Twitter Business Model

Twitter is a popular micro-blogging platform and messaging service that has been gaining tremendous growth and user traction. There are already a growing number of politicians and celebrities using twitter.

It is no longer news, how Twitter is fast becoming a news source. We have learned about earthquakes minutes before Associated Press ‘broke’ the news. I first heard of the US Airways flight 1549 landing on the Hudson River in New York through Twitter. And we have witness Yahoo! layoffs through Twitter. It is undeniable that Twitter has become an important communication medium, so much so that I believe that Twitter is a new utility, such as electricity and water. As a communication vehicle, even with a 140 character limit, Twitter has been very versatile. You see more and more people sharing anything and everything, from links (using Tinyurl), pictures (using TwitPic), music (using blip.fm), and much more.

The most popular parlor game amongst technologist is to conjure up business models around the service.

The back seat driver, armchair quarterback, and meetoo MBA, will undoubtedly suggest an advertising-based revenue model. A common scenario is that for every 50 tweets, a small ad will be injected in your time line. This approach seems least intrusive. In fact, this simple business plan is used by The Icon Factory. The Icon Factory is the publisher of the free iPhone Twitter client Twitterrific. Twitterrific sells ad space right along your time line via their free iPhone Twitter client. Twitterrific is also available ad free for the Mac OS X for $15 and the iPhone and iPod Touch for $10.

Another avenue for revenue is to go a freemium route. The freemium model has worked well for services like Flickr. Flickr allows users to upgrade to a professional account with unlimited uploads and storage, ad-free browsing and sharing, and other benefits. Flickr’s pro account are available for $25 per year. Twitter can provide a set of key services to cater to corporate entities and marketers in pro account such as enhanced search and administrative tools. For example, some power users might be willing to pay a flat fee to have their friends limit increased by an additional 500 users. Dell, JetBlue, Whole Foods, Overstock, Zappos, and a great amount of pundits and cyber personalities are promoting their personal brands on Twitter and would be willing to upgrade to a professional account for added reliability, more friends, an additional features.

The open API has been a large part of success of Twitter. The simplicity and availability of the API has provided a fertile and organic environment for the growth of third party applications such as TweetDeck, Twitterrific, Twitpic, MrTweet, and many more. Ironically, as Twitter popularity has grown, a number of limitations and restraint have been placed on the API. For example, there are limits in the number of times a given Twitter user can request data from Twitter per hour. Again, some power users are willing to pay a fee to increase this limitations to better suit their needs.

In addition of a public API, Twitter has made available all the public Tweets, firehose access, in their systems to a small number of third party applications. A great many more third party vendors want access to the proverbial firehose than currently have access. The process to obtain firehose access is opaque and the willy-nilly discretion of Twitter management. The firehose access to public tweets should be available, for a fee, to any third party vendor.

Their is also a great monitization opportunity in providing private entreprisy groupware solutions. For example, Yammer is a version of Twitter aim specifically for companies and organizations.

As a platform for third party applications, and communication utility, Twitter is posed to be a long lasting company, if only they could just scale the service to their growth.


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