Twitter's business model

Very simple model: Traffic.

Traffic is today's no.1 asset on the net. once you got it, the big players gets interested in you, which means a lot of $$$ for selling your service. 

rivid I totally agree. I would also add that twitter is one of those simple ideas that have so many different usages. I have seen people become so creative in their usage of twitter. It is simply amazing what a good and diverse product it is.

They don't - maybe they will gain enough traffic and create a strong enough community, or someone will beat them in feature wars. this applicaition doesn't have any tech - so the competitive advantage will be only if the right people will use it. at the end of the road - it will be all about traffic...

Good Night from stockholm 

My guess is that they'll hope to gather traffic and addicts (Twitterholics) and then begin to add premium features for a fee of course.  Premium features? (enhanced handling of direct messages, greater granularity in filtering by language or region, etc.) 

However, they're presently in danger of loosing legitimate long-term users due to all of the spambots currently plaguing the system.  Also, people are tending to use the service as a chat system and not really answering the question "What are you doing?"

So, I expect eventually advertising or subscription fees will eventually appear once the owners feel that they've built a critical mass of users that they can reference as a basis for a fee structure.

 -- Mike

Targeted ads.  After building to an even bigger critical mass I'd expect twitter to add tasteful, to in your face ads.  Notice on facebook that ads are coming in big numbers and they are turning big traffic into reasonable profits this year (estimated at $100 million), followed by massive profits next year.  

Twitter has an interesting approach though, note that CNN and other businesses are on twitter.  So when you "follow" CNN, you'll get their updates.  In theory this will become a massive infrastructure play where businesses would pay Twitter for the privilege of accessing the Twitter user base.  This model has already been validated on MySpace, where businesses can pay sponsorship fees and work with MySpace to maximize eyeballs on their profiles.  The smart companies will pay.

Twitter is likely to be bought which provides investor returns, and an acquiror will do the same strategy as above.  Getting bought is not a revenue model, as an equity return has nothing to do with a revenue and profit model.   Unless you are fortunate enough to be able to turn out one success after the next and continuously flip them, which could become a business model.  No one I know has been able to pull this off, consistently.

So then the acquiror builds a fancy spreadsheet, plugs it into their existing revenue model that would be some combination of ads and/or a paid version, and then they apply that business model to the acquired asset.  It's no different than network television, when you have people glued to your environment, advertisers pay to reach them.

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