How Twitter Can Make Money

Facebook has recently broken even, and Twitter is on record as having some interesting plans for making money from their service. I don’t know what those plans are, but I think Twitter is in a really good position to make money from their service.

What Not To Do

Twitter has become very popular, pretty fast, because they offer a simple service for free. Social networking is all about communication, and Twitter pares communication back down to its essence (sending people messages) and lets people do it without paying. Add to that the undeniable ego boost that comes from getting a significant number of followers, and Twitter is a great offering for the savvy online networker.

The most obvious way for Twitter to make money from this service would be to charge for it — but that’s not a good idea. Twitter should not start charging ordinary users for its service, because being free is one of its main attractions. If Twitter started charging ordinary users, I think we’d see the same response as we would if Facebook or MySpace did the same thing: outrage.

Advertising? Maybe

So, if you can’t get money from your users, how else to profit from the service you’re providing? Advertising is a popular option: Facebook likes to serve ‘relevant’ ads to its users, from advertisers who are attracted by the mountain of data Facebook has on its users’ interests and the real possibility for highly targeted advertising based on this data.

But everyone finds adverts annoying, and Twitter users would find them even more annoying because they’d be so much more apparent than they are on a site like Facebook. Inserting adverts straight into our tweet feeds would be horrible, because it would break up the flow of information: cool link, new photo, friend’s news, BUY MCDONALDS!, new blog post. Irritating.

Twitter could instead place adverts alongside our tweets feeds, instead of in them: this would be less intrusive, but would have the disadvantage of only serving ads to those who visited the Twitter website, not to those who use Twitter via its API. In any case, I think Twitter’s main aim should be to keep the experience of its ordinary users as clean and uninterrupted as possible, so as to keep those users coming back for more. Here’s why.

Money From The Big Fish

Twitter already has a bunch of users who advertise: businesses. Loads of businesses use Twitter to keep in touch with customers, post updates, promote their website or blog, provide discounts and special offers, etc. Twitter is a great place for businesses to reach their customers, and this is where the money lies.

Twitter should develop a suite of business tools and collect a subscription fee from those who want to use these tools. Off the top of my head, I can think of some stuff which I’d be happy to pay for (if I were a business):

  • In-depth follower analysis: when did my follower count go up/down? What’s my follower bounce rate (the percentage of people who follow then unfollow within, say, a day)?
  • Link tracking: like bit.ly, but integrated with the Twitter website. How many people click my links? How soon after I tweeted a link did people click? Twitter already seems to have standardised on bit.ly as a link shortening service, and I actually wouldn’t be surprised to see Twitter buy bit.ly, or a similar service
  • Tweet archives: a searchable archive of my tweets, with related stats for each tweet

On the assumption that it would cost more to provide these tools to businesses with more followers, Twitter could charge according to follower numbers: say $10/month for up to 1000 followers, $15/month for up to 5000, etc.

In short, their are really two kinds of users on Twitter: ordinary folk who just want to tweet their latest news, and businesses who want to promote themselves to those ordinary folk. Keep Twitter free for the ordinaries, and charge the businesses for cool tools that make promotion more effective.

I think this would be a great way to make money from Twitter, and if they don’t implement something like this, I might! :)