Has Twitter Doomed Their Monetization?

Although I’m not a big fan of Twitter, I am almost forced to read about them every single day. Everywhere I go I can’t help but see a blog post or an article about Twitter. Most of these articles are about tools, strategies or more so lately is the monetization of Twitter. Not as a business trying to use Twitter to generate new customers, but the hot topic is discussing which business model Twitter will use in an attempt to turn a profit.

No one really knows the number of users Twitter actually has. The Wall Street Journal estimated users to be about 32.1 Million. Daily Blog Tips has what I believe to be more accurate numbers which they estimate at about 5 million people.

As far as financing, according to Crunchbase, Twitter has accumulated $55 million dollars in funding from several venture capital companies.

In regards to traffic and visitors going to Twitter, most sources can agree the unique visitors a month hover currently at about 20 million people. Here’s the Compete chart and breakdown.

Anyone with a sound mind can agree that Twitter has potential. The question is exactly how will they monetize this potential and turn it into actual profits. No one knows the answer to this although there is a lot of speculation from selling data to creating their own comparative shopping base. I have no idea how or what they would or even should do.

What I do want to point out is how they basically DOOMED their monetization right from the start. Yeah, I know those are strong words especially from someone who doesn’t even play in the startup world. Take a moment though and hear me out.

Like I said, I’ve been reading about Twitter monetization for a long time just like you. Unlike Facebook or Myspace, Twitter has ruled out the standard web advertising model because they feel it’s too intrusive and will dampen the experience for their users. That’s fine and perfectly acceptable. You have to give them kudos for looking out for their users.

Even if they did institute a web based ad model I doubt it would work. This brings me to crux of this whole article.

You need to understand what a destination site is.

  • Facebook is a destination site.
  • Myspace is a destination site.
  • Bebo is a destination site.

Most social networks area a destination site. What do I mean? In order to use them you must actually go to the site to view your friends, groups, forums and any other interaction you want to make in the community.

Twitter is NOT a destination site.

Shortly after Twitter first started they opened up their system with an API which allowed developers to create applications which can interact with Twitter. The applications can get user data, post Tweets, follow or unfollow people and basically do everything and even a few more things than you can do on Twitter itself. This was great. It allowed users to communicate in a way which they chose. As a result, Twitter’s numbers have grown significantly.

In fact a whole underground business model has been created for companies to use Twitter’s data. Many companies are charging monthly fees for people to use their services and making a decent profite, yet Twitter gets nothing in return. Many would argue that Twitter could simply start charging these developers for access, but how many would pay? I’m not sure, but this is an idea which I have also come up with in thinking about this. It would only be fair.

Remember… YOU DON’T HAVE TO GO TO TWITTER TO USE TWITTER!

This openess, in my mind, has also put Twitter between a rock and a hard place. Because you don’t actually have to go to Twitter.com to use it, Twitter doesn’t have the views it needs to put in place a workable web based advertising campaign. Sure it would make money, but would it be enough to put them in profit? I don’t think so.

In order for Twitter to really break the profit barrier they are going to have to think outside the box.

Sure they could charge businesses for Premium features, but the number of businesses on Twitter are small in comparison to the users. The users are the bigger market. I believe this is the key for Twitter to become profitable.

In other words if they charged users additional fees for value added services this might be a profitable venture. Many Asian Social Networks charge for small items like custom avatars or Premium features and they are doing quite well. The difference though is that charging for these Premium features is acceptable in the Asian market. The US market is not so keen to being charged for these items and are under an umbrella of “entitlement” meaning they are OWED these features for FREE.

What will Twitter do? I’m not sure. They are certainly a group of talented people with an eye for innovation. All we can do is wait and see what happens next.

6 Comments

  1. […] Has Twitter Doomed Their Monetization?… […]



  2. […] with fascination a piece by old friend, mentor and (business) model Armand Morin entitled “Has Twitter Doomed Their Monetization.” Read it – great […]



  3. JacobKorn on June 27, 2009 at 5:14 am

    This is very true and a worry. They have the numbers but no way to harness their potential.

    Unless they are just trying to build up a “technology” so to speak and license it out or simply sell their company when it gets to the stage they want. For example Facebook already tried to buy them.



  4. […] not the only one who thinks that way. Here’s an interesting take on the topic by my friend and top Internet marketer Armand Morin. The issue, according to him, is […]



  5. […] not the only one who thinks that way. Here’s an interesting take on the topic by my friend and top Internet marketer Armand Morin. The issue, according to him, is […]



  6. […] not the only one who thinks that way. Here’s an interesting take on the topic by my friend and top Internet marketer Armand Morin. The issue, according to him, is […]