about Twitter’s potential business model.

After reading a post from Dave Winer’s Blog about twitter and the New York Times (here),

Here’s my answer to Fred Wilson and to everyone wandering about how Twitter could make money.

 

So far, everyone (including you) views twitter as a medium. When times comes to monetize on such medium, you all surge to the advertising model to make a profit. I think it was Dick Costolo who said - when talking about twitter’s revenue model - that it would be creative and innovative.

What do we have for creative and innovative revenue channel ? live and die ads based on re-tweet popularity… Not bad, but it’s not exactly revolutionary.

To me, viewing twitter as a medium is just going away from its core and its potentially very high revenue streams. Just because they call it “Social Media” doesn’t mean it’s only that.

 

When I think of twitter, I think of it as a protocol. A protocol to share tweets (as in its first intended meaning, like how birds communicate). A communication protocol.

This is the core of twitter, the tweets. And tweets have evolved from being just random thoughts, what is currently happening to a user, to being links, pictures, videos and so much more.

But with this advertising model that twitter is primarily going after, it’s actually (IMHO) jeopardizing its own core.

Granted, advertising is one of many revenue streams twitter should capitalize on, but it’s far from being possibly the most lucrative one.

 

First and foremost, it’s only monetizing on brands/companies etc. to turn a profit. But how much more users are you leaving at the door there?

When I look at all the uses twitter has enabled both users and companies to raise and expand the conversation, it feels like twitter itself is missing on so many opportunities.

 

Let’s take a look at the types of users twitter has so far first :

you’ve got basically 3 types :

_ normal users (and I put over-sharers and so called social media gurus in there), _developers,

_brands/companies.

 

Of those 3 types, it’s only monetizing on brands, companies and a few devs who need extensive API calls. But the biggest stake of users are left there for free.

 

Out of 200 Millions of users, twitter is probably going after only 5% of them (if not less).

What would be so wrong to monetize on normal users too ? Twitter’s model is definitely going to be freemium in the long run, but it’s taking the same boring route Google and Facebook have done with ads (and so many more businesses have too).

 

On monetizing normal users, twitter could very well offer premium services such as (in no particular order, provided in pack or not) :

 

_verified accounts,

_ability to turn hashtags (with a limit per tweet) into “one character count”,

_ability to turn links into “one character count” (instead of harming the shortening services ecosystem by providing their own t.co URL shortener),

_standard analytics (so many social media gurus or consultant would buy that one…),

_charging after a certain amount of tweets/day and the like,

_advanced list control,

_advanced curation capabilities (with API underneath to let the dev ecosystem tap into it, charge by consumption, and let the dev ecosystem integrate it into their own clients/apps/services),

 

To developers, I would say let them innovate in place of twitter, just the old school way :

Instead of expecting the dev ecosystem to focus on stuff like analytics, let them make whatever they want.

If twitter was relying around a various sets of API (free and premium ones), it wouldn’t matter if all users weren’t using the main client. By Charging per consumption or usage (a la Amazon Web Services) for each type of APIs (I’m assuming here a set of APIs on top/or in conjunction with the free Firehose one , like an Analytics API, Twitter Annotation feature with both free and advanced capabilities etc.)

Couple it with a standardized payments system that devs could harness to make a profit while twitter gets its share for premium API services usage, it’s a win.

 

Lastly, for developers, the ability to get more into the side panel. The main stream should be left untouched, but the side panel could very well be customized to let third party developers monetize their service.

one way I see this, is letting a service like instagram or twitpic have more control over the side panel where pictures are displayed, some sort of an “app space” where a twitter user could actually interact with his other accounts linked with twitter. Think how a twitter user also using foursquare could interact directly from within twitter etc.

 

And to finish with the brands and companies,

I think brands like Dell, Best Buy or Whole Foods or even Microsoft would greatly benefit from having High Profile account.

to Dell, twitter is a customer support service (and basically twitter is making no money from it, while a client like CoTweet is…), it’s also a Customer Relations Tool, a great PR channel, and also a great “special deals system”.

Why not make them pay to better serve their users ? Why not let them have some sort of High end twitter profile where they could have all of their twitter accounts in one place, let them have the ability to have more control over their follower base and the ability to directly measure their impact.

It could also include multi-user accounts (which small companies might also be interested in having access to) and the ability to have private streams (like in-company stream). Of course, all of this should be directly available through the premium APIs so that the developers can let their own users access it from their own services or clients while twitter makes their profit even when users or brands are not using those from their site. (I’m thinking like integrate premium APIs with something like Zendesk or even CoTweet etc…)

 

To conclude (hoping you’re actually going to read this and made it this far), I’d like to quickly mention the Annotations feature, and also the idea of using twitter as a way to save notes from class that you talked about on your blog a few days ago…

First, the Annotations feature announced a while ago would empower all of this but if actually done properly could very well drive user adoption of twitter (i’m still having issues getting my friends on it), Having the opportunity for users to have separate twitter feeds (not just like a list, but more like a separate room/channel) would let this idea of using twitter as a public note taking medium doable. Think about how Universities and schools alike could own SideRooms so that their students could engage with their class, provide feedback, ask questions all of this while having a good way to provide context to all of these tweet notes. I’m not saying that they should be private, but they should have their own stream, and not get mixed up with a tweet from LeBron James or Paris Hilton attached with ads…

 

Hell, let’s assume the premium account is charged 5$/mo and that only 1% of twitter’s users pay for it,  that the API consumption is charged in a similar fashion Amazon does with its Amazon Web Services and that Brand Profiles are charged at a high premium like 500$/mo with only 50k brands (or you could have various plans depending on the size and number of users of said Brand Profile) paying for it,

This would give twitter at the very least 500 Millions $ each years ! (120millions from the premium accounts, 300M from the Brands Profile and i’m assuming 80M$ from premium API, but it’s just a guess, and it could very well be much more than this….)

 

Then, we can talk about Promoted tweets and the likes…. But simply having promoted tweets (with very random trending topics) that a user does not necessarily has interest into (just like the LeBron tweet someone was talking about) won’t give a user enough incentives to consume tweets just for the sake of the platform….

Twitter does need some sort of advertising like the promoted tweets, and it needs a better search experience (with eventually TweetAds on it), but it could very well make a living with all the above too. And there’s nothing wrong with charging a premium for such kind of services.