Tweeter Pan

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Tweeter Pan

Everybody wants to know how Twitter will make millions. But what if it doesn’t want to grow up?

For months, tech writers have marveled at Twitter's quirky success. One-hundred and forty characters at a time, the company has brought in more than 2 million users, 2 million monthly page views, and $15 million in venture capital. Especially in the last few months, the microblogging, instant-messaging, social-networking platform has gone mainstream.

As Twitter has made the leap to the masses, a fundamental, quantitative question has started to percolate among technoscribes: How the hell is Twitter going to make money? Behind that query, though, is another that often goes unasked in today's Silicon Valley: Does Twitter even want to make money in the first place? Or is it all peer pressure?

Plenty of people have played armchair CFO and tried to graft a business model onto the service. The advice: Twitter should start using banner ads (as they already do in Japan), charge for pro accounts that guarantee uninterrupted service, insert text ads midfeed a la Facebook, and/or sell data to advertisers so they can narrowcast ads based on what you and friends are Tweeting about (a tactic that social networks employ). That's not all-the Twitterverse, blogosphere, and mainstream media have plenty of other pearls of wisdom to share.

Through all the noise, Twitter has made it clear that it's in no rush to start making money. Co-founder Evan Williams told TechCrunch last month that Twitter has "thought about" its revenue model, but that "it's not actively in development right now." Williams floats a few ideas about how to monetize, but they're sketchy. He suggested similarly murky ideas in 2007, but the company hasn't moved forward with its revenue model since then.

Twitter gets the revenue question so often, it devotes part of its press room FAQ to the monetization question:

Twitter has many appealing opportunities for generating revenue but 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.

The Big Money interviewed Biz Stone, another Twitter co-founder, who recently told Portfolio that focusing on a revenue stream would be "a distraction." We wanted to know whether this was all an act, whether Twitter was really just keeping plans close to the vest. So: How often do folks sit down to talk about a revenue model. Once a week? Once a month? It's never discussed, Stone said.

Why not? Because Twitter, according to Stone, still isn't "sustainable." Stone used the S-word as an excuse repeatedly during our chat, as if it were a safety blanket made out of chainmail. Twitter wants to have both a sustainable product and business plan before it starts to capitalize on its community. The product bit makes some sense-for months Twitter's service had been plagued with glitches. But Twitter's servers have been performing relatively well for the last few months, so maybe sustainability has been achieved.

Stone's other comment—that Twitter needed a sustainable business model—was more troublesome. Here, sustainability entails finding revenue without alienating current or future users, a common refrain among Web 2.0 folk. Facebook's ill-fated Beacon advertising platform failed while trying to find that balance. Williams told Download Squad, "Our top concern when it comes to monetization will be to do so in a way that does not negatively impact users." So instead of experimenting with a business model that might accomplish that goal, Twitter's founders continue to lounge within the comfortable status quo.

There may be a deeper, psychological reason that Twitter can't follow the dollar. It may have a Peter Pan complex-it just doesn't want to grow up. Pan ultimately chooses Never Never Land because he is worried about the pains adulthood will invite into his life. For now, Twitter is choosing to do the same.

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User base broad enough?

This was a very solid analysis. As a Twitter fan, I have to say that I sometimes wonder about its long term prospects. Though as you mention they have improved a lot of their server/scaling issues, I still wonder if Twitter is merely for tech nerds and the journalists and bloggers who are more than happy to keep writing about them. Facebook is a broad social networking technology, thus making monetization much easier in many cases and making its long term outlook more secure. But I wonder how/if the Twitter will hit a broader audience (http://tinyurl.com/5lgvpk).

Thanks again for this post.

-Chris

twittering dollars

The beloved upstart has yet to bring in revenue. There should be no problem incorporating advertising as it grows. People love twitter!

Venture Capitalist, or Patron?

I wonder if Twitter is really viewing the Venture Capitalists who poured $15 mil into them as people they'll have to pay back 10-fold, or if they're viewing these moneybanks as renaissance-style patrons interested in attaching their name to a cultural legacy. Google has provided a pretty good model for how Web-patronage can be successful: use profit to supplement services that can't ever possibly be profitable (Google Earth, Chrome). Twitter COULD easily be profitable (even if they just sold shirts and tote bags with pictures of the Fail Whale on them), but by foregoing profitability they're establishing themselves as a service more akin to a NY library than Times Square. Eventually they can grow to the extent that someone like Google or Comcast may just buy them for a ton of money simply so that their name can be associated with the success.

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