Twitter = losses? Not.
Wednesday, March 18th, 2009
Sanford Bernstein analysts think Twitter “will likely have to operate it at a loss in perpetuity, or until the next cool Web 2.0 social networking concept comes along and Twitter tweets no more.”
That’s idiotic. Twitter has clearly become a foundation for a new type of communication. The easy, obvious (and perhaps only) route to monetize twitter is to charge users a nominal fee for “registering” their usernames. (Much as domain registrars charge $10-$20 a year for each .com or .org registration.)
Twitter would give the first six months or 300 tweets away free, locking users into the twitter ecosystem.
Twitter now has atomic-powered network effects: who wants to re-follow 1000 people in a new network… or try to convince 500 followers to move elsewhere? Shaq isn’t going to ask his 300k followers to migrate. Perez isn’t going to take his 230k followers elsewhere. I’m not going to want to re-follow 410 people. And all the companies who have built tools around Twitter’s API aren’t going to be eager to recreate those services around other APIs. Once hooked up/in, people will gladly pay $5 a year or $1/month rather than lose their entire network of relationships.
Assuming 50% attrition from its current 7 million users, that would generate roughly $20 million a year… plenty of revenue for servers and the company’s 40-odd staff. It wouldn’t be glamorous, but it would secure profitability and let twitter continue growing the plumbing for a new type of communications revolution.
Update: John Hawkins argues that Twitter’s hordes of followers are inflated by bots.
Update 2: I ran this idea by a friend in-the-know and got what amounted to a “no comment.” Signal or noise?