Posted January 26, 2009 10:35 am by with 18 comments

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Can you imagine how much more than $250 million Twitter would be worth if it ever figures out a revenue model?

I suspect the micro-blogging service must have something up its sleeve, otherwise why would a venture capital firm reportedly dump $20 million into the company–giving it the $250M valuation?

Personally, I hope Twitter can find a way to support itself, before the money runs out. It’s no coincidence the company is seeing incredible growth, the service is becoming an invaluable tool for communication. Heck, some people are even suggesting that it’s becoming an alternative channel for bloggers.

Just the other day, I considered how I communicated with friends and peers before the advent of Twitter. For me, Twitter has become a valuable tool for three reasons:

  1. It’s a communication channel. It’s faster than sending an email and allows me to reach a wider audience than instant messenger.
  2. It’s a networking channel. I’d estimate that over the course of a year, I’d attend a dozen conferences and maybe network with, at most, 30 people at each event. With Twitter that number is in the thousands–all from the comfort of my desk!
  3. It’s a marketing channel. Whether I’m marketing my own personal brand, this blog, Trackur, SEM Vendor, I won’t lie: Twitter is a valuable source of eyeballs.

Now, here’s the key. I probably represent a small minority of folks that use Twitter for the above 3 reasons–most people use Twitter for non-business "chats." But, perhaps Twitter needs to look at a business model that doesn’t try to earn revenue from each of the 6 million users. Instead, look at how users like me are using Twitter and figure out how to generate revenue from our business use of the service.

What ideas do you have for how Twitter can monetize its service?

  • I agree, I would pay happily to keep Twitter going. Follow Flickr’s model.

    What Twitter can do is allow unlimited updates for paying users via the API and limit non payers to 50 updates per hour.

    I would pay 30-50 dollars a year for the privilege and I am sure others would too.

    Tom Royce’s last blog post..Home Prices Increase In a Number of States in 2008

  • I also think that there’s something already in the works if there’s this kind of valuation – we’ll just have to wait and see. I believe the kind of positions and recruiting they’re doing right now speaks to a business model that hasn’t seen the light of day yet.

  • It would b quite a challenge to monetize it without losing the average followers. As long is it is free the sign ups and usage would continue growing at the current phenomenal pace and even accelerated pace.

    May be the large corporates with big budgets could pay to use it for large number of business oriented updates.

  • I certainly wouldn’t mind paying a bit of a fee for a good service like Twitter.

    @Tom Royce… 50 updates per hour? Do you mean per day or per week? I don’t even do 50 updates per day and if it’s a slow week, per week. It will be interesting to see how they monetize.

    Although we are all sick of ads infiltrating every site, perhaps they could incorporate short text ads in the feeds? Annoying I know but it would keep the site free for all.

    Kate Dickman’s last blog post..Let the Conversation Begin! Listen First?

  • Oops… let me replace “feeds” with the word “streams”.

    Kate Dickman’s last blog post..Let the Conversation Begin! Listen First?

  • @Tom – I think some kind of premium to unlock more requests from the API would be one I would pay for. I easily use up 100 API requests an hour–which appears to be the limit–because I’m not only checking my stream, but also @s, DMs, and Twitter searches.

  • People as influencing as you Andy certainly use it more than a small-timer such as myself 🙂 I guess I would not have to pay that extra money to have unlimited API requests but hopefully someday I will. The question is, how many users are as active as Andy who would need that many requests? (I actually honestly don’t know.) So perhaps they could even make the premium option be half that.

    Kate Dickman’s last blog post..Let the Conversation Begin! Listen First?

  • “…most people use Twitter for non-business chats…”

    Andy, in our little corner of the Twitterverse, I’m not sure I’d agree with you since you (and I and every other user of the service) are our own brand and the totality of each of our conversations reflect upon that brand which (directly or indirectly) impacts business (even if some of the tweets aren’t business related).

  • @Todd – sure, some folks don’t realize that their tweets impact their business/brand, but I would suspect that a large majority of Twitter users do not consider it to be a business tool.

  • I actually believe that the monetization of Twitter will come less through ads and tiered-pay models, then from partnerships (which is one of the positions they’ve been recruiting for is about). Although, like Andy, I’d pay for an extended plan for over the 100API call limit.

  • There’s a lot of online user data in Twitter that I’m sure Google would love to have.

    Russ’s last blog post..SEO Reading and Friday Link Finds

  • Taken from a post I wrote last year:

    “…Twitter is all about people. As a user you follow people and people follow you. But what if you could follow not just people but objects as well? Objects like products, services, websites etc. Anything that someone has an interest in promoting and which one or more people might be interested in getting updates (object-tweets) about.”


    “Object-tweet accounts could operate under a freemium model whereby the object-tweet account holder gets a certain number of free tweets per month and pays a premium for the ability to send and receive more tweets about the object per month.”

    Louis Adekoya’s last blog post..Facebook Convert – A Revenue Earning Idea for Facebook

  • It still sounds significantly overvalued. One thing that disturbs me about a lot of these valuations is that it’s based on the number of accounts. “Accounts” don’t take into consideration whether or not the user is human, alive, active, engaged, duplicate, abandoned…

    Douglas Karr’s last blog post..There’s One Magazine I Pay For: Wired

  • I would propose that Twitter monetize by adding sponsored tweets for every 100 updates you receive. Users would be able to pay for a premium account that would be free of ads. I think advertisers would pay big money to reach 6 million cell phones. However it can’t be overly intrusive, thus the 1 ad per 100 updates and an option to opt out of ads for a small fee.

    Charles Sipe’s last blog post..Executive Insight: Study Shows People Willing to Pay More When Products are Touched

  • I currently have 5 Twitter streams but have to manage them all seperately, using different email addresses for each. I’d pay to link all the accounts and have some kind of dashboard to manage them all from.

  • I’d pay a monthly sub to twitter, as I rekon it’s worth it.

    Advertising shifts the agenda to the advertisers and frankly I am weary of the way it’s forced in my face. Like many I tune out and even block a lot of it. So where is the value for advertisers?

    If a service as good as twitted can’t be user funded then it really needs to find a way of better expressing it’s actual value.


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  • They dont need to ask money from you, they can ad their adverts like facebook has.

    fasblog’s last blog post..How To Get Top Ranking In Google