Enabling a Rush of Innovation…and Revenue

Big news from Twitter: it has officially launched its “Firehose” API in which third-parties can have 100% access to Twitter’s data. Twitter proclaims the announcement as something “Enabling a Rush of Innovation” but you could easily argue it is “Enabling a Rush of Revenue” as Twitter will start to charge for different API packages.

Much like the recent announcement that Twitter will start placing advertising within search results, the concept of charging for access to its API is a no-brainer from a business perspective. It’s something that I have argued in the past that Twitter should have been actively considering given the value that the API provides to third-party services looking to use the API to build businesses.

As GigaOm’s Liz Gannes points out, the big question now is now much Twitter will charge for its API. It makes sense that smaller users will likely pay nothing or a modest amount, while high-volume API users (Tweetdeck, Seesmic, Scoopler??) will pay significant amounts.

Twitter said there are seven companies now using Firehose – Ellerdale, Collecta, Kosmix, Scoopler, twazzup, CrowdEye, and Chainn Search. Twitter did not talk about pricing structures said “these companies range from funded startups to part-time, one-person operations so we came up with a fair way to license access that scales with their business”.

What we’re finally seeing from Twitter is the foundations for a business plan that will generate enough revenue to justify the venture capital that it has attracted. Generating revenue from advertising and its API is something that Twitter could have introduced months ago but, for whatever reason, it decided to wait until early-2010 to do it.

Maybe the time is finally right, or maybe Twitter’s investors have put the hammer down, and make it clear that it was time for Twitter to quickly evolve from a popular project into a viable business.

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  • ed lee

    is it just me or does this feel like a bit of a pyramid scam – twitter charging third party devs for the right to do interesting things with its data and then pass on the obligations to monetise to those parties?

  • Anonymous

    I don’t see it that way given the API clearly has value to other companies that want to use it to create an online business. If they can pay for the API, and make money from running Twitter-based businesses, more power to them. The big question is how much Twitter will charge for the “privilege” of using the API. It will be a balancing act between charging enough to generate significant revenue, and not too to deter demand.