Does Twitter really need a business model?

By: ispeculatornew
Date posted: 03.25.2009 (4:00 am) | Write a Comment  (2 Comments)

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twitterOk ok, maybe the question is not clear. Of course, Twitter will need a business model in the future. But how soon will that happen? Can Twitter go on for a few more months or years before actually trying to generate money? There has been a lot of speculation lately about possible ways that Twitter could use to generate money including a good one I read yesterday on the Wild Investor here.

Of course, Twitter will eventually need to turn all of those users and “Tweets” into money but in my opinion there is no hurry. Being a very simple service, Twitter has few expenses. Mostly, you would think that Twitter has server expenses. But with few spinoffs to date and little to none paid advertising for their service, they have few capital requirements. I would draw comparisons to Google from a few years ago when it had one and only one focus: search. And even then, Google had a lot of expenses related to research. Compared to that, Twitter really has very little expenses. And because of that, it can go a long way with its $55 millions of funding. In my opinion, as long as Twitter is experiencing rapid growth as is the case currently, they should remain as easy, as simple and as clean as possible for all users, and yes that does mean no advertising and no section for paying members only. They should have only one focus right now and that is “growth”.

Of course, to say that brings us back to the dotcom bust and how businesses received money without actually having a business plan or a way to generate cash. I am not saying that Twitter should have no plans. But for now, those plans could remain possibilities only. Think Twitter will not be able to generate cash? Think again. Rival Facebook has received almost 10 times more in investment money with not much more to show in terms of a business model. Facebook has of course started to show ads and show investors how they could get a return on their investment. But I don’t think Twitter should change course until it gets a lot more users, a lot more mainstream attention and until it becomes a lot more thirsty for cash.

When it runs out of potential investors for long haul, Twitter will know it is time to start moving on its ideas to generate cash. It certainly will have gained a lot more attention by then and might be able to start putting up ads without worrying about users fleeing which on any internet project, is always a worry, especially social networks where the “masse” phenomenon is very powerful.

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2 Comments

  1. Comment by The Wild Investor — March 25, 2009 @ 4:32 pm

    What I would give to create a powerful social network, with all that cash floating around…

  2. Comment by Catarina — April 30, 2009 @ 7:49 am

    Research from Nielsen Online says: “more than 60 percent of U.S. Twitter users fail to return the following month”.

    I think that Twitter is a great web success and is currently experiencing rapid growth. However, it’s a everyday challenge to stay on top. Management will need to do something on a regular basis and being proactive in order to retain users and keep them coming back!

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