Twitter’s Business Model: Will figuring the figures shift the social networking paradigm?

A recent article by Jessica E. Vascellaro and Michael Corkery of The Wall Street Journal “Twitter Lines Up Additional Funding” (Friday, September 25, 2009, Corporate News, B3) has sparked my interest and prompted me to share my thoughts on the latest funding fury. Twitter is in negotiations to receive up to $100 million to enable them more time to determine an appropriate business model they can transfer into economic value. According to the article, the business model may include the implementation of a database of twitterers segmented by keyword content from tweets which I believe may result in altering Twitter and the social networking media paradigm.

Many corporations believe that like RSS feed concerns back in 2005, Twitter is creating more risk of compromising ad spending since internet users are able to create their own PR buzz and get the information they want for free, and may push Twitter to incorporate a pay per click (PPC) program. When and if this occurs, I see Twitter becoming a “micro-search engine marketing” program, competing for dollars with the Googles, Yahoos, and MSNs of the world.

RSS and Twitter are almost identical systems which is why I believe a smart move for Twitter, besides due diligence, would be to model their business after Real Simple Syndication (RSS) as well as the leading search engines (Google, Yahoo, MSN). RSS feeds, initially developed in 1999, became mainstream in 2005 and have been successfully and effectively publishing many updated periodicals in real time in an open free environment ever since. Anyone with a web site or blog can add the RSS icon to their site and get subscribers for free.

Although RSS and Twitter are different, both share the identical process:

• a user clicks on an RSS icon (twitterer’s icon) to subscribe (follow) to a feed (tweet)

• Twitter is limited to 140 characters, RSS is not and can be as long as it needs to be

• RSS feeds are used for publishing blog entries, news, audio, video, etc. and users can bookmark the feed; Twitter users are still new and are not yet using Twitter to it’s full potential the way others are using RSS

• Users add RSS onto their blog and submit their blogs to submitter sites or directories to increase the chances that people subscribe to their RSS feed much the same way twitterers follow others to get followed and post their Twitter links

• A big difference is that with Twitter, users post information about a new web site they have, include a link to it, write brief promo copy to attract other Twitterers to visit their site or follow, something we are unable to do with RSS

When used creatively, Twitter, like RSS feeds, can add hype and increase the chances of creating various internet revenue streams. RSS has been enabling many companies and individuals with the potential for additional revenue streams and affiliate programs on the internet; All this for free. Why then would anyone want to pay for Twitter should they create a database when we are able to have the entire Twitter universe now for free?

Below is a listing of some factors that I believe would need to be considered before developing and implementing a business model for Twitter:

1. “Twitter Narcissists”: How do you weed out “Twitter narcissists?” There are individuals doing up to 100 tweets per day to get thousands of followers so they can brag about it. And then what, do you sell a “Twitter Narcissist” list to a corporation for them to post an online ad? That just might happen and prove to be phenomenal.

2. Revealing Identities: Twitter and other social networks enable users to create profiles where they can include all personal things about themselves including age, gender, geographical area, hobbies, interests, join business groups, etc., along with all other types of content

3. Privacy: Some folks are putting personal things about themselves for the world to look at without ever realizing what they are doing, e.g., Facebook, YouTube, Flickr, etc. Issues are going to arise such as invasion of privacy, etc. prompting the FTC to intervene and incorporate more compliance laws. Our economy is strapped enough and now more government spending due to Twitter. Can our government afford this?

4. “What’s in it for me?”: Twitter is still so new.  Individuals are still learning and do not want to post without a clear reason and direction; There is no way to determine what twitterers are tweeting for their employers vs. who is tweeting individually, etc. Why would individuals continue to create buzz about something if Twitter is capitalizing on it without anything in it for the Twitterers making the buzz?

5. Identity-Centric Database: People are following other tweeters because of interests and the feeling of freedom associated with Twitter. Some even end up meeting them at events to discuss their passions, becoming colleagues, etc. Commercializing databases of Twitterers who originally participate for the uniqueness and freedom of Twitter may possibly hinder the uniqueness of the original intention of the social and professional networking media paradigm.

6. I’ve been tweeting for the fun of it and to let folks know what concerts, professional events, fundraisers, other places, etc. I’m attending or have attended,  as well as topics I’m interested in, blogs I’ve written, etc. I'm not utilizing all of the tool enhancements out there that can add thousands of followers to my Twitter account in one simple click. I’m Twittering to learn of groups that have similar interests similar to how I use my LinkedIn account.  Every now and then I  llike  to announce my new web site http://allthingsdigitalmarketing.com (which is still not up yet) but I will continue to include it and mention the status of this project. I’m also thinking about ways to capitalize (e.g., Adsense, etc.).

7. Twitter Account Segments: Corporate, Non-Profit, News Media, Non-News Media, Political Media, Non-Political Media, Individual Twitter Account – Segmenting corporate twitterers is going to be a very subjective and difficult task. Currently, many companies and individuals have multiple Twitter accounts. There is risk that many will opt out if they are forced to pay for accounts, posting links to their company site, blog, etc.

8. Assessing Twitter Analytics: Many experts are looking way too deep into the shallow stats and believe that they can judge the effectiveness of twitter by analyzing Twitter percentage rates of people's tweets (aka Twitter rate %) . All a Twitter rate % means is that that people are tweeting back and forth to each other. I’m not sure how a company can justify spend advertising dollars based on a Twitter account % rate. People talk back and forth on the phone, back and forth via email, via blogs, etc. Does that make your telephone wire or email more successful than another persons? It is going to be very difficult to measure which tweets are effective and which are not especially when attempting to base on the amount of tweets going back and forth to one person. There are also those of us who use the auto-responds, purchase software to get additional followers, etc.

9. Compromising Corporate Productivity: With all of the Twitter buzz lately, I still believe that anyone spending inordinate amounts of time Twittering at work is doing a big disservice, wasting valuable time and compromising corporate productivity; Eventually ending up with our country having more corporations going under and being bailed out at our (we the taxpayers) expense

10. Twitter is simply one of the many internet tools (i.e., RSS, email, podcasting, webcasts, micro-blogs, social and professional networks, etc.) used to integrate into a marketing program. There are many other social networks that can be used. Changing or adding on to Twitter other than what it currently is, may shift Twitter into an entirely new product, like a “micro-search engine,” or risk losing uniqueness, and tweeted into oblivion by becoming another friendster, lifestream, linkedin, facebook, flickr, etc.

written by Gloria Buono Daly (c) 2009