revenue

An Open Letter to Biz Stone

By Mark Evans in Social Media 1 Comment Tags: , , ,

Dear Biz,

I’m sure you appreciate the intense, burning interest that people have in how Twitter is going to make money. After all, you’ve got more than 50 million users, which has caused the monetization buzz to get more increasingly feverish the more popular that Twitter becomes.

But can you do me a favour: please stop talking about how Twitter is going to be announcing a business model soon. It’s an act that, frankly, has grown tired because it keeps repeating itself.

Yes, I understand that you’ve got to answer the “money” question every time you do an interview but the thing is you keep giving interviews so they keep asking the money question. It’s a vicious circle that’s become more vicious.

That said, it seems that you have a hard time not playing the game so when you appeared on TV yesterday, you declared Twitter will unveil a business model in the next month.

Is this a tease or do you really mean it? The problem is no one is sure whether Twitter will actually announce a business model because we’ve been led down this path before only to be disappointed.

I’m hoping this time you mean it but time will time.


Enabling a Rush of Innovation…and Revenue

By Mark Evans in Social Media 2 Comments Tags: , , ,

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.

Is Twitter’s Data a Goldmine?

By Mark Evans in Social Media No Comments Tags: , , , ,

The blogosphere was abuzz yesterday when it was disclosedt that Twitter is having discussions with Google and Microsoft about giving them access to the firehose of data generated by Twitter users, including links.

There were enthusiastic discussions about whether these potential deals would finally mean Twitter would be able to create a viable business model given Google and Microsoft may be willing to pay millions of dollars for access to the data. My first thought was that Google pays Firefox millions of dollars in referral fees to drive traffic so striking a data deal with Twitter could see the same kind of financial return.

While a deal with Google and/or Microsoft is definitely interesting, a far more intriguing story comes from Silicon Valley Insider, which reports that Twitter is already selling its “firehose” of data, typically between $1,500 to $3,000 a month.

If you think about all the companies that have been created within the Twitter ecosystem that have Twitter data at the heart of what they do, selling data – even to small customers – could be a good source of revenue. It’s a volume business but Twitter controls the keys to the kingdom so it could also be lucrative.

Maybe selling data is Twitter’s financial salvation – much like Google stumbled upon the idea of AdSense while it was searching for a way to make money. (Truth be told, Google borrowed the concept from Overture).

In the past, I’ve suggested Twitter should/could charge high-volume users of its API – a concept that always generated healthy pushback. Data, however, could be a more appealing and palatable option.

What If Everyone Makes Money Except Twitter?

By Mark Evans in Social Media 3 Comments Tags: , , ,

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.”


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