The Last Podcast

Allen Stern thinks Twitter is f*cked because it doesn’t have a business model:

Most of the heavy Twitter users use the service via the API and “offsite”. I actually use the Web site and refresh the page every few minutes while I am at home. How can they monetize the API usage? If a Twitter user already paid $15 for a piece of software, would they then be willing to pay Twitter for their account?

That is a problem for Twitter, but it doesn’t mean twitter is going away anytime soon. Twitter’s problem, I think, is in the way people perceive it: it’s a utility that really isn’t very different from email.

Nobody makes money of email directly. As Allen points out, its the auxiliary services that make the money, not Twitter itself. Email got big because it allowed for the simple interchange of information.

Does that mean that Twitter can’t survive in the long term? Maybe. If other people built better interfaces to your service than you can, you can’t expect advertising to flow in. Also, as Mathew Ingram points out, Jason Calacanis’ advice to just built traffic and hope to be bought might not work if there really is not business model that could ever lead to profitability.

So what can Twitter do? They could have premium accounts that allow for more pesonalization of your twitter page. Maybe the ability to attach mp3s and other files to your messages.

But there are already services being built around these things and that’s why Twitter isn’t going away. There is an ecosystem that is being created around it and that ecosystem will sustain the Twitter system. Running Twitter probably isn’t that expensive, especially if most users access it through the API. You could also image in Open Twitter system where users can run their own servers that can communicate with each other.

So maybe Twitter as a company might be f’ed, but the Twitter idea is bigger than that.