Sep 11, 2009

Is Twitter Jumping the Revenue Gun? [Twitter]

Twitter's only recently become an international sensation, but, unlike some of its more slow-and-steady contemporaries, it's already looking to make a buck and this week hinted again at opening the ad revenue doors. This may not end well.

Though they've always admitted they could possibly, maybe, potentially open the door to advertisers, Twitter founder Biz Stone seemed to chart a more definitive course yesterday afternoon when he tweeted, "We leave the door open for advertising. We'd like to keep our options open, as we've said before." Then, Twitter altered its terms of service, which now read:

The services may include advertisements, which may be targeted to the content or information on the services, queries made through the services, or other information. The types and extent of advertising by Twitter on the services are subject to change."

In consideration for Twitter granting you access to and use of the services, you agree that Twitter and its third-party providers and partners may place such advertising on the services....

One can hardly be surprised, of course, for the two-year old site's growing like gangbusters and has even, like Google before it, created an entirely new verb.

But, as Michael Arrington of TechCrunch fame points out, it's not always wise for a unique company such as Twitter to open the revenue flood gates, for poor performance can drive down the ultimate value:

...The problem is, once you have revenues it's impossible for [potential buyers] to just make stuff up. They look at those revenues and growth rates and trend out from there. They can't add a different long term growth rate without a solid reason to do it

So when Twitter talks about turning on revenue, it isn't such a small decision. They have no idea how much money they can make off the service....

It's not inconceivable that Twitter actually can't scale as a centralized service, and will stumble badly.

Others wonder whether companies will want to advertise on a site where people can express themselves in a manner, however lewd and crude, of their own choosing. Does Wal-Mart really want to be advertising alongside Courtney Love's insane ramblings? Probably not.

One big concern we would have, if we were Twitter, is how much staying power the site actually has (although the influx of sluts does bode well). One reader recently compared Twitter with CB radio. It is, they hypothesized, nothing but a fad. And that's entirely imaginable.

It's hard to say how long the world will tolerate communicating within the constraints of 140 characters. Although, with the way things are going now, we'll probably all be grunting and scratching ourselves, rather than actually conversing. So, Twitter, maybe you'll surprise us.

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