Twitter premium use – the search for a business model

Steven | multimedia,twitter | Tuesday, 24 March 2009 - 16:20

As long as I know Twitter (I joined the service over 2 years ago) people are talking about the business model behind it. Till this point, there is none!
Twitter is build with Venture Capital, $55M at the moment as you can see on their crunchbase profile.

Twitter So there is no business model yet. This means the service is not making money on its own, not as far as we know that it. At first, when twitter was largely unstable, users would like to pay for a stable version. But that passed by when Twitter grow more mature.

There’s 4 ways for Twitter to make money.

1th is by acquisition. If, let’s say, Google would buy the company, that’s all what it takes. This would be a company that typically is interested in the data, the relations, .. and thus can use Twitter as a research base. Google would definitely fit this description. They can learn from it. An other type of company could be on that has an idea to monetize it, but this is, in my mind, less likely. If Twitter turns into a money making machine, I see Obvious (the company behind Twitter) doing this themselves.

A second way would be by advertising. If banners, adwords, .. are placed on the site they would generate a decent amount of cache. There’s just that many users, so loads x small CPM is still good. However, a lot of users ever see the website since they’re using different clients (like twhirl, tweetdeck, ..) which is possible thanks to Twitters’s great API. Of course it would be possible to insert commercial tweets in the stream, but I think this might be something some people consider a bridge too far. For me personally, I guess I could live with it, but I prefer without.

The 3th way is just turn it into a commercial service. Let users pay for the use, or let them pay if they want to go over a certain threshold like following xx people or posting xx tweets per month. Let’s avoid this scenario shall we :) – But it IS a possibility.

The 4th way, and in my mind most possible way, is by adding commercial features. Sure, the small feature set definitely helped the service grow, but there are some things that would be interested and in my mind. I read this post the other day, and it started me thinking (that was about time :) ). Obviously it’s a fake post! Random followers, having celebs to follow you .. I’m sue people would pay for it, but it’s just not what Twitter has become and is love about.

What I do think is a great commercial feature is opening up the analytics of Twitter. It completely fits in the context of this time. Everybody is obsessed by numbers, and with reason. At this moment twitter is monitored by Google Analytics, and in GA it is pretty simple to log data on multiple accounts. So a model could be: you pay for example $5 each month, and you can add your own tracking ID so your stats become visible in your own GA account.

I would pay for that, and for me $5 each month would be acceptable. I used to pay for feedburner before it was acquired by Google as well.

Easy Money! If we consider a usebase of 8 million people (this is an estimate based on Compete, might be higher because of the API, might be lower, only twitter has the answer) and suppose only 5% of the users would pay for this, this would result in a turnover of 24 million dollar! Even if only 1%, so 80.000 users would pay for this, which seems likely to me, this would still generate about 5 million dollar a year. And then you can start tweaking the numbers based on research: what would be the perfect amount of money to ask for a user to generate the most income? You could even identify these users as “pro” users, if you see the status this brings on for example Flickr .. it might work.

I started a little poll to find out how people feel about this, feel free to participate (no registration whatsoever needed). If you think $5/month is too much let me know what you would pay for it.

I would like to turn this into a movement, so if you think this is a good idea embed the #5dollarGA hastag in your tweets. This is something Stenito came up with. Or just tweet a link to the poll or to this post.

Thanks! You can follow me on twitter under @minorissues.


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