Twitter

Twitter's coverage by the news media has been getting a lot of attention these days. Since its creation in 2006, Twitter's popularity has grown exponentially. It's now estimated there are 4 to 5 million users worldwide.<br /> <br /> So how does this media darling make money? Well, currently it doesn't.<br /> <br /> Don't let the attention-grabbing headlines fool you. Twitter still has not announced a business model... More >>

Twitter's coverage by the news media has been getting a lot of attention these days. Since its creation in 2006, Twitter's popularity has grown exponentially. It's now estimated there are 4 to 5 million users worldwide.<br /> <br /> So how does this media darling make money? Well, currently it doesn't.<br /> <br /> Don't let the attention-grabbing headlines fool you. Twitter still has not announced a business model. There are no ProTwitter accounts. There is no TwitterWords advertising program.<br /> <br /> The hype surrounding this web2.0 social-network service revolves around the large number of users. Twitter has built-up a customer base so big that investors are anxious to see how it will reach out and extract revenue. But this is inherently Twitter's biggest risk: finding a way to monetize the service.<br /> <br /> The obvious way to make money would be for users to pay a subscription fee, or to accept unsolicited tweets from advertisers. Yet if the free service disappears, the user base would surely evaporate quickly.<br /> <br /> Even Twitter CEO Evan Williams doesn't know how to monetize the service. "We will make money, and I can't say exactly how because...we can't predict how the businesses we're in will work," he said in a recent interview. "We think Twitter will make money. I think it will take some time to figure it out."<br /> <br /> If the CEO cannot even articulate how Twitter can generate a profit, what hope does this company have?<br /> <br /> Revenue model aside, Twitter's competition is also a big risk. Twitter's technology is very simple and not patented. This creates a low barrier to entry for any competitor to replicate the service. Facebook, Skype, or AIM could easily create a similar service within their interface which would make Twitter easily substitutable.<br /> <br /> Bottom line: despite the large user base, Twitter is not a realistic or sustainable business. << Less

Twitter is an addiction. Its userbase has been growing exponentially, and it's one of those websites where people tend to stay on the site for hours a day. It's less a "social-networking" website than it is a "microblogging" service, which is both its novelty and its allure. Twitter has developed a cult-like devoted following and is already the dominant player in the microblogging market. If you factor in Silicon Valley's ... More >>

Twitter is an addiction. Its userbase has been growing exponentially, and it's one of those websites where people tend to stay on the site for hours a day. It's less a "social-networking" website than it is a "microblogging" service, which is both its novelty and its allure. Twitter has developed a cult-like devoted following and is already the dominant player in the microblogging market. If you factor in Silicon Valley's longstanding tradition of trying to cultivate enormous userbases before turning a profit, then it wouldn't be a stretch to say that Twitter is already well underway to becoming the next Facebook. No exaggeration. << Less

For a while I have been talking about Twitter on ChubbyBrain, and suddenly realized that it would be a shame not to post an independent review of Twitter, especially because it offers such an excellent insight into the current state of the market for social web companies in the micro-blogging space. The one question that Twitter thought it would ask itself when it becomes \"cool enough\" was \"How do we make money ?\". Now, th... More >>

For a while I have been talking about Twitter on ChubbyBrain, and suddenly realized that it would be a shame not to post an independent review of Twitter, especially because it offers such an excellent insight into the current state of the market for social web companies in the micro-blogging space. The one question that Twitter thought it would ask itself when it becomes \"cool enough\" was \"How do we make money ?\". Now, there is nothing wrong with that if you know that when you do really become cool enough, you will have an apt business model at your disposal and you will also not have any competitors that are as cool as you are threatening to take your user base away. These were two assumptions, which as any social web analyst would agree, are totally unrealistic given the \"fickleness\" of the social web market today. Twitter precisely made these assumptions and ended up paying for it. George Colony, the CEO of Forrester Research puts it aptly: you have to re-earn your customers\' loyalty every day as a new toy will grab their (customers\') next fifteen seconds of attention. The \"fifteen seconds\" bit is really becoming a reality because of initiatives like Plaxo Pulse, which attempt to help users export their contacts and content from one network to another. Now, given this scenario, apparently Twitter attempted suicide by jumping into the market with all the tech but no business model. A good question would be, what then is a good business model for companies into micro-blogging today. This question is hard to answer since the most popular model -advertising isn\'t quite a fit here, as the scope for exposure to ads is limited in the microblogging space. See my review on Jaiku (http://www.chubbybrain.com/companies/jaiku/reviews/ruchirj) for an example of a sustainable business model in this space. Some networks try to create texting incentives for their users by allowing them to use mobile phones as micro-blogging interfaces. However, Twitter failed to do this too, as it couldn\'t foresee that when its userbase grows considerably, outbound SMS-based posts may cost dearly especially since it did not have substantial partnerships with global telecom network operators. See my review of 3Jam (http://www.chubbybrain.com/companies/3jam/reviews/ruchirj) for more details on this. All in all, I agree with Amy (as I have earlier) that cool tech + no revenue model = problem and am appalled to see a company like Twitter, which has now more than 700 K addicts today, struggling hard to survive. <br /> <br /> << Less

As Andrew pointed out, Twitter has a lot of people who use it - almost 700k per the numbers he provided. And to make things better, people are addicted to it. Twitter has entered the public consciousness. So what is not to like?<br /> <br /> I won\'t comment on Twitter as a service in detail except to say that while there are probably a lot more adopters to come, but like blogging, people will jump on the bandwagon initially and ... More >>

As Andrew pointed out, Twitter has a lot of people who use it - almost 700k per the numbers he provided. And to make things better, people are addicted to it. Twitter has entered the public consciousness. So what is not to like?<br /> <br /> I won\'t comment on Twitter as a service in detail except to say that while there are probably a lot more adopters to come, but like blogging, people will jump on the bandwagon initially and then many will tire leaving a smaller group of active users. And many will be hit in the face with the realization that nobody cares what they\'re doing right now and so nobody is following them.<br /> <br /> The bigger problem with Twitter, however, is that there is no revenue model nor does there seem to be one developing in the near future. And this should worry you if you are an investor or employee at Twitter. Coolness does not pay the bills. Moreover, any attempts at charging Twits (is that what you call people who use Twitter?) or somehow doing anything for-profit runs the distinct risk of alienating the very people who are so active on Twitter. Going from free to charging for a service is not an easy proposition.<br /> <br /> If they get to 1 million subscribers and let\'s say each customer is worth $20, that implies Twitter is a $20 million company. That\'s great money but not nearly big enough to warrant all the attention that Twitter gets. And $20 per user is generous as presently each Twitter\'er is worth $0.<br /> <br /> Twitter is a classic example of a cool technology which is a terrible business. It is a technology/service that is built to be sold as there is no hope of it ever really be a solid standalone business. There is already lots of talk of Facebook acquiring it, but the built to flip strategy is a risky one in general and one which may be made worse by the current climate. <br /> <br /> I do ultimately think Twitter has a high chance of being acquired as someone will get infatuated with the technology and overpay for it. Cool often can get you a nice premium sale price. With or without an acquisition, I don\'t think anyone will be talking about Twittering or micro-blogging in a few years. Fads come and go and so will Twitter. << Less