Twitter’s Business Model

I woke up this morning and found a twitter message on my phone from chris herbert pointing me to this discussion of twitter’s business model on techmeme

http://x98.us/pt

That’s the tiny url that chris sent me. I hope it works. I’m still limited to my blackberry for internet here on the great barrier reef

I love that my twitter friends keep me posted on stuff that matters to me and I love it even more to see so many friends discussing something that is near and dear to my heart – the question of how twitter will make money.

I left a comment on Alan Stern’s post that set this whole thing off. I don’t think freemium is where the big money is, at least for Twitter.That doesn’t mean that freemium offering isn’t a smart move, but I think are smarter ones.

And I also noted that some of the best web companies of our time; Google, YouTube, Skype, and Facebook all launched without a business model and too their sweet time getting to one.

To me its really simple. You can’t monetize web services very well until you have an audience of scale. Jason Calacanis suggests that 10mm monthly uniques is where you have scale. I think it can be less in some cases (highly targeted services) and more in some cases (social nets). But every ounce of time, energy, money, and brainpower you spend on thinking about how to monetize will take you away from the goal of getting to scale. Because if you don’t get to scale, you don’t have a business anyway.

So I agree with Jason and Dave’s posts on this topic.

Marc Cantor’s post is interesting because he suggests that Twitter needs to signal its business model so that developers are comfortable building on top of its api. I think there is some truth to that, but actions speak louder than words. If Twitter behaves well towards its developer community and keeps giving them what they need, I think they’ll be patient too.

I think you have to look no farther than facebook to see where all of this is headed. They are the Google of social media. They are going to figure it out When they do something that works (becoming a platform for third party apps) others will follow in their wake. When they make a mistake (beacon version one) others will learn from that mistake. I am not saying that twitter is going to monetize exactly the way facebook is going, but I think that’s a good place to look for inspiration right now. If twitter does things right, developers will be as excited to build on top of its platform as they are right now about the facebook platform.