What started as a simple reply to Matthew Dryden’s comment on the July 18th tech5 podcast here at Indigo Spot turned into a long-winded response.
Matt asked,
Speaking of rocky web ad business…I keep hearing that Twitter will eventually die out due to lack of ad revenue. Do you know the story on that?
Show Me The Money!
I don’t know that Twitter will die out, but there is a fun discussion that surfaces every few months about how Twitter is going to monetize their service. I am not sure that they aren’t already.
Looking at the amount of users and data that Twitter is storing, I cannot help but think that they are selling some very powerful anonymous statistics. Think about the iPhone 3G release and the amount of tweets related to that alone.
I would think that Apple, or more likely their competitors would be interested to see what sort of online “buzz” was created by the marketing of the iPhone 3G leading up to and throughout the entire launch.
Of course, I am purely speculating on that. It is quite possible that Twitter is hoping for someone big to swoop in and buy them. Then it doesn’t matter if there are ads added to the service for users because they can point the finger at the big, bad buyout corp.
Share and Share-alike?
Perhaps there is a revenue-sharing model in place for all of the commercial applications that leverage its APIs. Twitterific is a popular client, but it displays ads until you purchase a license. Then again, I think Twitter’s API is open to all, so I’m not sure they could control the use of it, unless there are advanced features available to developers who pay a premium.
This just does not seem likely to me. I have been wrong before though. So if you’re a developer in the “super sekrit Twitter club”, drop me a line. I’d like to hear more.
But Think of the Users!
Users are essential for any application to exist and be useful. Funny how that works. In any case, there are those who claim that Twitter would lose most of its users if it went to an ad-based model, or if it went to a subscription model. They might be right.
Pownce is a similar service to Twitter, but offers a “Pro” version for those who wish to pay a nominal fee per year. I would like to point out that this model has also worked well for Flickr. Of course, these two services were set up with those models in mind, so users gain additional features and functionality above and beyond what your typical user might need.
What could Twitter possibly offer to users now? They offer everything you need in one tidy little, downtime-prone package of fail whale, right?
Apply Some Kung Fu to the Equation
Merlin Mann, of 43folders and You Like Nice Today fame, put some thought into some features he would like to see added to the Twitter user profile page and wrote about it over on his kung fu grippe site.
My thumbnail ideas for useful information to display on an advanced, public Twitter profile page, per user. I.E.: Stats and heuristics to help me decide if this person will be interesting/unannoying to follow on Twitter.
- Average and highest daily post volume
- %age of total posts that are “@” responses
- %age of total posts that include a link
- Five most favorited posts by this person
- Five posts by this person that attracted the most “@” responses
- (up to) Five people this person follows who I also follow
- (SORT BY least number of followers ASC)
- [tells me more than if they follow CNN or Jason Calicacacainis]
- Five most followed people who follow this person
- Ratio of
- Number of posts to number of people Followed (“The ‘Are You Really Using This?’ Index”)
- Favorited posts to number of people they follow (“The Joy Index”)
- Followers to Followed people (“The Reciprocation Index”)
- Bonus: percentage of total links that point to the same domain name. (“DoucheFilter”)
- Yeah it requires decrypting shorturls; that’s why we have computers.
So, yeah. Unpack those left joins, and have at it, boffins.
Ah, the eloquence of genius. Honestly, Merlin can make you laugh while reciting a proposal for a unified theory of the universe. However, he’s not the only person to have ideas about extending the tools available to users. I realize that the beauty of Twitter is in its simplicity, and that’s great, but there are some users who would pay a premium for a little more complexity and customization.
There’s No Demand For That
If there were no demand for customization and extensibility, then Identi.ca probably would not exist. At least, not yet. Identi.ca is a microblogging service, like Twitter, that runs on an open source platform, Laconi.ca. Aside from the usual benefits of open source software, the beauty of Identi.ca, or rather the platform itself, is that users can compile and run their own microblogs.
These individual microblogs, thanks to OpenMicroblogging specification, can then talk to each other. So for users, it doesn’t matter where your account resides, you can “follow” others and they can “follow” you on any of the Laconi.ca installations. Identi.ca is playing catch-up on features with Twitter, but they do have a Twitter-compatible API now which will allow developers to easily port their applications to work with Identi.ca. Identicarific, anyone?
Where Do We Go Now?
For a moment, let’s suppose that Identi.ca catches up with Twitter with its feature set. Since it is open source, I don’t expect that we’ll see Identi.ca go ad-driven any time soon. So if Twitter manages to drive their users away, is Identi.ca the obvious choice? (I would argue not in its current state, but step into the future with me for this, please.)
In this future scenario, Twitter becomes ad and subscription-driven. Why? Because it’s my scenario. Users leave in droves, some starting their own microblogs, others joining microblogs of friends and acquaintances and the microblogosphere explodes with open source goodness.
And then, AdSense comes along again. That’s right. The affiliates will run rampant. As with many blogs on the World Wide Web, you can bet those microblogs are going to want to try and make a little income from their services. After all, we all want to retire early.
Back to Reality
I don’t really think that scenario will happen, but it is fun to “What If” every now and again. Based on human behavior, Twitter could get away with adding some subscription features and even throwing some sidebar ads on the pages of free accounts. Sure, the servers will explode with complaints and idle threats, and some users will even take their 140 characters elsewhere… for a little bit.
But they’ll come back. They always do.
So kind readers, what do you think will happen?
Is Twitter doomed?
Are ads a failure waiting to happen again?
Do you follow me on Twitter?
