Twitter's business model

Wednesday, January 02, 2008 by Dave Winer.

When I was in college, professors used to ask questions that are much harder than the question Allen Stern asks in this piece.  

The NY Times crossword puzzle is harder. 

Geez, installing a new hard disk in a MacBook is harder, and as I've found out that's pretty easy.  

Okay what is Twitter's business model?  

They give away access to the API only to find that add-on devs have a business model selling Twitter clients while Twitter itself is left sucking air.  

And this is some kind of problem? 

We should all be so lucky. 

Here's what you do if you're Twitter.  

Distribution. 

How much you want to bet that Twitteriffic reaches a very small number of Twitter users.  

Twitter, of course, reaches every Twitter user. 

So what could be easier than to offer to sell everyone a client that makes Twitter work a lot better?  

And of course Twitter would be entitled to some of that money. 

Now, imagine that Twitter was really ambitious and they wanted to design a cell phone around Twitter. One that could make phone calls and play MP3s and do SMS but also had Twitter baked in.  

Okay, so you can't imagine Twitter getting into the hardware business or being a cell phone service provider. But what if one of those did a deal with Twitter, or even bought Twitter? Then you'd be paying a monthly service fee to use Twitter, and might have chosen TMobile or Sprint over Verizon or AT&T because they have Twitter and the other guys have Microsoft's ripoff of Twitter. Or Google's. I think there's a premium for being the original guy, if you play it right (I never do, but Evan Williams does this pretty well.) 

Anyway, there are lots of ways for Twitter to make money once there are enough users. And right now their business is to grow and their first priority is to stabilize their service. This isn't based on inside knowledge, but comes from reading the tea leaves and applying common sense.