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Ripsnorter

1:52 PM on 8 May, 2009

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As I understand it (and if I've got this totally wrong feel free to put me right), Twitter is a company that, while growing at more than 1,000 percent annually, does not make money. Rather, it continues to burn that of its investors. Its business model appears to be: grow hugely and massively, while not making money, until it reaches such a size that somebody large and loaded is bound to buy it because it has become so huge, and then the new owner can figure out how to make some money off of it, while the original investors can retire to their tropical islands or wherever. With YouTube's owner still unable to monetise the thing, where does the profit model for Twitter's owners lie, beyond the one day hoped-for cash buyout?

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Gordon394

3:11 PM on 8 May, 2009

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@Ripsnorter - a few things to consider: the cost of maintaining Twitter for investors is nothing compared to the potential profits of the company growing at 1000 per cent per year. On top of this brand awareness can be just as important for a major firm that's already hugely profitable.

In the case of YouTube Google wanted the brand and it makes enough money to support it for the profile it brings - the same could be said for Twitter.

Lastly, monetisation should be too difficult. Twitter deals in 140 character posts - not the most challenging of concepts compared to something like Gmail - and a simple service charging organisations for usage, verifying indentities, offering premium filters, even SEO add-ons should all bring in cash. I suspect Twitter is simply delaying such measures until it has enough people/companies sucked into the service.

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Marko

4:13 PM on 8 May, 2009

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It's all very well talking about future profits but this wouldn't be the first time something's been hyped to buggery and failed to deliver on the initial promise (imagined or otherwise).

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Ripsnorter

8:07 PM on 8 May, 2009

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@Gordon - Twitter might be burning through not much money per member, and that burn through would rise at an improportionate rate to its growth, but burning money is still burning it. It's where and how those profits will come that makes me wonder. Twitter itself doesn't appear to have any business model beyond "Someday my well-monied prince will come."

Google is, I believe, still flushing a great deal of money down the YouTube, and ad revenue is certainly not what it was, nor have efforts to introduce premium content worked as hoped for.

It will be interesting to see how many people remain on Twitter if and when the company does start charging. 'The Internet is free' mentality is very strong and Twitter already has problems with retention as it is.

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