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Twitter Profitable in 2009?



OK, I have learned my lesson. I am going to tell you right out of the gate that when I read this piece of information about Twitter turning a profit in 2009 I was a bit skeptical. Now, the second part of this is that the source, BusinessWeek, is well, BusinessWeek so I tend to pay attention a bit more. Well, the times they are a changin’ for sure because the distinction between the venerable BusinessWeek and the rest of the Internet space may be less noticeable than before. As I went through the article I read the following

In October, Twitter said it had struck multiyear arrangements that make users’ short blog postings available on Google.com and on Bing, which is run by Microsoft. Those agreements carry sufficient value to help Twitter achieve a small profit for 2009, say two people familiar with the company’s finances, who asked to remain anonymous because Twitter’s books are not a matter of public record.

I added the italics because I now immediately place this story in the category of rumor. I suspect that if Twitter wants people to know that it turned a profit, no matter how big or small, they will let us know. Do I think they actually did turn a profit? I honestly don’t know because I don’t do their accounting and I haven’t spoken to ‘sources’ who think that leaking corporate data is cool. Now, of course, let’s not discount the possibility that Twitter allowed the leaks but now we are getting into silly territory. What this looks like though is that BusinessWeek is starting to sound more like the tech blogs and new world media that it has fought against. Verify facts with the company being covered? Nope. Two anonymous insiders will do because the story is “hot”. Oh boy.

The one thing that is certain is that the biggest revenue generator (maybe only?) are the deals that were struck with Google and Microsoft for the Twitter feeds to be indexed in the search engines. These are rumored to be in the $25 million range with $15 million from Google and $10 million from Microsoft. If these numbers are indeed accurate I have to wonder what the $5 million difference is since the two companies are essentially getting the same data. Your speculation is welcome in the comments section here, as always.

Another part of the ‘information’ that was ‘leaked’ to BW was the fact that Twitter has been cutting expenses and has now been left with people being the bulk of the expense to run the service.

The company used to pay a lot of money to telecommunications companies for distributing billions of text messages over wireless networks. Twitter users can send and receive messages over both its Web service and text messages. Now that Twitter has become so popular, it has gained bargaining power with telecom companies and has managed to renegotiate so many deals with carriers that the company pays far less for the services.

With 105 employees and estimates placing the needed money to run the operation at $25 million per year either those 105 people are making some nice coin or they have deals that are starting to look like being a pre-IPO Google employee. Either way, good for them.

So as always is the tendency when looking at Twitter we must try to figure out just what will happen in the future to make more money through the widely used service. The BusinessWeek article tells us

Over the last year, however, executives have started to talk about the various ways the company has been exploring to generate revenue. In addition to the search deals, Twitter plans an advertising program for early next year. The company also will charge for commercial Twitter accounts that would let businesses analyze tweet traffic.

Get ready for 2010 to be a big year for Twitter as the world watches how they integrate advertising into the Tweet stream. Also, if you are a company you better make a little budget room for whatever commercial account services become available. Nothing was ‘leaked’ about how much that would cost so your guess is as good as ours or BusinessWeek’s or some anonymous guesser source.