Revenue Model for Twitter Coming Soon
Last week we asked our readers to help Twitter find a revenue model. We received a great amount of responses that we hope Twitter can take into consideration. From API's to the traditional ad-based model, we heard it all. The topic at hand and the amount of responses generated would let anyone know that a revenue model for Twitter is pretty important for various reasons. Fred Wilson of venture capital firm, Union Square Ventures initially thought otherwise, but has recanted his statements. Nevertheless, VC backers of Twitter have noted that revenue models for the micro-blogging service will be coming in the first half of 2009.
Revenue Models Coming in 2009
Wired.com interviewed several of Twitter's VC backers who remain "bullish" on the subject. Investor Bijan Sabet of Spark Capital notes that Twitter will introduce a business model of some kind within the first half of next year. Others are also betting that Twitter will find a revenue model this late in the game just like Google. Henry Blodget of SAI even suggested a future valuation of $1 billion or more for Twitter. We think anything is possible at this point.
A Dumb Question
Earlier we noted that Fred Wilson of Union Square Ventures initially felt the question of whether Twitter would monetize was the stupidest question in the world. He stated:
"It's like the stupidest question in the world: How's Twitter going to make money. It's like 'How was Google going to make money? Eventually Google was going to make money and they figured out how to do it and they figured out a great business, and I think the same thing is true with Twitter."
Wilson has recanted his statements, but we do agree that Twitter could very well duplicate Google's formula for success. However, Google is not Twitter and vice versa. We're talking about two completely different services. There's still a chance that Twitter won't find a successful revenue model. For all we know, luck may have been on Google's side. Up until recently, Twitter couldn't say the same with numerous outages and stability issues plaguing the service. Personally, I agree with Mark Evans sentiment that the question is not dumb at all. The question at hand could arguably be one of the most important questions any company could ever answer.
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Corvida - while it makes for a great headline, I think it's a little presumptuous to announce new revenue streams for Twitter. Even you close out this post with significant doubts.
The comments of Fred Wilson had no real certainty in fact he was much much more equivocal than one would expect a VC to be - for him to say "and I think the same will be true for Twitter" shows no real clue over a safe monetisation path.
The Twitter VCs realise there is no easy answer - and any slow down in consumer and ad spending close lots of monetisation doors for them.
A couple of things...
First, do you REALLY think that the commenters on the other thread (I was one) came up with anything that internal twitter management hasn't already thought of? Really? Isn't that just a wee bit presumptuous?
Second, Fred's modifying his sentiment about the dumb question. Let's report accurately, mkay?
Third, can we PLEASE stop obsessing about Twitter? We were OK before it, we'll be OK if it goes up in smoke. WE might find another service like it, we might not. But it's a marginal service outside of the early adopter community and, while potentially important, certainly isn't vital to the very existence of the web.... so let's stop treating it as if it is.
Really?
So we're back to hearing about Twitter multiple times in any given week, along with stupid predictions and inane presumptuous discussions about "Web 3.0" that aren't even realistic?
Why would people replicate the same social network-based failures of Web 2.0 in the "next iteration" of the 'net?
And why are you guys writing so fervently about it and the downfall of Web 2.0?
We get it. Things are changing.
Great. But page me when it's done. Once.
Not 15 times a week.
--Kyle
The revenue model is easy. There are a gazillion users who love Twitter. Make us pay for the service. Surely we don't expect someone else to foot the bill for something we want?
Excuse me Rick, but I did not see Fred's corrections at the time of writing this post. Forgive me for not being as omnipresent as you are.
Well, Corvida, he did tweet his correction... :)
That's omniscient, Corvida. Omniscient. You're not as omniscient as Rick. You are clearly two to three times more omnipresent than he, however, and although you are only half as omnivagant you are 10 times more omnispective.
The comparison of Twitter to Google is way off base, bordering on laughable. First, Google even in its original incarnation (search only, not search + ads) provided a useful service--help people navigate the web, and do it better than anyone else at the time. Search is fundamental. Fundamental whether you're looking for entertainment or education. And fundamental whether you're on the leading or lagging edge of technology adoption. Twitter on the other hand is of marginal utility. Sure, it can be fun but it's far from an essential web utility. What problem does it really solve? Twitter can certainly be worth something someday but it's no Google. It's laughable to compare the two.
The other critical point to make is that Google, pre-Adsense, *did* in fact have a business model. It was to license search technology to web portals and enterprises. Yes, it was the development of Adsense that made Google the cash machine it is today, but it's not as if the company had no business model prior to the introduction of ads alongside search results. People like to believe that Google was funded with no business model as an excuse to claim that their web startup with no real revenue model will too someday be worth billions.
Twitter, twitter, twitter...
Does Web= Twitter???
It is that much of a big deal.
stop obsessing too much with Twitter.
Agreed with the posts above. This is a stupid comparasin, just ludacris but is probably just meant to generate attention by being such an outrageous claim. Lame.
Twitter is so incredibly overhyped in the tech world. It has little to no usefulness. And people outside of the tech world have no clue what it is nor motivation to find out.
Get over it.
Facebook deserves that kind of status. It is a game changer. Twitter is a feature of facebook that makes no sense standalone. Get over it.
It's a good news for the twitter users
Agreed with the posts above. This is a stupid comparasin, just ludacris but is probably just meant to generate attention by being such an outrageous claim. Lame.
Twitter is so incredibly overhyped in the tech world. It has little to no usefulness. And people outside of the tech world have no clue what it is nor motivation to find out.
Get over it.
Facebook deserves that kind of status. It is a game changer. Twitter is a feature of facebook that makes no sense standalone. Get over it.
The real question is why you would hand your money over to a VC who would invest in a company where not even the VC can figure out how it's going to make money.
so eventually, Twitter has also planned a way to generate the money .. hmmm
Twitter can be the next Google, its just that they're going about it backward. Google started with a highly focused, monetizable product (search page views always had far higher clickthroughs than any other pageviews), and they have added a ton of junk that is essentially a funnel for their money machine. Twitter has started with the worthless activity, and they have to add a siphon into very, very focused areas for people who want to sell products.
By focused, look at keyword search -- its maybe 2% of all US pageviews but 42% of all US internet advertising revenues. That's the kind of ratio Twitter should keep in mind. 98% of Twitter activity is not monetizable. Twitter will be able to make a ton if they can siphon off 2% of their activity into focused, e-commerce pages like keyword search and classifieds. Some ideas for focusing:
- any search or rss feed should be examined for e-commerce possibilities. If you have someone searching for "tennis players," make damn sure you show them some online tennis stores.
- open a Twitter classified section, and make it a permanent link. Kind of a Craigslist within Twitter.
OK, well if Twitter is not doing either of those two yet, call me after they do the obvious. Remember, keyword search and classifieds are the only two areas on the internet where advertising works.
No news here. Twitter says it will tell us what business plan it has after it has spent another quarter finding it. Yep and I am quite sure scientists will tell us when they've found a cure for cancer. Just let us know when the plan is baked, not when you've decided you want to move it on from half baked.
Ian Hendry
CEO, WeCanDo.BIZ
http://www.wecando.biz