Wednesday, March 09, 2011

Twitter Business Model

How will twitter make money?

Two things they did are:

  • New website 
  • Promoted Tweets
Why promoted tweets? Yes for money, but more importantly, it is because they will show up on all applications that use twitter API.  Twitter apps don't run in twitter context, twitter runs in twitter app context.  Facebook on the other hand provides the context in which facebook apps run. The important implication is who owns the screen real estate. In case of facebook, it is facebook. In case of twitter it is twitter apps. Hence any mechanism of advertisements from twitter would have to be part of the "content" served by twitter API. But even this doesn't works if clients can filter content.  

So twitter started with making people remove twitter/tweet name from their app names and website names. They purchased few of the clients, did revenue sharing with some of the clients and then added promoted tweets.  All this and the new website are all towards an effort to own the screen real estate, because fundamentally that is what you need if you want to show advertisements.

Here are some ideas on how twitter can make money.
  • Speed  - How much time does it takes for a tweet sent to be displayed on the followers screen.  This could be immediate or could be delayed and it could be delayed so much that it never makes it to the intended person.  Some people would pay for speed in sending it out, some people would pay for speed in receiving it.  Some might pay for slowing it down.
  • Are all tweets equal ? And is chronological order the best way of reading tweets. If someone can save my time by filtering and sorting them for me, I could pay for that. It could be the most "active tweets"(replies) or most liked tweets (retweets) or it could be a person doing the filtering. Keep me connected but don't waste my time.  May be organizing them into tweetshots - collection of related tweets either on a topic or from a person or during a time interval. Out source this problem say via twitter proxy interface and let developers innovate inside the twitter platform, instead of outside. Another way to expose the same functionality could be virtual users. @politics could be a tweet channel that filters tweets related to politics. Basically instead of having hard link between produced and consumer, make it a soft link. 
  • Make twitter a market place.  Paid tweets. Subscribe to Seth Godin's tweets for $1 per month. May be some people would find it worth the price. Similarly twitter could have tweets as advertisements. So I as a subscriber can sell my attention for some money. Lets say I put my attention for tweet at 20 cents. Any one whom I am not following can send me a tweet by paying me 20 cents.  My attention is cheap, but CEO of a company might put it at $100. 
  • Twitter Analytics - Instead of specifying a single shortened URL in the tweet, auto generate different URL for each user.  This creates a way for twitter to monitor exactly who read it and when and what else they are reading.
  • Most broadcast mediums end up causing spam. Email, Groups, etc. Twitter is in a unique position where they control the medium and have power over the complete ecosystem. No one can tweet me until I follow them. Email sucks at this. Communication medium with a single point of control can solve the spam problem.
  • Many people use twitter to complain in public. The purpose of that complaint is not to bring down reputation of the company, but to make the company listen. Reputation management in social media is now almost a buzz word. Twitter can become the unified CRM for companies. #complaint >apple could be slowed down, giving company a chance to handle the complaint, before letting it  spread. People would love it if it makes it easy to communicate with the companies and companies would love it, if they somehow can manage the complaint instead of playing with its reputation.
  • Twitter for computers. Twitter is a communication medium for people. But the same technology could be used for structured messages (json?).  Twitter for Rentals (Need a place or want to rent a place) . Twitter for products (price changes/discounts). I guess the point is, instead of launching websites, providing API's or sending emails to other companies, some companies will benefit by just providing that information in public and let other companies consume it, in a standard way. So if you are recruiting, just tweet it to a recruiting topic with standard interface and let all recruiters in the world help you.  Or if you need a quote for 100 lenovo laptops with 4GB ram, just tweet it.  In short, global structured message pub sub, using standard twitter client.
I like the company, would love to see it making money.

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