Twitter Comes Closer to a Biz Plan

For some unknown reason I have spent time thinking about how Twitter can make money, something which has no benefit to me(or maybe it does?) to do so, but yet here I find myself thinking about it.

While I have not figured out the exact specifics since I don't have access to the statistics required to make a detailed plan, I think that Twitter actually could be a self sufficient company and service without advertising by using a tiered/scaled system of charging users for the service.

Yes, charge the users, but not all of them and not a lot of money either. 

For this to work would depend on the number of users Twitter actually has, which is a number that seems impossible to actually find. Unlike other sites, Twitter doesn't seem to advertise how many people use it, how many new people sign up every day, or any of the other advertising schemes that other networking sites seem to use.

I have seen numbers that range from 500K to 10 million users on Twitter, that's quite the range for anything.

So let's guess they have 1 million users for the sake of using an easy number as an example, and we can break this down further with example statistics since we are just kicking around ideas.

So what percentage of those people have an account and never use it or just use it to follow other people but never do updates themselves? 20%? I would think that might be a good estimate.

So that leaves us with 80% of the Twitter community remaining, how many of those people could be defined as a casual tweeter? Someone who updates 1-2 times a day, guess that would be 30% of total users? 

How many businesses are on there? Let's say we go with a generous 5% of total users, and a business would tweet how many times a day? 2? 3? 5? Let's say the average business tweets 2 times a day M-F.

What about heavy users? You know, those people who tweet about every single little thing and have back and forth public conversations via tweets instead of just a regular text message, email, instant message or *gasp* an actual phone call. Figure these people are probably 20% of users?

Then we might have the moderate users who make up the rest of the user base, 5-20 tweets a day as updates, forwards, @ responses?

What would you do for a pricing plan? What about something small like this, which would cause the loss of some users, but even in today's economic times, I think the price could be low enough to have people sign up and use it.

$1 a year for all people who want to use the service, but a free 90 day trial period. So say they keep 80% of all people who are using the service and willing to pay $1. That would be $800K a year right there.

$50 a year for all businesses who want to use Twitter, and $1 per tweet. Would average $600 or so per year, per business using Twitter. I don't think $600 is anything outrageous for a business is it? At 5% of the 1 million, that would be 50K businesses, at an average of $600 a year, total of $30 million.

Now we get to regular users on twitter. I say you have 2 levels of people, regular users and premium users. Regular users make up that 50% of the user base the people who mostly only read other tweets or only tweet 1, maybe 2 times a day. Charge them nothing extra outside of that $1 per year fee.

Next on the list are the moderate users who tweet 5-20 total tweets a day, charge them $2 per month for the service, when their total use is 100+ tweets in a month. Give them a $1 discount if their only use is through the twitter website instead of texts or any of the hundreds of twitter apps out there. Allowing for low months, and some people only using the web, let's say this averages $1.25per user per month, for a total of $3.75million per year.

Last on the list are twitterholics(can I copyright or trademark that?), those obsessive people who tweet everything to every one all the time. Charge them something outrageous, like $5 a month when they go over 1000 Tweets in a month and you have yourself another $7-10million a year.

While that business % is probably the most inaccurate, the above style of charging for the service would still gross Twitter around $10-15million without the income from businesses. It would also be keeping twitter free for 50% of the users, even if you killed off the $1 usage fee per year per user. I am sure these % numbers and usage ranges are inaccurate, I would guess that the people at Twitter have the real statistics that they could use to break up the percentages and usage volume into real numbers for the scales to be able to figure out who would pay and who wouldn't.

As a moderate user myself, $25 a year? Would I? Sure skip grabbing that sandwich at the local sub shop once every other month and the money would even out. Although if they partnered up with cell phone companies to build the charges into my cell phone monthly bill, then that would make it even easier.

Yes, I know that making up numbers is dangerous, but it's more the idea and system those numbers support than the actual numbers anyway. I also know that there would likely be a huge backlash at a change by those fanatical fans, but I think that it would all even out in the end when people realize that not everything out there can be "free" and you have to pay for it somewhere.

By using a some people are free, and some people need to pay system like some Shareware makers, or sites like Flickr which put limits on the free accounts, then I think everyone would end up winning in the end because Twitter would make enough money to cover it's costs, pay it's debts and pay it's employees.

Also, if anyone from Twitter is reading this, and you like the idea, and you guys actually use this idea or a slight variation of it, remember, I want my cut...

Most (if not all) of the professional social sites are charging for advanced services to their members. Linkedin (that I'm using) for example, is charging for direct email/introductions (used primarily by recruiters). Most of the wiki-* notepads are charging for extra functionality, space, user support. The same goes for the professional blogging platforms (e.g. typepad, etc).

Twitter attempted to first build an admirable subscriber base and then think about how it can make money out of it. Not a bad plan if you ask me. Not the only one of course. Nevertheless, twitter has to realize the special characteristics of its users, which might differ from the users of other "subscription based" services.

However, as soon as one free service stops being free, the road for competition opens wide. And twitter might very well like to think its planned pricing very carefully.

 

Hey Nicole,  It still amazes me that to have such a revolutionary Internet product and be so numb in figuring out how to make it a viable business.  Any of hundred potential take over companies, are drooling at those streaming eyeballs.

But you got to hand it to Biz, he's finally waking up from  his sugar coma. 

Twitter is a cool and neat little service, but what you have described is exactly why it will be bought and swallowed up by some other company.

It is never(in my opinion but maybe they will prove me wrong) going to be able to make any money as a stand alone service, it needs to be integrated as part of another business model as a value added service.

The only real way I could possibly see them actually profiting is to sell themselves out to "the devil" and become a giant spam machine, tagging the end of all the tweets you get with ads and links, or by getting unsolicited tweets to the mobile device you have registered.

I think the reason they don't have a biz plan is because there isn't one that will have it keep it's users and keep it a stand alone product.

If the service is good enough, companies will pay.  They'll have to offer a real nice bone to companies if they are going to be expected to pay for something that is so not mission critical and easily replaced with sometihng home-grown or repurposed.

Here's a driect quote from Biz Stone from last year.

"“When you have a lot of traffic, there’s always a clear business model.” 

Apparently that business model is not so clear after all.  

The assumption on the part of Twitter and a lot of people that use it is that there IS a business model for the service, and it just needs to be discovered. What if such a business model doesn't actually exist? History of the Internet/Web suggests that it probably doesn't.

 

 

Unlike the concept behind the phrase "if we build it, they will come" from the popular movie Field of Dreams, in Twitter's case --

If they charge for it, we may not come...

 

With Dell making so much money, I do not see how it has taken the Twitter founders so long to come up with a way of taking their share of the action.  A Biz Plan can come later.  For the moment, just charge tickets at the door to any company that wants to make a mint on Twitter.