000

Two themes emerging...premium services and advertising. I like the ad revenue concept. The targeting that Twitter could do could be awesomely contextual. They know what you're doing as you're doing it. For people who can't stand the ads, premium twitter could omit the ads. Calcanis called out SMS ads and feed insertions. I wouldn't mind as long as the ads are relevant (but I believe that ad relevancy is somewhat axiomatic in that respect). If you minded, subscribe to premium twitter and lose the ads.

Another oft mentioned tactic is getting a cut of the SMS revenue. The only problem there is that in order to make value for one carrier, you'd have to exclude non-paying carriers. This cuts your potential user base to the point where you can't create scale. I'd stay out of the exclusives with carriers.

Re: Twitter's business model (Scripting News)

RacerRick — Wed, 02 Jan 2008 17:29:23 -0000

I think I've posted this before...

I believe twitter makes some revenue, maybe even a decent amount, from overseas cell phone companies.

In some countries, the cell phone carriers pay service providers (ie twitter) when they help generate text messages. So like maybe a fraction of a penny per text message or something.

Re: Twitter's business model (Scripting News)

Steve Kirks — Wed, 02 Jan 2008 17:02:42 -0000

What's really interesting is the TiVo like demographic info available. Twitter has information right now that shows what client you used to update and the source of the update. For example, they could go to a mobile provider and say "most of our customers are females of color that use SMS to update between the hours of 3pm and 6pm each day". Or even "text searches of the updates show that most members talk about going to bars and restaurants on Thursdays after 4PM local time".

That would enable Twitter to offer a service to advertisers that mirror the mood and location of the person sending the twit. So if Dave sends a twit via SMS that he's hungry and looking for lunch, the magic Twitter machine can spit out nudges to his friends with pre-written suggestions--one button to send.

What do you think?

Re: Twitter's business model (Scripting News)

Wed, 02 Jan 2008 16:20:56 -0000

But your 2 examples prove his point: the options are either sellout, or depend on somebody else with a useful product. Neither are very sustainable. Sellout is an 'end-game' so by definition is not a sustainable model. Depending on something like Twitterific is horrible too, until lots of other ecosystem things come out of the woodwork and prove that it's something that the Free2.0 crowd are willing to pay for.

Re: Twitter's business model (Scripting News)

Charlie — Wed, 02 Jan 2008 16:18:17 -0000

I'd easily pay for Twitter.

Re: Twitter's business model (Scripting News)

andrew — Wed, 02 Jan 2008 14:44:18 -0000

i have said from the start that twitter is a mobile carriers dream because of the sheer amount of txt msging that goes through the twitter platform. Twitter should be able to cut deals or even sell out to a carrier.

Re: Twitter's business model (Scripting News)

Fraser — Wed, 02 Jan 2008 13:48:46 -0000

There's been an interesting discussion over the past few weeks on our (AdaptiveBlue's) blog about what's most critical for a start-up to deliver first - good code, utility, end-user value, etc.

It's a good back and forth between a number of people discussing the merits of distribution, value proposition, code, etc. Twitter, and more specifically your point Dave, is referenced a few times. Worth the read: http://blog.adaptiveblue.co...

Re: Twitter's business model (Scripting News)

Guest — Wed, 02 Jan 2008 13:41:49 -0000

Should be stressed that Twitterrific is available in a free (ad-supported) version. You only need to pay if you'd like to remove the ads.

Re: Twitter's business model (Scripting News)

David Badash — Wed, 02 Jan 2008 13:32:23 -0000

On the one hand, the "distribution" answer reminds me of the old SNL skit about the bank that only made change. How did they make a profit? Volume. But on the other hand, the best possible thing Twitter could do right now is exactly what you suggest: grow & stabilize. The service is remarkably reliable - yes, every once in a while, or when NPR decides to do a profile on Twitter, sure, there are some service problems. But overall, the glitches are few. (I've been an active user for 4+ months; there haven't been that many interruptions.)

Twitter's assets are huge. Not (necessarily) the financial ones, but the people and community ones. Who wouldn't want to create a startup with a community that boasts some of the greatest "A-List" bloggers, Internet pioneers, social networking leaders, & angel investors - as daily users.

Twitter is a remarkable invention that is fueled by its passionate and intelligent users, and supported by some of the best minds in the industry. Whatever the ultimate business model becomes, I think there are a lot of users - I, for one - who would be happy to say, "tell me where to send the check."

Re: Twitter's business model (Scripting News)

Tuz — Wed, 02 Jan 2008 13:29:39 -0000

Eh - thats a big maybe for me. I mean, I use my cellphone to send twitters but I have receiving them on my cell turned off (I only pay for 500 SMS a month from Verizon & have a shitty Razr). If AT&T would have Metro (subway) coverage underground here in DC I would switch to AT&T & get an iPhone....but thats another story entirely.

It would have to be a killer killer feature for me to switch cell carriers over. Now if it were somehow iPhone specific.......

Re: Twitter's business model (Scripting News)

Brian Sullivan — Wed, 02 Jan 2008 13:14:20 -0000

As I indicated in my first post my idea for a business to make money is "to generate a consistent revenue stream" (and over the long term spend less than you generate).

If you are an investor in Twitter then making money is getting more money back in your bank account than you invested.

But maybe again my old school idea of a "business model" s getting in the way.

Re: Twitter's business model (Scripting News)

dave — Wed, 02 Jan 2008 13:04:13 -0000

Sorry, I don't remember what your definition of "making money" is.

To me it means money shows up in my bank account that wasn't there before.

Re: Twitter's business model (Scripting News)

Brian Sullivan — Wed, 02 Jan 2008 12:48:43 -0000

OK -- I guess that changes the conversation tone a little ;-)

Do you agree with my general definition of "making money" or were you thinking of another definition?

I find the West Coast/Silicon Valley definition of "business model" (and maybe "making money") often varies from my probably more traditional view and always feel a little uneasy with the "new economy". "shifting paradigm" view. I think it was wrong in the pre 99 web and and is wrong now (but maybe I am just an old fart too far from the action in time and geography).

Re: Twitter's business model (Scripting News)

dave — Wed, 02 Jan 2008 12:24:19 -0000

Are you sure about that? What if there were some super neat feature that you could get only with the carrier that owned it, and suppose it cost the same as your normal cell phone service? I'm not at all sure they can't make me an offer I'd find compelling. I'm a sucker when it comes for cooool gadgets. The problem is that so many of them sound cool but in reality aren't. :-(

Re: Twitter's business model (Scripting News)

dave — Wed, 02 Jan 2008 12:22:01 -0000

Why would I be offended? I pay for everything. Cable TV, phone service, electric, water, mortgage, insurance, etc. Everything costs money. Why shouldn't software??

Funny you would think I would be offended! That would be like saying that a professional musician would be offended when another musician wanted people to pay for music. I have a hard time imagining that happening. :-)

Re: Twitter's business model (Scripting News)

Peter Kim — Wed, 02 Jan 2008 12:20:17 -0000

Right on, the "problem" appears if you can't see past an ad-revenue model. Depending on the endgame, as another option the craigslist route might be worth emulating.

Re: Twitter's business model (Scripting News)

dave — Wed, 02 Jan 2008 12:19:03 -0000

That was my comment, and I certainly didn't mean for it to be anonymous.

Re: Twitter's business model (Scripting News)

Brian Sullivan — Wed, 02 Jan 2008 12:17:16 -0000

When I posted an entry recently musing on Twitter's business model recently (http://radio.weblogs.com/01... mostly based on thinking about postings/tweets from you btw, I got an interesting anonymous comment:

"The business model is to merge with or be acquired by a company that makes mobile devices and use the service to drive sales of the mobile device. First they have to create a large enough user base that it makes sense to start making a device just for the service. So they make money right now by attracting new users. That's what the investors put the money down for, so you don't have to worry. Their pockets are deep enough so they can afford to keep going for quite some time. "

The comment is interesting for two reasons -- one in it is anonymous, second my blog is very rarely read (except for family/friend based entries or readers) so I am speculating someone who search blogs specifically for Twitter related postings (someone in Twitter maybe?) found it and commented.

I am not sure I agree with your statement that there are "lots of ways" for Twitter to make money. I can see ways for the investors to get back their investment (as the commenter indicated) but not many ways other than something advertising related to generate a consistent revenue stream (isn't that what "making money" traditionally means?)

Re: Twitter's business model (Scripting News)

Pat Phelan — Wed, 02 Jan 2008 12:08:35 -0000

I believe that over-simplifies it slightly Dave
Twitter's issue is not the USA where users pay to recieve a text but the rest of the world where SMS costs are in the region of 10c per unit.
With Twitter having recently reduced the SMS limit to 250 a month they are still looking at a negative $25 per user per month outside of the USA.
I believe like you there are numerous ways to make Twitter pay and I think we may be seeing the first of these in this qtr.
Nevertheless I totally agree with you on being the original guy and think Evan and Biz will do very well out of Twitter.
Just no Facebook to buy Twitter rumours please :-)

Re: Twitter's business model (Scripting News)

yndygo — Wed, 02 Jan 2008 12:04:10 -0000

We've been discussing the "where is Twitter's revenue?" question amongst ourselves lately.
I like the idea of embedded mobile - but so many of us also use the web-interface from laptops and desktops as primary access that you have to consider the revenue stream from there as well.

Honestly? At this point I'd be willing to pay a subscription fee - not unlike the model LiveJournal uses - paid subscriptions ad-free, basic (unpaid) include ads on pages.

But they do need to work quite a bit on their reliability first - like making sure that the feed is the same no matter which server you are being directed to.

Re: Twitter's business model (Scripting News)

Jeremy Toeman — Wed, 02 Jan 2008 11:59:08 -0000

I'm a bit surprised by this one. If they made a client and charged for it, I think I'd expect to see other twitter devotees like yourself be offended they are charging. Further, I wouldn't be surprised to see some of them build their own clients for free...

I don't think this question is nearly as easy as you position it Dave. If it was so easy, I don't think we'd see so many people doubt their ability to transform into a revenue generating company.

Re: Twitter's business model (Scripting News)

Chris Brogan... — Wed, 02 Jan 2008 11:58:26 -0000

Pretty interesting. As Twitter has proven to be a very simple backbone conversation product, it's also set itself up to be a network where people have built listening bots and also lots of 3rd party off-core apps. I think that's an interesting premise: having Twitter sell various apps on behalf of the 3rd party developers. So as they gain user base, they have even more customer base to sell into. Neat.