Wall Street has doubts about Twitter's growth. Is it time to rethink giving the service away for free?
Twitter is taking a beating. While the company trumped Wall Street estimates and added millions of new users, it also announced a net loss of $132 million this week, and its stock price fell 8.6 percent after the company reported its first-quarter financials. According to news reports, analysts are wary about the slowing pace of Twitter’s growth.
Dominic Rushe, writing in The Guardian, summed up Wall Street’s concerns about the platform’s long-term prospects: “…the service may lack the mass appeal needed to turn it into a advertising powerhouse.”
Twitter’s business model is common among social sites (and many other Internet companies): you give the service away for free, which attracts users, which in turn attracts the advertisers.
But if Wall Street thinks Twitter may not survive under this model, is there a case to be made for charging users? In other words, do the people who actually spend time on Twitter get enough out of it to make it worth paying for?
Presumably, connecting a publisher with its public is a valuable service. Most of the people I follow on Twitter have things to promote: a blog, a Web site, a company. It doesn’t bother me that they use Twitter as a promotional tool; I follow them because I’m interested in what they have to say, and Twitter makes it easy for me to keep up with them. At the same time, I use Twitter to promote my own writing.
So is this service valuable enough that Twitter could charge for it? There must be many ways Twitter could monetize this platform outside of advertising. For instance, it could charge media organizations for accounts. The New York Times, NPR, the BBC, Huffington Post and others might just be willing to pony up to ensure its brands and its writers have a presence on Twitter.
Or it could offer tiered pricing based on something like the number of links you post. Everyone gets a free account, but once you share a certain number of links over a specific period of time, you can’t share any more links until you buy into a plan.
This kind of pricing scheme would directly target the organizations that use Twitter as a publishing platform, without penalizing media consumers or people who use the site for status updates, swapping jokes, and live-tweeting Game of Thrones.
Speaking as a member of the tech media, I know Twitter is a key part of our company’s strategy to extend the reach of our content. If Twitter kept its prices reasonable, I could see my organization rolling the price of editors’ Twitter accounts into the cost of doing business, just like e-mail and phone service.
Twitter has built a powerful ecosystem to connect media companies with an audience, and both media companies and audiences are taking full advantage of what Twitter has built. Surely Twitter can find a way to extract some financial value from that ecosystem.
A recent article in The Atlantic declares that Twitter is entering “its twilight” and says its relevance to Internet culture is sliding toward that of AOL Instant Messenger (ouch!). And yet, a very prominent button below the story’s headline shows the story has been Tweeted more than 4,200 times (as of this posting). Is this just cruel irony, or a signal to Twitter that it might be leaving money on the table?
Do you get enough use from Twitter to make it worth paying for?
Drew is formerly editor of Network Computing and currently director of content and community for Interop. View Full Bio
Social is a Business ImperativeThe use of social media for a host of business purposes is rising. Indeed, social is quickly moving from cutting edge to business basic. Organizations that have so far ignored social - either because they thought it was a passing fad or just didnít have the resources to properly evaluate potential use cases and products - must start giving it serious consideration.
Social is a Business ImperativeSocial media is critical in the age of digital business. How can IT help? First, work with the marketing team to set up social networking programs on Facebook, Twitter, and LinkedIn, at minimum. Then work to put social media sentiment analytics in place to measure success.
InformationWeek Must Reads Oct. 21, 2014InformationWeek's new Must Reads is a compendium of our best recent coverage of digital strategy. Learn why you should learn to embrace DevOps, how to avoid roadblocks for digital projects, what the five steps to API management are, and more.