I wrote a comment on Twitter's Business Model: Brilliant or Non-Existent? on the Harvard Business blog, that turned out to be rather long, so I post it here as well:
I believe Twitter has done the right thing given the funding they have had and the potential value they can create, extract and control. The potential value lies in the number of users and the number of sent messages, so by improving the user experience the number of users, and the number of messages per user, increases along with the number of applications using Twitter streams. In comparison with most other internet services, Twitter has the ability to become a de-facto standard for a new type of data to be mined. The key question is how much of the value created that will be captured and controlled by the company, and how much of the value that will be extracted by others mining their data. What I find perhaps most impressive is that Twitter has managed to get so many application developers to build applications on top of its API without an outspoken business model, assuring the continuous ability to do so with or without fees or advertising.
There are many speculating about future premium versions using a Freemium model, but with or without paid versions I believe there are so many great ways to monetize the Twitter data. Twitter is increasingly becoming a standardized platform for real-time data, now used by actors such as Microsoft and Google, and their search algorithms will probably be updated with algorithms ranking pages on links from Twitter users, RTs by other Twitter users, by the number of followers, by webpages linking to Twitter profiles etc. This is of course of great value for Internet users, as well as for search- and content companies, and brand owners, that want to know what is going on right now, what are the latest reports within a certain area, who are the people in the world that by interest or profession stay on top of everything that happens within their field, local community etc. It is of course also of great value for the Telcos getting increased amount of data transfer from mobile phones.
Content in Twitter messages will probably soon trigger other services. Say that I Twitter about a book that I have read, it would be in the interest of Amazon to ask me to comment the book on Amazon and recommend a new one, in the interest of the writer to get my feedback, in the interest of my local cinema to tell me about when the movie is coming out, and in the interest of mine to know what friends also read the book and who liked it and who didn’t. By cross-referencing twitter messages with past messages, messages by others or from friends in social networks such as Facebook or LinkedIn, there will be great opportunities for interesting services and business models.
My twitter stream (@sundelin) will probably not be ranked as high as @NYTimes for general news but perhaps my stream will be considered more important in relation to business models, where I tend to find things faster than most others.
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Using twitter is very helpful in promoting a business and your website.
ReplyDeleteHi Anders,
ReplyDeleteNice comment on the Harvard blog post and I share your belief in that parts of the success and value of Twitter is dependant on the services originating from the open API. I would how ever want to challenge you on a couple of your statements as I find them interesting to discuss:
1. “The potential value lies in the number of users and the number of sent messages, so by improving the user experience the number of users, and the number of messages per user, increases along with the number of applications using Twitter streams.”
Being a pretty active Twitter user both from a personal as well as a business perspective I have to disagree on the statement that the potential value lies in the number of messages as the answer is not that simple. For me, the value first and foremost lies in the quality and relevancy of the message. The quality is the content and linking and the relevancy is the quality combined with timing. The introduction of the Lists will to some extent change the value of having many followers and I anticipate we will see a dramatic change in behavior over time.
2. "Twitter has the ability to become a de-facto standard for a new type of data to be mined."
Yes and no. Twitter is one way of sending real time data and the first accepted one by the general public. What Twitter has done is to open the eyes both to the public, the industry and the search engines on the value of fresh data. I do however think that Twitter as such faces the risk of being diluted due to the introduction of same theory using other platforms when merging services.
3. "Say that I Twitter about a book that I have read, it would be in the interest of Amazon to ask me to comment the book on Amazon and recommend a new one, in the interest of the writer to get my feedback, in the interest of my local cinema to tell me about when the movie is coming out, and in the interest of mine to know what friends also read the book and who liked it and who didn’t."
It is a contradiction to the whole force behind Twitter that Amazon would contact you and ask you to write a review. From my perspective, Amazon should not be involved. The introduction crowd sourced real time data will by itself be enough of a review.
Again, thanks for sharing your comment as it clearly highlights some important parts of Twitter’s success as opens up for some interesting discussions. /F
Fredrik,
ReplyDeleteThank you for an excellent challenge!
1. "For me, the value first and foremost lies in the quality and relevancy of the message" - I fully agree, but what is quality for you is not necessarily quality for me, or for a company selling cat food that wants to know if you have a cat or not. From a data mining perspective I believe the more the better. From a user perspective, I believe advanced filtering will be a necessity...
2. I agree with you, and in comparison with Facebook (whose market value per user seems to be similar to Twitter's) the switching cost for Twitter users are far less than the switching cost of Facebook users, hence the risk should be bigger.
3. Perhaps its not Amazon who contact you but your friends... making money from Amazon if you click on the link to the book they just read? This was in the news today (nov 4th):
"Amazon affiliates earn money by putting Amazon links and banner ads on their websites and collecting referral fees when people click on those links/ads and buy something. Now they'll have the option of tapping Twitter for those fees as well. Here's how it works: affiliates go to an Amazon product page, hit the "Share on Twitter" button on their tool bar, and get an auto-generated message on their Twitter account with a short product URL and their affiliate ID. They can edit the message, or just hit update to post it. If Twitter users click on the link and make a purchase, the affiliate gets a fee.
Amazon has an interesting relationship with Twitter. Amazon CEO Jeff Bezos is a personal investor in the microblogging service, and Twitter uses Amazon's S3 cloud service for storing profile and background pictures. Various Amazon business units use Twitter to build buzz around products and services, but now Amazon seems to be making a more serious effort to leverage Twitter for ecommerce."
Take care // Anders