Twitter and the Business Model 2009

December 30, 2008

in phweet, twitter

I wrote this post a month ago. I’ve decided to post it. Especially after seeing Ev’s video comments just before Xmas. On the one hand I’d like to thank Twitter for the opportunity it presented to me in 2008. Twitter the organization rather than the community continues to leave me out in the cold.

I’m a Twitter Developer. Well sort of. I can’t be a Twitter Developer if I can’t create a model that will make money. The only Twitter developers that are likely to be making money right now are those few with iPhone applications. I doubt any others make money. I can’t think of any.

I’d also like to register that I’ve never been contacted by Twitter about Phweet, to ask how it is going, share what they think of it, or in any way make me feel like I may be part of their success. It’s not like we haven’t tried either. I was given great early advice to “love twitter” and I still do. (I’ve added “developer” learning and Skype comparisons at the end.).  However, I have no clue about how to “talk” to people that really matter at Twitter. I also believe that many other developers and I have a lot to offer.

The Money Horizon:

The problem with Twitter is it is a pipe and we send signals down it. That means it’s not that different to the internet, just text-based. You could sort of charge for packets. Most of these things have been debated in the past. Twitter’s problem is one that Phweet set out to solve when it was designed – for Twitter.

The tweets that are valuable are the ones that escalate to conversations. An @ reply is also many times more valuable to the community than a DM. Both are an escalation. Both imply some form of relationship or exchange. Key word that! Exchange.

Let me point out how services with disparate end points make money. From I want to pay you. Oh here’s my Visa or Amex card. The bank provides the Trust and guarantee. They take a percentage. Then when it comes to telephony we also have an exchange. They connect the call – we know the end points but I pay for the calls I make. Thus the telephone co takes a toll on the conversation. Thankfully the toll is now less than it was and we can have more global conversations at little or no cost. Banks have learned that we need low levels of friction to create interesting commercial models. It the interest or the percent is too high the business goes elsewhere. For that matter, governments have learnt the same. When tax rates are too high the business goes elsewhere.

Twitter is great because, unlike IM systems, there is no approval to follow. It works because it is open like the original telephone. In Twitter you choose your own profile. So far it is rather limited. Still you can link it to something else. Interestingly many are using multiple Twitter accounts and it is built in to some clients as an option. So perhaps we do want more than one identity.

So lets come back to the exchange. Each tweet has a unique URL. And there it stops. There’s no way to add to that URL, whether a comment or escalate it to something more. When things escalate on Twitter for the most part they go off twitter. It becomes a Skype call. Blog posts, a meetup etc. The community at large doesn’t benefit from this and in fact would find it hard to follow or find. The users have partially solved this by using #tags and Summize now being part of Twitter search makes it many times more useful. Then there are also problems.

For commerce to happen around Twitter there must be a form of exchange. Each Tweet is a potential exchange. That is what Phweet is, does and demonstrates. The easier it is for conversations to self organize and escalate around a URL than anything else. In fact that is the natural order of things on the web. We relate to exchanges. When every page potentially becomes an exchange then it becomes even more interesting.

Now what problem is this solving?
Communications today when they escalate are inside out. We worry about the endpoints rather than the conditions. Today we have things like caller and receiver rather than “hosts” and “participants”. Remember a host serves or looks after the community so while they can send requests they can’t interrupt potential participants. Now this is apparent in how “control” is managed in Phweet.

The telephone/communications exchange can be decentralized and put into the users hands and controls. Any individual could build as many exchanges as they saw fit. They could be persistent or temporary. More importantly these exchanges aren’t really exchanges in the tradition of switches. They are in fact info contracts. Thus the host (originator) of the tweet can decide whether it is open for discussion, addition etc. In fact the contract could become quite complex. I sometimes joke with other Phweeters that I could require them to sign a NDA before being able to accept and activate and talk to me.

Now this might not seem that interesting on your standard tweet. However if it is a tweet about work and availability, or a Tweet of an item for sale this URL could represent something much bigger. The beauty is Twitter doesn’t need to work out the classifications of things being sold on Twitter. A developer could. Twitter doesn’t need to know how to make the Phone calls and protect the privacy of the parties. (Phweet could and does already!). Twitter doesn’t need to create the dating and meetup infrastructure. A developer could. Twitter doesn’t need to do anything to reap the rewards of open customer service. Eg @comcastcares I have a problem x. Was there a public answer? Well a Developer could.

What do we need? We need a way to make money. So we need a way to escalate the conversation. You can’t do that unless we have a charging format. eBay takes an auction fee. Skype charges for minutes, Craiglist for some listings. Most services around Astrology (eg Keen) or other online services take huge percentages. Apple does pretty well at 30% on iPhone apps and Twitter isn’t even sharing in the ones sold to use Twitter. I’m an advocate for a credit card like rate being applied to Twitter. A couple of %.  Why not start with 5%. Then those finance charges are more than covered.

How would Twitter get there?
Work out how developers can tie in to the unique URL’s for each Tweet. Make it easy to expand the page and the value on it. A tweet is not just a tweet. I don’t really see the difference between tweeting that I’m listing my car for sale, and I’m watching TV. The thing is I probably would like to have responses to each but they may be different. I think it is huge when NetFlix decides to bring my Tweets about movies in with others or introduce me to others that are watching the same movie now.

These exchanges can still have a half life or disappear quickly. Part of the beauty of twitter is how quickly a tweet is forgotten although they stay around! More importantly exchanges or at least higher order ones represent services which i may or may not subscribe to. Some are time sensitive some aren’t. Twitter’s current delivery system doesn’t really guarantee time sensitive delivery or location based although the SMS can be tweaked a little (recently has not been reliable).

For me, the value of users controlling the exchanges via the URL is they are the hosts and they can set the rules and create the options around it. Blogging is then something that is completely different. In fact could be reinvented. I doubt Six Apart sees this in buying Pownce. The signals are for the most part public. The access to the tweet may not even be public in the longer term. That’s not much different to a letter vs a postcard and it is illegal to read others postcards in the mail in many places.

Lifestreams should lead to natural intersections. Ah another form of exchange. Who goes first? The growth of Twitter clones suggests many see the value to organizations in just learning faster. Add in location to Twitter in an effective fashion and then there is an even better prize. Tweets by location when placed in the context of all written above is a hugely valuable prize. Add in the ability to select or choose profiles and from which service you want to attach to the URL you are tweeting and we have user centric control over profiles and context before exchange. The approach provides more protection than anything built in to the phone system.

Why should all this be interesting? Commerce is not click to call unless it is big business. When you take the friction out of escalating conversations you need to put the controls and filters with the recipients.

So Twitter if you want to make money you have to allow commerce to flow through your veins. You have to let me turn each Tweet into something more valuable. You have to keep it really simple and find a money model that doesn’t gouge my efforts. There are obvious businesses that work here. Many are already experimenting in small ways with selling goods and notifying customers.

How could you make this happen?
First integrate Phweet. We can provide the communications infrastructure to enable “ads” for services very quickly. Concurrently there are some other additional items we can add in.
Second, provide the “negotiation” model for the contract surrounding the URL.
Lastly, let the developers design this and participate in this. It’s got to be a community effort.

Community is important. So far from a developer’s perspective it hasn’t been targeted or really managed. Twitter doesn’t have the resources and so what it must have is the structure and roadmap to enable developers to build it for them. One of the fascinating things about Twitter is it was so open so early. Now it has critical mass or almost. It has the opportunity to grow even more rapidly, not off the backs of tweets to CNN but off the backs of people that want and need to make money. It’s the way to really take the communications web to the mobile. We can only do that if we retain and augment the power of the URL.

Closing Remarks:

Skype Developer EcoSystem gets a D- I wrote this post in July 2005 before Skype was sold. (I have no control over what it looks like now!) The eight key factors apply to Twitter too. I think Twitter management should sit down and look at the eight factors suggested here and then address.

What concerns me. I can see ways to make money and yet they may not eventuate. Twitter has always been an experiment. We used Twitter to create Phweet because we could use it’s signaling service (SMS & email) as well as it’s log-in – tools all for zero outlay. It made prototyping a new type of service many times cheaper. Twitter is fun and, like WordPress, has a community developing around it. I just wonder for how long.

Today it is more attractive to develop for the iPhone than it is for Twitter or Facebook. Twitter has even pulled back from it’s mobile underpinnings “SMS everywhere” although that is understandable given their lack of a model. The iPhone community is also growing faster than Twitter. The “update” solution is here to stay. Twitter only has six months to prove they are it or something else will usurp their position. Ovi or iPhone are good examples.

Previous post:

Next post: