The Problem With Twitter Is…
By Anna Johnson on October 25th, 2008The problem with Twitter is… it doesn’t make any money.
Yep, seems everyone is making money off Twitter… except Twitter! So while various Internet marketers will tell you how great Twitter is, in terms of generating traffic, a list, buzz, sales etc, Twitter is still looking for a way to make money.
An article by Corvida in ReadWriteWeb indicates that the venture capitalists who have funded Twitter are expecting the company to establish a revenue model in 2009. That’s right, harking back to the dotcom days of the late 1990s, Twitter was founded – and funded – without having a model for making money!
In fact, asking how Twitter will make money was, until recently, a ‘stupid’ question. Fred Wilson of Union Square Ventures which helped fund the company is quoted to have said:
“It’s like the stupidest question in the world: How’s Twitter going to make money. It’s like ‘How was Google going to make money? Eventually Google was going to make money and they figured out how to do it and they figured out a great business, and I think the same thing is true with Twitter.”
But Wilson has since recanted his statements… perhaps in light of current economic conditions.
Sure, Google started out as an exceptional, ground-breaking search engine and only later established a model for making money. But I wonder: for every technology company that began without any idea of how to make money, and ended up successfully working out one (or more)… how many other companies self-destructed because they were never able to commercialize their technology, or at least sell something that people wanted to buy?
I don’t know the answer. But we need only look at what happened during the dotcom bust of 2000 to get an inkling of what happened to many companies that lacked an effective business model.
So it will be interesting to see what Twitter comes up with, and more generally, how many non-money-making Web 2.0 companies make it through the current period.
Oh, and why is Twitter’s inability to make money a problem? Well, if Twitter is helping YOUR business… then you’ll want it to stick around, right? Well, it won’t be able to stick around… unless it becomes self-sufficient. In other words, unless it makes money.
Source: Corvida, “Revenue Model for Twitter Coming Soon”, ReadWriteWeb, October 18, 2008
