I like Twitter. I hope it lasts. So I want it to have a business model. This week, I was in a discussion on that subject with really smart people, some even with useful experience. Afterward, I had a really radical idea for a business model: Ask people to pay for using it. Read on for discussion, and a survey.
Here’s the survey. Take it now or read the article first, whatever. Results so far.
But First... · Twitter is going to have to make their service about as reliable as the Web in general, so it’s there whenever you have something to say, and people who care what you say will hear it PDQ.
Here’s a bold prediction: Twitter will do this, and will do it soon.
All the Tweets You Can Eat: $5.00/month · Given a snappy, reliable, Twitter that has a community of a few hundred thousand, including some combination of the people you want to track and the people you want to reach, would you pay a few bucks a month for it? I would, in a flash.
Twitter is called a “microblogging service”, and while you can blog for free, people who take it seriously mostly don’t. I don’t hear much complaining about the cost of blogging.
Variations · Yes, a charge-to-Twitter would be a barrier to entry, which my pony-tailed CEO is at pains to say is bad, and he’s right. So, here some introductory offers:
Screw it, Twitter has already proven its value. You wanna use it, please cough up $30 first for the next six months.
No charge for reading the Web interface, but you have to pay for anything involving push.
Grandfather in everyone who’s already Tweeting on the day the charges start; anyone who starts after that has to pay. That’s a very Web-2.0 of leveraging a community, n’est-ce pas?
Slight variation: Grandfather in the existing user base, but only for six months.
Free for everyone, but only for the first month.
... or, but only the first 25 followers or followees.
... or, but only the first two tweets per day.
Not For Everyone · Making Twitter a commercial service would limit its ubiquity. But here’s the secret: I personally don’t think Twitter will ever achieve the ubiquity of web browsing or even blogging. You gotta be a pretty deranged info-junkie to find it worthwhile in the first place. Fortunately, between the worlds of technology, politics, and finance (just the ones I know about), there is a pretty big population thus deranged, and they are the kind of people who are most likely to pay anyhow.
Yeah, you won’t get the penniless high-school students. That doesn’t feel like a fatal flaw to me.
Contributions
· Business (126 fragments)
· · Internet (112 more)
· The World (151 fragments)
· · Life Online (273 more)
· Technology (90 fragments)
· · Web (396 more)
Comment feed for ongoing:
From: Tim (May 28 2008, at 22:11)
I think that pay to publish, with amount going up with number of followers, is the most promising model. Plus, allows free version, and demand driven pricing:
First 25 followers - free
First 100 - $2
First 500 - $5
Arrington - $100
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From: M. David Peterson (May 28 2008, at 22:11)
Why don't they slap ads on everyones profile pages like every other web-based service provider out there? That's never made any sense to me. Would anyone really care if AdSense ads suddenly appeared on their profile page for a free service they have come to rely upon. And for those that would, offer them a "pay-to-play" alternative.
Also, the area that really needs to be explored is the pay-to-play web service vertical. Application developers will find ways to generate revenue. So charge them for access in the same way Amazon charges for S3, EC2, SQS, and SimpleDB. Taking a more Google AppEngine approach where under a certain threshold is free might be the better overall approach, but people will be willing to pay for premium access if they know there's money to be made. And there is.
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From: Zach (May 28 2008, at 22:25)
I consider myself an average user. I follow nearly 40 people, and just under 20 follow me. Sometimes I use it heavily, while others I only have a tweet or two every few days. I use it most around cons and other gatherings to coordinate with friends, although I also track several keywords for where I live which was the "Killer App" of twitter for me.
That being said, would I pay? Honestly, probably not. In fact, I've been pondering building a "mini-twitter" designed around a handset and a usb data cable targeted to small (less than 20 people) groups, since I don't want everything to be public. Twitter moving to a paid model would probably push me to stop thinking and start coding.
In fact, I've also been wondering about a distributed twitter, and how that could work. Maybe a new jabber protocol...
However, geekery aside, twitter needs to get paid, and I hope they're not doing it by selling a feed of all tweets to the NSA. ;) Seriously though, it seems to me they ought to look at how AIM, jabber.org and other large IM networks are funded (which probably means twitter would need to be bought by a large company to emulate those models...)
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From: Parveen Kaler (May 28 2008, at 22:38)
A really important question to ask is if each revenue model would push people to a competing service, such as Jaiku.
Maybe a Twitter Pro. $25 per year gives your account access to the Twitter API. So everything that is value-added has a cost.
Similar to Flickr Pro or XBox Live Gold Memberships.
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From: Debbie Moynihan (May 28 2008, at 22:42)
I would definitely be willing to pay but I just don't think everyone is as deranged as me :) ... I like the variation where everyone gets some sort of service for free to continue to drive ubiquity while also providing unlimited, premium service to those wiling to pay a fee. I'm not sure if 2 tweets per day is a good limitation because I think you would want to get users immersed and addicted before asking them for money, but I like the idea of free for "up to X number of followers". I think it would be a good idea to also throw in some premium services for paying customers in addition to unlimited followers, like I'd like the ability to send a secure tweet to a specified group of people, for example, so they could get some dollars from people who may have only a few followers but who do appreciate the value of Twitter and have some readily available disposable income ...
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From: Bill Humphries (May 28 2008, at 23:21)
Outside of the States, penniless students have mobile phones, and Oyster cards, with which they can pay for things.
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From: Scott (May 28 2008, at 23:22)
I've been waiting for copy-cat blogging services to come out. I even expect some open source projects similar to WP to come along that is similar to Twitter.
Twitter is the evolution of a bridge between irc and blogging.
I anticipate that given the recent stability issues this will happen sooner than later as people have seen the power of this model but want to take their own spin at it.
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From: Aristotle Pagaltzis (May 29 2008, at 00:47)
“Only for the first 25 followers” can be gamed too easily.
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From: grant (May 29 2008, at 02:11)
Here's a neat variation I just came up with: For those who don't want to pay, let them donate compute time. That way, the penniless high-schooler can Twitter and that machine that sits idle all day at home will have something to contribute to a valued service.
I haven't though about how to swing this technically, but my intuition is p2p message forwarding nodes would be a possible solution.
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From: Stephen (May 29 2008, at 03:01)
I think it's essential that anyone who wants to *receive* tweets should be able to do that without charge from Twitter.
Use Case #1: Politicians on the campaign trail can twitter to give media people (& anyone else) live updates on where they will be at what time.
Use Case #2: Businesses who want to disseminate information (promos and special deals, changes to store opening hours, whatever) to the public.
In both cases, the info is one-to-many, and putting any kind of artificial block into the subscription process (paid or otherwise) limits the channel's usefulness.
For that matter, I think asking people to register on Twitter just to receive messages is a big roadblock in itself.
If people came to my Twitter page, I'd rather that they saw:
"Send '/follow foobarchannel' to +555 123 4567 to get notified when I update this channel" rather than having to go through the multi-step registration process.
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From: Daniel Grady (May 29 2008, at 06:38)
You also won't get penniless college students, graduate students, postdocs, or young professors, which probably isn't a fatal flaw, but it is a flaw.
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From: Bob Aman (May 29 2008, at 06:47)
As someone who is unconvinced about the utility of Twitter (signal to noise ratio is too low for my tastes), I can confidently say that most of the payment plans you've suggested would be a complete turn-off for me. About the only option you suggested that might get me to use the service long enough to cause me to become a paying member is if the charge was limited to push.
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From: Scott Johnson (May 29 2008, at 07:53)
These variations mostly seem like good ideas. The $30 up front would quickly scare me off to Pownce, however. The $5/month would likely do the same. I really like #3 the best.
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From: ben (May 29 2008, at 07:57)
Hm. $10-15 p/a? A penny per tweet, paid in advance? These seem reasonable, until you consider the hoops users need to jump through in order to get a mobile plan that supports Twitter's tentative tons of SMS traffic.
Certainly not $5/month.
I would, however, cheer if they started charging the people - even Scoble - who've taken to following thousands of people. I can only assume that every last one of those people is mining the service gratis for reasons that have a lot to do with revenue.
Meanwhile, I find there's a sweet spot where followee count and tweet value typically intersect. Let's just say that the former's a lot lower than a thousand.
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From: Steve (May 29 2008, at 08:33)
How about Twitter Pro = longer messages, attachments, images, tinyurl-style encoding, etc. Keep the basic thing free.
I would pay for more features, but not sure I like the barrier to entry that "everybody has to pay" would raise.
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From: Rob (May 29 2008, at 08:39)
I'm surprised at how many people WOULD pay. I enjoy the service, but as the frequent outages prove I can live without it with very little hardship.
To that point, I've been a little confused by people who talk about how "important" twitter is. Important how? I can come up with snarky reasons for some of the whales on the service ("Twitter is important because it makes me feel popular. I finally have the popularity I was denied in high school!",) but some people who don't seem to fall into that category also talk about the service like it's more than a diversion.
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From: Jason Clark (May 29 2008, at 08:45)
> Yeah, you won’t get the penniless high-school students. That doesn’t feel like a fatal flaw to me.
Today's penniless high-school (and college) students are tomorrow's working professionals. If the latch on to something else now, they won't switch to Twitter later just because they have $5 a month. Fatal? I don't know, but the web doesn't seem to be awash in successful pay services that started out as successful free services.
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From: David Williams (May 29 2008, at 08:55)
I'm already paying _for_ Twitter, just not _to_ twitter: I had to change my plan to prepay for more messages. I would be OK paying them a small fee as well; I enjoy the service and they should be rewarded.
I think the idea of fee per followers is wrong -- too easy to force someone you don't like into paying more (or taking the time to block users). A fee per followee makes more sense to me.
But I also thought they were thinking of some commercial applications -- your company/group/whatever having a private twittersphere. If that worked and the rest of us could just sponge off them, I'd be fine with that too.
And while I like the idea mentioned earlier of rolling your own, my (perhaps misguided) impression was a big part of the magic sauce was the SMS connection. I can't imagine that's free to anyone.
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From: Sara (May 29 2008, at 09:20)
I think it's insane for a still newborn service to think it can charge. Most people I know hooked on Twitter are techgeeks and businesses/politicians trying to stay ahead of the curve--and lots of recruiters. If Twitter wants to keep only early adopters, they should start charging. But if they do...I have text messaging, IM, my own blog, facebook, myspace, ning, etc etc and I don't need to pay to keep Twitter.
IMHO, it would just be bad marketing.
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From: El (May 29 2008, at 09:35)
I've been twittering for about 48 hours, so I'm not answering the survey ("too soon to know" not being an option). But...I can't see myself wanting followers. I like following a few others I know from elsewhere (when three bloggers I read regularly announced they were twittering I figured I HAD to check it out). I LOVE nattering on to myself on Twitter, but at present no one else can read it. If there are a lot of folk like me, a pay-per-followers method is going to be heavily supported by a smallish number of people, which doesn't seem entirely fair.
Anyway, question--does anyone know how Twitter gets income now? I can envision getting a cut from cellphone providers based on uses of the SMS number or percentage of texting charges or something, but that's all that comes to mind....
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From: Mark (May 29 2008, at 09:39)
For $5/month, you also wouldn't get people who work in economies where $5/month is a ridiculous sum of money.
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From: Karim (May 29 2008, at 10:39)
Mark: "$5/month is a ridiculous sum of money."
You sure are kidding! Internet is something for the whole world isn't it? $5/month is still big money in some places, and it would be sad to restrict access to openess, to culture, art, contacts, knewledge, whatever to those who have the money...
If someone has the money why won't you donate? Why isn't twitter supporting its service with ads or other good solutions that proved to be good with much more heavy apps?
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From: MilesZS (May 29 2008, at 10:48)
I might pay. I think something inspired by AWS could work.
- 3 or 4 free tweets per day
- unlimited followers
- $0.015 per followee above, say, 20?
- $0.015 per tweet after the daily limit
- No charge for 'receiving' tweets (directs, replies)
The actual dollar amount is based on nothing. I grabbed it out of the air. I think there is something to be said for charging pennies for small pieces of a service. The consumer psychology piece is obvious. I would think it would add up soon enough.
I could also see myself jumping to a service that is remaining free, and encouraging others to do so as well. I guess I'm a cheap bastard.
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From: Skrud (May 29 2008, at 10:50)
I'd prefer a business model like Pownce, where non-essential "nice-to-have" extensions to the service cost money, but the basic microblogging features are free.
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From: Mayson Lancaster (May 29 2008, at 11:17)
Partner with the telecom companies who are making megabucks[exaggerated for effect] off all the SMS tweets.
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From: Ian Bicking (May 29 2008, at 11:23)
Charging for Twitter seems impossible. There's nothing that technically fancy or interesting about Twitter. Someone else could reimplement it in a flash if they wanted to. In part, because Twitter has figured out quite a few bad paths to go down, and someone who reimplements can avoid a lot of mistakes. Such is the nature of the internet. But the simplicity of Twitter makes it much worse for them.
That's mostly fine, except it makes Twitter fragile. Twitter's value isn't its technology, it's the group of people using it, and probably in part an investment in the group of people who will use it in the future (a little bit of a social pyramid scheme). Once you charge for the service you reveal a chink in its popularity. People will consider other services. Maybe irrationally -- maybe the other services don't offer anything that some free subset of Twitter offers. But anyway, people start looking at other services, and even if Twitter remains the Most Popular, it loses its sense of dominance, and once that's lost then the market becomes fragmented until something new comes along with some novel new aspect.
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From: jordan (May 29 2008, at 11:51)
Huh, last I checked, Twitter’s catchphrase wasn’t “What are you and your affluent, nerdy white friends doing?”.
I doubt you meant any harm, but this solution—very natural for programming types, apparently, as I’ve seen it numerous times before—is inherently elitist. Yeah, it has the upside of finally giving Twitter a business model and letting users express their thanks, but it also spits on those who aren’t first-world middle-class, and severely limits the interestingness of the whole experience.
If you want to pay, why not use Pownce? They also conveniently have a larger feature set and generally seem to attract the sort of geek circle-jerk you’d end up with.
I’m quite certain that if Twitter ever becomes a pay-to-play service, I’ll be gone.
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From: Eric Meyer (May 29 2008, at 12:20)
I as talking about this with my father, and theorized that a number of people out there would be likely to pay for Twitter Pro like they do for Flickr Pro-- and probably for about the same rate; that is, $24.95 per year. Especially if it offered extra services like the ones that have sprung up around Twitter (Favrd, Favotter, Summize, Overheard, et cetera ad nauseum).
In fact, part of me suspects the reason the Twitter folks haven't deployed some of those features yet is that they're saving them for a premium service level.
Otherwise, the only revenue stream I can envision is that one that Brian Alvey and John Gruber independently proposed last week: put ads on the "Oops!" downtime error page. Instant megabucks!
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From: Carolyn (May 29 2008, at 13:18)
You've got great comments going here, Tim.
Glad to see you like Twitter, my nephew would love it (he's 20) and would probably pay for it. Good ideas on business models. Makes me want to keep an eye on Zach (for one) for future opportunities. ;-)
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From: Josh (May 29 2008, at 16:30)
Lots of good suggestions in the comments.
Personally I'd be happy to pay $5 a month for Twitter but not everyone is in that position. Twitter is global now and $5 is a lot to some communities that are using it now.
My preferred model would be:
Free to Tweet
Free to follow
Pay a premium for extra features - Twitter Pro
Pay for unrestricted API access. I'm convinced it's the API usage that is causing the real load and it seems reasonable that if people are going to base their businesses on Twitter then they should expect to pay a reasonable rate for the service.
Perhaps leave a limited free API in place for the little guys.
Of course, the minute Twitter starts charging then the downtime become a much bigger deal and I suspect this is the reason it is still 100% free.
My bet is that as soon as the infrastructure is more reliable then some kind of charging will be rolled out.
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From: Tony Fisk (May 29 2008, at 17:06)
Three ideas for the brainstorming session:
1. The 400lb canary:
After a number of tweets, you start getting 'feed the dickybird' messages/tweets (squawks?), yourself. They become more and more frequent until you either offer some seed, or leave.
The number of 'squawk-free' tweets depends on how much you paid, and would start at, say, 25.
No minimum or outstanding payment: no matter how squawky your stream has become, you pay $x and thereafter get $x squawk-free tweets.
2. Ye humble tipping jar.
For a modest fee, your donation could be acknowledged via a simple 'this tweet was bought to you by...'
3. Drop the whole idea.
Let the overall dissemination of knowledge be for the profit of all.
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From: some dude (May 29 2008, at 19:32)
Pay for followers? Really?
You people must be nuts. Everywhere else in the world you get payed if people are interested in what you're saying.
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From: Brian K. Jones (May 29 2008, at 19:49)
How about this: ADD VALUE.
It's not like there's some shortage of potential for the technical aspects of this service. Heck, anyone who works at twitter should just go join a bunch of random IRC channels and have a look at the bots that add value to those channels. Create a twitter bot that I can send a message to and get a response back from. Make a stock quote bot so I can send a message to twitter@gmail.com that says "quote:GOOG" and it'll send me back the current stock price. Weather, dictionary... there are endless possibilities there. Want access to the bots? Pay me.
What I *do not* think will work is:
1. Limiting user-to-user capabilities.
2. Charging the users for user-to-user communication.
Twitter, as it exists today, needs to be subsidized/funded, for sure. But there are so many sites and services that have proven that you don't have to go to the users for that funding. The users are the value, not the funding.
Define the 'core service' as the user-to-user communication (basically, twitter as it currently exists) and expand the services to create a compelling value proposition worth charging "pro plan" fees for.
My $.02.
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From: Aristotle Pagaltzis (May 29 2008, at 20:16)
After some thought I have to agree that API access should be where the money goes. I do not think they can afford to lock out API users as a rule (to me, Twitter is pointless without a client for it), but it is entirely plausible to impose different rate limits for different payment levels.
Also, a Free/Premium split on features is equally a better choice than segmenting on amount of use. See <a href="http://brad.livejournal.com/2368071.html" title="Brad Fitzpatrick: No more Basic Accounts">Brad Fitzpatrick on his reason for allowing free LiveJournal accounts</a>, f.ex.
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From: Aaron Swartz (May 29 2008, at 21:30)
Huh? Why are we even having this discussion? Twitter's problem is not that it's hurting for cash -- they've got tens of millions of dollars in VC, with more almost certainly guaranteed if they need it. They can let whoever acquires them worry about generating revenue.
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From: James Aylett (May 30 2008, at 03:57)
This conversation appears fascinating for the number of smart people giving what appear to be knee-jerk responses. I'm sure they aren't, but so many are making bold statements without much to back them up.
I'll try to avoid doing that, so instead: a question. Is there any change we can get some correlation reports between the survey questions? Or can that only come at the end (I've never used surveymonkey myself)?
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From: Paul Boddie (May 30 2008, at 05:36)
"Make a stock quote bot," writes Brian K. Jones. I must admit that I'm somewhat distanced from the Twitter hysteria (of all kinds), but isn't this the shark-jump sales pitch moment of any technology?
What is Twitter anyway if not a "we own your feeds" service, fighting against the decentralised nature of the Internet? (Are RSS and its peers suddenly not doing justice?) Their FAQ really doesn't seem to dwell on such matters, nor, it would seem, have their investors.
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From: Mitch Wright (May 30 2008, at 12:05)
If it were me, I would:
1) Tweet all you want, it's free
2) First N (10 maybe) people you follow are free, then some charge for following more than that.
I would then take the proceeds and put part of it towards the company and the remainder would be divided up proportionally to people who have the largest followings.
This would, IMHO, encourage people to have useful tweets that others want to follow. Since following is what generates the revenue, I'd make it a sort of revenue share with those that are making the service valuable.
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From: Jeff Carroll (May 31 2008, at 06:27)
Software is perishable; you can sell it for money for only as long as it takes someone to clone it and give it away for free. On the web, that applies not only to code but to application concepts; a pay-to-tweet system would last for just as long as it took someone to clone the concept and make it free.
The fundamental twitter experience has a lot of similarities to IRC, and with the introduction of groups the evolution of twitter is toward the IRC model rather than away from it. What twitter has that EFnet no longer does is mindshare, and eventually that will change. The long-term viability of twitter depends not on the revenue model but on whether it can successfully align itself with the next generation of application concepts.
Following Aaron's point: the challenge for Twitter right now is not revenue but reliability. The focus should be on tailoring the platform to a more supportable model; my favorite optimization idea is to cap the number of people one can follow at something like what a single brain can deal with. I can't imagine why or how anyone would follow 5000+ people, except maybe Scoble. (Thousands of followEEs, of course, is an entirely different story.)
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From: Postmodern Sass (Jun 05 2008, at 14:25)
In my humble opinion, Twitter is born of that same impulse that makes entertainment "journalists" report on every move Britney Spears makes, and the one that provides an audience for those reports. It's every bit as important, and just a tad more useful.
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