How can a company be so popular and still have no discernible revenue? Social networking and communication was revolutionized by the birth of Twitter. It's so simple, its a wonder why nobody came up with it before. Twitter asks its users the question, "What are you doing?" and limits their responses to a mere 140 characters. The engine is completely free to the public; users can even download their logo in three different formats, practically welcoming surfers to take, edit, and share their image. According to their website, Twitter has about 30 employees, and 25 open positions at their corporate office. If Twitter is used so frequently, and is so well liked why isn't the company banking? To answer this question for myself, I went directly to Twitter.
As I began clicking around the website, I came to the About Us section, which posed frequently asked questions. To my surprise, here was the very question I came asking myself: "How do you make money from Twitter?" Twitter's response:
Twitter has many appealing opportunities for generating revenue but we are holding off on implementation for now because we don't want to distract ourselves from the more important work at hand which is to create a compelling service and great user experience for millions of people around the world. While our business model is in a research phase, we spend more money than we make.
Interesting enough. Their desire for "not wanting to distract themselves from more important work" puts Twitter in an almost heroic light. Since the boom of the internet, more and more websites have been turning to advertising for vast amount of revenue. So why is Twitter not buying into all of this? I think Twitter is waiting until they gain even more popularity so that they can sell space on their website, or even a portion of their website like Facebook did back in 2007.
And what is this "research phase" their business model is in? Isn't it obvious how to make money off the internet? Websites and search engines have been doing it for years. I think by "research" they really mean they are waiting to see where people take Twitter as a social utility. They are waiting to see how much popularity the engine can gain and how much speed it picks up amongst internet users, for both of these factors enormously affect the most practical type of advertising to implement.
Maybe what Twitter is doing isn't so bad. When Facebook sold a tiny bit (1.6%) of their website to Microsoft for a mere $250 million, the total value of Facebook was estimated to be $15 billion, keeping the interest of advertisers and software companies buzzing about what Facebook was going to do next. If Twitter plans to follow the same model, it could be pan out to be a grossly lucrative decision.
