Apr 142010
 

Whenever I present or give classes on monetizing social networks and online communities people usually have two questions. One, should we monetize other people’s activity? Two, how can Twitter make money? The first question is ethical – if money and currency is about a show of worth, a menu of value, then yes, we can monetize conversations and activities. Because if we don’t people have to find a way to show value themselves and that’s harder. Question two comes from Question one (in part) - if Twitter doesn’t find a way for us to show we value it, it will fold/go under/dead pool, and that would be a shame.

Anyway, I thought I would play around with Twitter business models, given the current interest in premium sponsored tweets in Search (and later timeline) on Twitter (see Fastcompany for more)

Social Media Monetization Models on Flickr http://www.flickr.com/photos/silkcharm/2893602428/

Looking at the diagram here they are one by one

Customer Pays Twitter

  • Social media Donations it works for Wikipedia. It works for newspaper articles (new model in the States), it works for some games, it works for independent movies. Would it work for Twitter? Stick up a PayPal Donate button and see!
  • Pay As You Go -  a joint venture with a telco could deliver this model. Twitter cards (like iTunes) anyone?
  • Joining fee a nice account setup charge. Would that work on Twitter?
  • Expansions and upgrades Twitter’s not World of Warcraft so this is a bit harder. Maybe custom backgrounds, ability to have animated/links in background?
  • Freemium/Subscription Tiers turn the ads off already! Oh wait, they haven’t started yet. Pay $25 a year a la Flickr for a Pro account. Even if the average, 10% pay, that’s … wait how many are on Twitter? 20 million? The unpaying masses get ads, the paying few get tiered accounts. Business ones even. Verified ones definitely.
  • SMS other social networks are built on SMS revenues such as SMSFun. Twitter has probably done their dash with doing SMS deals by now.
  • Collectibles buy an account and get special badges like the Pro badge above. Or Foursquare style reward badges – most retweeted, most linked.
  • Online Events team up with LiveStream and ask for a few bucks for an online event such as those NASA video/tweet streams. Works for TED… (the online real time TED )
  • Virtual Real Estate a tough one again if you are not a virtual world like Second Life but how about a special forum for payment. Starbucks could hire a special Twitter room for a competition or an online event and then invite members. Twitter helps to promote the “room”.

Commercial Clients pay Twitter

  • Real World Events Music labels, film studios pay MySpace for record launches and Secret Shows. Friendster run big events in Asia. It’s a good revenue stream for them, and we already have Tweetups. Twitter could mashup with TED. TWED… Catchy. Someone tell Facebook too.
  • Sponsorship straight out sponsorship is a bit harder to do on Twitter -would a “your profile is brought to you by MacDonalds, your Twitter lists are sponsored by Nike” work?  (not ads)
  • Advertising Hey let’s eavesdrop on conversations, then interrupt with a contextual ad based on that word. Tweet “I want a cup of tea and a biscuit” and get a Woolies sponsored tweet with Tim Tams in 140 characters. Social ads is the worst revenue payer in social media (MySpace make $2.17 per member per year compared to Habbo, Cyworld, etc (no ads) making $17 per member ) But Twitter might just have a unique twist…
  • Market Intelligence Facebook give their market intelligence away for free (go to create Ad then play with the demographic searches). Twitter never ever seems to reveal numbers – members, time online, API calls, ditched accounts – so a nice big expensive report would probably sell very well. An ongoing service of account managers advising companies wanting to be Dell or Zappos would also be a nice sideline investment.
  • Trial Affiliates members get additional benefits if they trial another companies product. Farmville does this well – click and join an email newsletter and get Farmville gold. Click again and get a free account on World of Warcraft for a month. Blizzard (WoW) would pay Twitter for the clickthrough and the member gets not ads, but  trial signups.

Members pay Members

  • Virtual Items could be in any revenue box above as they can be Member made, Twitter made or Commercial client made. There are some plug-and-play virtual item platforms now. I’d like a magic wand that I click and it sends sparkles around my tweets please. I’d pay good $$ for that one.
  • Clip of the UGC Sale members make “pixel products” or “virtual goods” for other members and Twitter offers the platform for the trade. The eBay model but for digital items. Maybe nice avatars or backgrounds created by budding entrepreneurs and facilitated by Twitter? Trusted transactions of user generated content.
  • Clip of the Social Economy services such as opensource outsourcing/recruitment. Want a plumber, a designer, a webdev? Guru.com mets Twitter. Twitter solves both the escrow payment process and reputation challenges by offering a testimonial/points based system.
  • Auctions and Member Trading same as above but real world products similar to CafePress, Threadless, Etsy and so on. RedBubble in Australia is where members trade in art items they have created and Redbubble get a clip of each sale and help the transfer. Harder to do, but if Redbubble can get the investment, Twitter jolly well can too.

Commercial Clients direct to Members (clip of sale to  Twitter)

  • API widget economy provide a platform for Amazon to empower Twitterers to sell books to each other via API. Kinda hard in 140 tweets but hey, introduce images and embed API and we  home and hosed. See here for selling through embeddable widgets on customer site, not on business page.
  • 3rd party merchandising and 3rd party virtual items – still using APIs but through intermediaries. If I see a book or a DVD tweet flying past, I can click, purchase within Twitter and the company providing the link in the tweet gets the revenue. (If it’s a member tweeting the link, it’s in the box above). Sort of Affiliate marketing on steroids.
  • Merchandising could be 1.Twitter sells the real life products e.g. Starbucks cups or TechCrunch gear and does a deal with those companies 2. members sell from Twitter store 3. Members sell from 3rd party stores, 4. companies sell direct to members. Could go anywhere on chart.

I missed one – “all ur intellectual propertiez belongz to us” but I hate that one. Threadless, YouTube, MySpace have all had that in the past. It’s where anything that Twitter members create can be nicked by the host (Twitter) and resold with no cut to the customer. Yuck. It’s not on  the chart for a reason…. Any others?

What do you think? Would you pay? Do you want Twitter to be free but ad-based? Or does something else make you want to tip your PiggyBank/FailWhale upside down and give it a good shake?

You can see my slides from ConnectNow on monetizing social media here and my presentation to South East Asia media proprietors on new revenue streams for social networks here.

*HT* Gemma Breen of ABC News who was asking around about Twitter and revenue. Her article on ABC news site.

See also Open Innovators 77 revenue streams for Twitter and Jason Calacanis 3 business models that make Twitter a billion dollars

50+ Retweets already on Social Media Today

If you enjoyed this post, please consider leaving a comment or subscribing to the RSS feed to have future articles delivered to your feed reader. Follow @Silkcharm on Twitter. Or you could just dance nekkid around the room for me.
  • http://stilgherrian.com Stilgherrian

    I’ve said for ages that Twitter should just charge money. It’s a messaging platform. I reckon a freemium model would work nicely, free for low-volume users and then charge for higher-volumes and add-on services like SMS. The two tiers naturally fall into those who use it for an occasional dabble and those who choose to make it a core part of their communications mix.

    The beauty of Twitter its simplicity. The subtle strength is its open API. Tarting up the core service with wankery like collectibles and virtual items and auctions is all about turning to simple core messaging service into a fancy community-building platform and I reckon that’d be the wrong path to take. But nothing wrong with others building on that simplicity with tools like foursquare for those who want that kind of thing.

  • http://www.deaddinosaur.co.uk/blog Chris Norton

    Interesting post and some good thinking in here. A low-paid for membership for added features could be the way to go but my prediction is that is going to buy the best applications and make a super-application that only it can make with it’s own data. The problem then is whether this switches the rest of the Twitter eco-system off by trying to control the game entirely. It has to play a very careful balancing game to a make money and b not annoy everyone that uses it. Interesting times.

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  • http://mementoceremonies.com.au/ celebrant_3

    A premium model is a great idea although I think advertising is a far more lucrative way to monetize twitter, how though I don’t know… Stilgherrian you are right when you say the beauty of twitter is simplicity thats the problem trying to monetize it while still keeping the simplicity – impossible??

  • http://lingerieaustralia.net.au/ lingerieaustralia

    A joining fee makes the most sense – can they back charge the millions of users though thats the problem… They would loose loads of accounts if they tried to upset the apple cart now! If its not broke don’t fix it I say :)

  • http://twitter.com/silkcharm/status/78750360616960000 Laurel Papworth

    22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm

  • http://twitter.com/bogy_st/status/78750745289170945 Petar Bogdan

    RT @SilkCharm: 22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm

  • http://twitter.com/shannonboudjema/status/78751119886651392 Shannon Boudjema

    22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm

  • http://twitter.com/dklcrm/status/78752979238404096 D Klein

    RT @SilkCharm: 22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm

  • http://twitter.com/impact_infotech/status/78755946972725249 IMPACT

    RT @SilkCharm 22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm @impact_finance

  • http://twitter.com/naveenk22/status/78768804334809088 Naveen Krishnamurthy

    22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm

  • http://twitter.com/tommyhearn/status/78850173903704064 Tommy Hearn

    RT @SilkCharm: 22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm

  • http://twitter.com/smifffy22b/status/81670288386961409 Andy Smith

    Nice article on monetising UGC – 22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm

  • http://twitter.com/raizel_x/status/88526368605876225 Rachel

    22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm

  • http://twitter.com/monetizeurtwit/status/88526791861477376 Monetize Ur Twt

    RT@raizel_x22 Twitter revenue streams – monetizing tweets http://bit.ly/cJVPSm http://bit.ly/n6Kewz

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  • Rodhika Tchi

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  • thirsty creative

    Twitter could pay wall at any time. Any thoughts?

  • thirsty creative

    Twitter could pay wall at any time. Any thoughts?

    • http://laurelpapworth.com LaurelPapworth

      Unlikely, as Twitter needs to keep growing. Paywalls cannibalise other revenue streams (people expect everything for free, advertisers don’t get the numbers, p2p sales are limited etc). Never charge your product as a customer except for freemium services :P

    • http://laurelpapworth.com LaurelPapworth

      Unlikely, as Twitter needs to keep growing. Paywalls cannibalise other revenue streams (people expect everything for free, advertisers don’t get the numbers, p2p sales are limited etc). Never charge your product as a customer except for freemium services :P

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