Friday, January 30, 2009

How to monetise twitter

Last night I attended a very interesting Mashup* event on Realtime Social Web.

Mashup* events are independently organised and held every two months or so, with interesting people discussing burning issues. While most of the emails I get asking me to conferences get deleted straight away (especially the ones that won't tell you the price until you've got to the third page), Mashup* events cost £25 +VAT for the talk, plus drinks and sandwiches at the end. They attract a good mix of people from media types to investors to techies.

Back to Realtime Social Web; what this means is the speeding up of the web - email is now seen as the new snail mail, rss is too slow, and blogging takes too long. New services like twitter are offering a much quicker experience. Of course it's not just twitter - live video is the most realtime thing that there is online, but inevitably the audience wanted to talk about twitter most.

Towards the end, the panel, including Sam Sethi, Nick Halstead and Alan Patrick, were asked how twitter was going to be monetised, and they came up with 2 very good answers.

1 - Charge for access to the API. Twitter is built on an open source platform, and other companies and applications can access this API regularly to produce other services like tweetdeck, twitterholic etc. In the same way, search engine marketing companies regularly access the APIs of Google to retrieve data (for example to automatically manage cost per click bids), and a few years ago Google started to charge them, because it could see how essential this was to their businesses. So this is the first way to make money for twitter - charge the really heavy use applications.

2 - Use affiliate code in links. Lots of twitter posts contain links to other things online. If you want to recommend a book or dvd to your followers you'll put a link in. Popular user Robert Scoble sent a link to his followers recommending the Kindle to them with a link to buy one on Amazon, but using a link that identified them as coming from his blog. That meant that if one of his followers bought one from that recommendation he would get a percentage of the puchase price as a comission from Amazon. Twitter have the power to do this on a mass scale. Currently they automatically shorten any links that users posts, to keep their tweets to below 140 characters. It would be simple to add an affiliate identifier to these new links, with twitter getting the commissions. As backup to how this could work, alan Patrick quoted stats from Etsy showing that twitter was Etsy's third top-referring site. This could generate serious revenues.

Update: More ideas from SEOmoz, including this one:

"Keyword Purchases - Every time someone Tweets the word "SEOmoz," I, as an advertiser, want two things. First, I want those users recorded so I can message to them in the future and second, I want the word to automatically become a link pointing to the page of my choosing (probably a Twitter-specific landing page for PRO in our case). "

& from one of the comments: "Start off by asking for donations. Wikipedia has 3.5 Million out of their required $6M; not too shabby for a site with no advertising"

So - any other ideas, anyone?

& please sign up for alerts from Mashup - the events are great value for money.

Update - 22nd December 2009 - following search deals with Google and Bing, twitter is rumoured to be profitable... (Alternative link)

Update - 17th November 2010 - Twitter has announced that it is selling access to it's tweets for analysis through a 3rd party company.  50% of all tweets posted would cost $360,000 per year; 5% would cost $60,000 per year.


Simon said...

Great post Dan.
Do you see Twitter going towards charging brands for official profiles like social networks have tried to with commercial online media options/functions? Might temper the current talk of cybersquatting/impersonating brands on Twitter.

Dan said...

Yes, good point. However as long as individuals can have free accounts, many brand will find it more appropriate to have a named official twitterer, rather than to have a [company name] account.
But yes, the cybersquatting has to be sorted out!

Paul said...

Couldn't Twitter charge a small fee for extra characters, with a limit of, say, 10 'extra' characters per post so as not to lose the original concept. At a penny a character, they'd make millions, surely?

Paul said...

Couldn't Twitter charge a small fee for extra characters, with a limit of, say, 10 'extra' characters per post so as not to lose the original concept. At a penny a character, they'd make millions, surely?

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