TechCrunch (Michael Arrington) has a post looking at Twitter’s “Revenue Dilemma”, looking at how Twitter is still having a hard time trying to figure out how much money it can make offering services such as advertising and analytics.
It’s an issue that continues to attraction attention as the number of people using Twitter has surpassed 50 million, which, in theory, means there’s a large audience that the company can start to monetize.
While the spotlight is on how Twitter is going to make money, there’s an interesting story starting emerge: a growing number of companies using Twitter’s API that are creating businesses that are generating revenue.
This begs the question is what happens if an “economic ecosystem” is established around Twitter but doesn’t include Twitter itself. In other words, what happens if hundreds of businesses are created using Twitter’s API but the entity supporting them – Twitter – can’t make revenue or, at least, enough revenue to be viable.
A good example of Twitter’s emerging economic ecosystem is StockTwits, which has emerged as a popular place for investors to talk about investment ideas. StockTwits recently made an intriguing move by launching a desktop application that looks and feels a lot like TweetDeck but has a lot of investor-friendly features. (TechCrunch has an extensive review.)
StockTwits offers a free version and sells a premium version that goes for $50/month or $400 to $500 a year. The company has raised $1.6-million, suggesting investors also think StockTwits can become a viable business and/or investment opportunity.
Another example is Tweetdeck, the most popular tool to use Twitter other than Twitter.com. While Tweetdeck has yet to come up with a business model, it is attracting enough users to a compelling service that should give it a solid foundation to generate revenue.
As well, a growing number number of businesses are being created that are focused on areas such as search (Twazzup, Scoopler), data analytics, e-commerce (Tweetbucks) and marketing. Some are making money from subscription-based services, while some are simply using AdSense.
Meanwhile, Twitter talks the talk about making revenue has yet to walk the walk. There are lots of ideas bouncing around but nothing has emerged that suggest Twitter has solved its revenue riddle.
For the companies building viable business around Twitter, the fact Twitter isn’t making money has to be somewhat of a concern. After all, you can’t have healthy branches if the tree is sick.
StockTwits co-founder Howard Lindzon said it Twitter should be able to make money and “it is past the point of funny that they have not”.
“Twitter witter is a great lead engine, what I always thought it wwas great at,” he said. “As just a lead engine, Twitter SHOULD make hundreds of millions but who knows.”