Is there a business model for Twitter?
By Michael W. Jones
The question has been on the lips of many, but has gone largely unanswered: How is Twitter planning to turn a profit? Now there is at least a partial answer, straight from the larynx of Twitter CEO Evan Williams. The answer he gave dismissed advertising as a revenue source and instead gave credence to long-standing rumors that the micro-blogging giant has some interest in charging customers for commercial accounts.
More specifically, Williams said that Twitter is a communications channel, and that they should be able to “charge the people who want to use that communication channel commercially. There is commercial value, not just personal value to Twitter and if there’s commercial value we can really deliver on…then I don’t think it’s going to be hard to monetize that.”
These remarks came at the recent Web 2.0 conference in San Francisco, and were reported by CNET. This business approach has a couple of different angles. The first is simple: companies could pay to use Twitter as a marketing venue for their products. The second is a bit more oblique: companies could be charged for using Twitter as an internal corporate communications channel.
The use as a marketing venue, of course, has already begun. Williams cited Twitter usage by Woot.com, who has started selling on the micro-blogging site, saying “a lot of companies that have goods that are scarce and they want to get the word out quickly.” This would seem to be a perfect use of Twitter’s market position, and could certainly be a source of revenue.
It is easy to see how corporate communications could be easily set up in Twitter, as well, using the site on a new private level reserved for the employees of a corporate client. It would certainly be a simple way to keep everyone in touch with each other and to allow for rapid interaction among team members. This approach is already being tried by new entries into the marketplace such as Yammer and Presently.
Williams seemed to denigrate advertising as a revenue source, saying “I think advertising, as most people think of it, is more and more a different proposition, the whole idea (that) we’re going to insert some message along with the content you actually want, and hope you’ll be interested in that as well.” A lot of users would agree with this sentiment.
Both types of commercial Twitter account would seem to offer a clear path to revenue, although the amount of the revenue is still unclear. Both seem to be a way for micro-blogging sites to move towards profitability. Perhaps this same sort of approach could be used by the younger, but more conversationally oriented, Plurk micro-blogging site as a revenue tool. Either type of commercial use as contemplated here would be preferable to out-and-out direct advertising a la Google Adsense.
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November 9th, 2008
Tell me, what is the business benefit to my company over an internally hosted instant messager service? Or the free (and secure) instant messaging already on all my Blackberry devices? Better yet, how about writing about tech, and leave discussing business models and other such subjects to economics and business plan blogs!
November 9th, 2008
Why would a business choose twitter over a group chat device, such as on zoho for corporate communications?
November 10th, 2008
I find this very interesting and in line with some earlier thoughts I had on the subject… I would love to hear what others think about it.
http://www.thinkmacro.org/?p=277
and to a lesser extent:
http://www.thinkmacro.org/?p=303
(hope its OK to post links here)
November 10th, 2008
DavidB -
That is a good question. And I don’t know the answer. Since no one has seen any detailed plans, as yet, it is hard to tell what Twitter may have up their sleeves. The answer of “No” to regular advertising is interesting enough, and the rest is even more titillating. And if you think that business models and money have no place in tech, you might want to reconsider your view of tech. As with most things, the dollar drives technology. Ignore it at your own risk.
November 10th, 2008
Hi, DebInDenver, it’s good to see you over here! As I mentioned above, no one is quite sure of the details yet. Have you looked at Yammer and Presently to see what sets them apart? It seems that part of it is how the information is presented, as well as the “team” approach. And I feel that an interface like Plurk’s would be better for a company trying to foster internal conversations, anyway. But we shall see. :)
November 10th, 2008
Dima -
As those articles show, there are a lot of possible ways to monetize social media. That none of the novel methods have been tried to any great extent by the major players speaks volumes about their uncertainty as to what will work. I am fascinated by how this issue plays out across the broad spectrum of social media sites.