Twitter is the poster child for the ‘scale first, don’t even think about revenue at launch, monetize much, much later’ model of startup. In the current climate, ventures like that probably won’t get funded. Which is a shame. Twitter is addictive and fun and even occasionally useful. If anybody can pull this business model off, it will be Twitter. It has scale, seem to be moving mainstream and they’ve even fixed their reliability issues.
But Twitter won’t survive if it doesn’t find a great revenue model. This matters to all of us.
Why This Matters To All Of Us
If Twitter fails to find a revenue model and hits the deadpool, it will have a chilling effect on innovation. That matters to all of us in the innovation economy. Sure, you could live without Twitter, but what about the funding chances for that brilliant idea of yours?
No Rush But It Has To Be Right
Twitter has top tier VC backing and enough cash to wait till they have scale and the right revenue model. But when they launch it has to be just right. In this climate, Twitter would probably not recover from a Beacon like fiasco. Nor can Twitter do well with a smorgasboard of revenue models, where none really moves the needle and all irritate users just a bit. It has to be one absolutely compelling model that enables Twitter revenue to scale the same way their usage scales.
Adwords Is The Gold Standard, But This Is Tougher
Adwords is the monetization gold standard. The fact that Google did not invent it is irrelevant. But how many new revenue models like this have we seen in the last 10 (or even 100) years? That’s right. This is tough to get right.
But Twitter’s challenge is even tougher. Google was not creating an entirely new type of service. It was Yet Another Search Engine, just a better one. They could just use/improve a revenue model developed at a different search engine. Twitter has created an entirely new type of medium, which is what makes it so exciting. So there is no obvious place to borrow a revenue model from.
This requires serious creativity. Yes the words “revenue” and “creativity” were just used in the same sentence, welcome to the new world!
Why Did Adwords Work? Two Acid Tests
These are the two things that Twitter’s Magic Revenue Model has to achieve that Adwords did so brilliantly:
1. Do not irritate/interrupt the user and even occasionally add value to the user.
2. Provide a value proposition that is so compelling that even conservative buyers give it a try.
Show That The Wisdom Of Experts Works
My horoscope today told me to “pick a controversial topic and ask someone smart what they think about it.” Well, I am taking that to extreme and asking lots of smart people what they think.
Wisdom of crowds is “so last cycle”. Wisdom of experts is what really works. That is what we have here on ReadWriteWeb, lots of really smart innovation experts. Give us your one best idea for a Twitter Revenue Model and show us how it meets the 2 acid tests defined above.
