It seems that every couple years we find a new technology, or re-purpose an old one, with which to communicate with each other. They often start out as a niche application that only a few technically inclined people (Internet, Email) use or are reserved for those who can afford the luxury (Cellular phones) but then as these early adopters foster the growth of the technology the barrier to entry drops dramatically. Soon after the technology hits critical mass and widespread adoption is inevitable (I dive more in depth into this concept here). Twitter is the latest method of communication to hit this critical mass point and as far as anyone can tell it’s here to stay for the long run:

Some time soon, the company won’t say when, the 100-millionth person will have signed on to Twitter to follow and be followed by friends and strangers. That may sound like a MySpace waiting to happen — remember MySpace? — but I’m convinced Twitter is here to stay.

And I’m not alone.

“The history of the Internet suggests that there have been cool Web sites that go in and out of fashion and then there have been open standards that become plumbing,” said Steven Johnson, the author and technology observer who wrote a seminal piece about Twitter for Time last June. “Twitter is looking more and more like plumbing, and plumbing is eternal.”

Carr hits on a point that I’ve made informally (and unfortunately not on this blog as far as I can tell) many times before. Twitter as it stands provides a useful service to many millions of people and they did the right thing from the start of blowing open their whole operation in the form of very friendly APIs. This drove adoption up like crazy since anyone who has spent even a short amount of time building web applications would be able to whip up a simple Twitter app for their platform of choice. Twitter even has reach in places where Internet connectivity is sparse but mobile phone coverage is not, further widening their market and cementing it in our minds as an ubiquitous technology.

So you might ask then, why does the title of this post suggest I believe otherwise?

As they always say, if you want to find the truth follow the money. Twitter, according to Alexa, is currently ranked the 14th most visited site in the world with a global Internet traffic capture of almost 5%. When you have that many eyes locked on your site every day it doesn’t take a lot to monetize that traffic and make an incomprehensible amount of cash. However, as some leaked documents showed, Twitter’s revenue scratched $400,000 in Q3 of 2009 with projected earnings of $4 million in Q4. Whilst they’re still being coy about what their actual monetization strategy is going to be there’s been a few tidbits leaking out around some agreements with search engines and the possibility of in depth analytics for corporate customers. These are all good in theory, but is it really going to be enough for Twitter to keep on keeping on?

The problem as I see it isn’t that the service isn’t valuable or unpopular, far from it. More the fact that despite all their success Twitter is struggling financially with its current windfalls only providing a temporary cash injection (of which they’ve already had 3). The user-base is used to having their Twitter clean and ad free so taking the Google route of slapping advertising on it is out of the question and really unless they’re capturing some other wordly metric that no one has thought of yet I can’t see the value businesses could derive from ponying up the cash for a premium account. With Twitter being tight lipped on the matter (apart from saying they have multiple things they want to try) I’m wondering if they’ll ever produce a stable revenue stream. It all sounds dangerously similar to Youtube before their acquisition by Google, and they had a solid monetization strategy.

This is not to say that the service that Twitter embodies will disappear, far from it. The social netziens have developed a set of social norms that revolve around the use of a Twitter-esque service and should it disappear they’ll soon hop to the next web framework that provides a similar means of communication. Indeed there are already several alternatives that provide much the same services as Twitter and could easily pull up the slack should it disappear. How much of the horde would convert if such a fate befell their service of choice? Hard to tell, but the past has shown us that if people want something bad enough they’ll go at almost any lengths to get it.

Still Twitter has been going this long without a hitch so there’s no reason they won’t continue on for the foreseeable future. They pulled their monetization strategies ahead aggressively in order to alay their shareholder’s fears and their recent deals should cash them up enough for them to try several revenue generation streams before they’re out of time. There’s also the possibility of acquisition by a large corporate entity who can absorb their losses in exchange for their user-base (ala the Google/Youtube deal) but that’s a few years off at least, since they’ve only just recently started playing nice with the giants of the IT world.

It’s going to be an interesting year for all the folks over at Twitter.

About the Author

David Klemke

David is an avid gamer and technology enthusiast in Australia. He got his first taste for both of those passions when his father, a radio engineer from the University of Melbourne, gave him an old DOS box to play games on.

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