With a record of losing money every year, Twitter went IPO with a value of nearly $25 billion! But you have to make money eventually, right? They have a business model that makes money from promoted and sponsored tweets. Will that be enough in the long term? If Twitter were a “fee for service” program, would their 250 million users pay? Would you?
Dropbox set the original business model: first get people addicted to using your service for free. When they realize they can’t live without it, charge them a small, nominal fee.
Although some people may balk at paying for Twitter, the majority of businesses (and celebrities) would pay to make sure they can still communicate with their audience. The only questions are, “How much would people pay?” and “Which of the 3 business models is the best?”
Annual Subscription
The majority of money will be made from a large volume of subscribers. Draw audiences in with a free 3-month (or 6-month) subscription. That gives them time to build their followers. Subscribers then begin to pay $20 / month to connect with their friends and engage with businesses. Users will pay up front for membership for an unlimited number of tweets, limited tech support and exclusive membership. With a dedicated and growing membership, this will insure a growing revenue stream.
Pay Per Tweet
Half of all tweets are “worthless.” These are the tweets about Justin Bieber, Kim Kardashian and the french fries at McDonald’s. With the “pay per tweet” model, members could pre-pay for 100, 300, 500 or unlimited tweets per month. Members would bid on a price per tweet. There would be no cost for retweets as this practice increases the spread of information. This would be the least popular of the models and could lower Twitter membership. However, remember when cell phone companies charged per minute? You cared how long you were on the phone until everyone went unlimited.
Service Model
Businesses don’t want to read books, watch videos or listen to podcasts on how to Tweet. They want someone to teach them or do it for them (that’s what SciSpeak specializes in). With 3 different levels, Twitter members would receive expert training on building a Twitter strategy, internal and external policy and best practices. Phone and video tech support would also be provided. Even though the tweets are free, the service would cost extra for businesses who want that support.
First things first: Twitter must turn a profit. Banner ads will devalue social media to that of a mobile billboard and consumers will begin ignore the message. Remember: Today’s Twitter can be tomorrow’s Friendster or MySpace.
Scientifically Speaking, of course.
Next Week: salesforce.com = Social Sales Funnel
