azeem.azhar

Alan Patrick raised the per-weekly question of Twitter’s business model: how and when will it make money?

Now, as a quick aside on web20nomics, I am encouraged by Facebook’s ability to make money, heading towards $550m this year on 250m users, which isn’t a bad monetisation rate for a business without a business model (as it was described in 2007).

As monetisation rates go, it ain’t bad: $2-3 per user per year. On it’s current user base of 250m, if Facebook could triple their monetisation per user (which would put them below Yahoo), they would be a $1.6bn revenue company, which makes Yuri Milner’s call today a smart one.

But at least an order of magnitude off Google’s, which is between $40 and $80 per user per annum.

With Twitter heading north of 30m monthly users, monetisation rates as good as Facebook’s, Twitter would be making close to $10m per month, which ought to pay the electricity bills. The question is how?

You could:

• change functionality : likely a bad move as that would break your application ecosystem
• introduce new functionality for developers (like a billing mechanism)
• introduce premium developer services (e.g. for more frequent polling of the API)
• introduce adverts into tweetstreams (and offer paid for accounts without adverts)

My favourite–because of its simplicity–would be to introduce a pro account with nothing more than the label. The ‘I paid a $2 a month for this service’ label.

Why? Signalling.

As twitter gets louder and noisier, content and person discovery gets harder and harder. Topsy Search, Tweetmeme, Retweet, and Oneriot may start to help but just as my Web surfing has collapsed to the occasional Google search, techcrunch and Reddit, I fear that my twitter usage will collapse into a few hundred people who I follow and grow very slowly.

I need signals that suggest to me that someone may be useful to follow. And not a ’social media network marketing consultant’ who happens to have inveigled their way into my friend’s follow networks.

Essentially, another tweeter has private information which is there assessment about how good / valuable they are. There is public information but it is laborious to trawl through. Who are they following? Who follows them? What do they appear to tweet about? Twittergrader and Twitalyzer are very early, but I don’t believe robust, approaches to provide a ranking or rating that is public information.

It sounds counter intuitive but price is a well-known signal of private information and one which we all inherently understand.

P.S. Did I mention? Follow me on twitter…

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