May 8th, 2009 § 8 Comments
Twitter is the third most popular social media network with something like 6 million unique visitors a month. It’s all over the media, used by celebrities and normal folk alike and really seems to be the next big thing. According to the Wikipedia article, Twitter has secured tens of millions of dollars in venture funding and the company could be worth up to $150 million.
So Twitter Makes Loads Of Money, Right?
Wrong. Twitter may have had over $50 million in venture capital sunk into it, but it does not make meaningful revenue. In fact, according to the previous link, Twitter has only just hired someone to think about what services Twitter could charge for.
Possible Revenue Streams
Twitter could sell advertising on user home pages or through Twitter search. They’re currently improving the search feature so this looks like a strong possibility. Putting adverts on the homepage when users aren’t used to them could create a backlash however, at least amongst those users who haven’t fully bought into the service.
The number of monetisation options is limited because people are used to Twitter being a free, slimmed down service. There aren’t exactly many features to upgrade and limiting usage now would seem unfair. Maybe the founders didn’t expect Twitter to take off in such a big way (and who could have foreseen 6 million users?) but I get the feeling they didn’t really think about monetising the service at all.
Where Twitter Went Wrong
People have come to expect social networks to be free, so Twitter had to offer a free service. They could however have stuck advertising on it from the start to bring in a trickle of revenue and acclimatise users to the ads. If the advertising increases it does so by degrees and doesn’t seem like such an intrusion. On the other hand, Twitter could have offered premium accounts for users who want an ad-free site. If the premium account fee were low enough a fair percentage of users would be willing to pay it.
They could also have limited the usage to, say, 50 friends, with an option to upgrade to an unlimited account for a yearly fee. This is the model that Flickr use and it works pretty well for them.
Twitter’s problem is, the boat has sailed and with it the opportunity to monetise every single user on the site. They may find themselves relying on secondary revenue from search ads – that is, potential secondary revenue – good luck getting that venture funding back….