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
How Enterprises Are Attacking the IT Security EnterpriseTo learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Digital Transformation Myths & TruthsTransformation is on every IT organization's to-do list, but effectively transforming IT means a major shift in technology as well as business models and culture. In this IT Trend Report, we examine some of the misconceptions of digital transformation and look at steps you can take to succeed technically and culturally.