Twitter is a Cash Cow in the Making

by Joe Hall

We have been talking a great deal lately about how Twitter should be monetizing their service. Most of this talk comes after news that Twitter secured $20 million in venture capital, to push its total valuation to $250 million. It wasn’t long ago that Twitter started looking for a product manager to define a revenue stream. This is a smart move for a company that has relied solely on venture capital from day one.

Andy recently wrote a post detailing his thoughts for a Twitter subscription program. This is an idea that even Twitter’s CEO Evan Williams has spoken about in the past.

We’ve though about it. We had to do some thinking about that to raise a bunch of money, but it’s not actively in development right now. The broad strokes on the matter are obviously Twitter is being used for a lot of commercial purposes right now, in addition to social purposes. We think that works pretty well. We think there’s a lot of companies that we’ve talked to that seem to be getting a lot of value out of it. If that continues, if that becomes a rich world for users and the companies, we think we can extract some revenue from that.

While I think that a subscription based program of some kind would be a good idea (one I would probably subscribe to), I think that implementing that alone would miss Twitter’s full potential completely.

Twitter’s Full Potential

As Seth Godin states, Twitter is a protocol. What’s a protocol? A protocol is a set of “rules determining the format and transmission of data.” The Twitter Protocol is made possible through Twitter’s overwhelmingly open API. Because of it we can integrate Twitter into just about anything.

So, Twitter is a protocol, whats the big deal? Protocols control the flow of information. Those that have become masters at information control have built insurmountable wealth as a result.

Here’s two real world examples at how the Twitter Protocol could bring on lots of wealth.

URL Control: Many Twitter users use some type of URL shortening service to make their URLs more manageable with in 140 characters. At the moment Twitter is integrated with the infamous TinyURL. If Twitter brought URL shortening in house they could not only brand out going URLs, but they could also control them. Think about every link that leaves Twitter to places like Amazon.com or eBay.com, now think about those links all of the sudden turning into affiliate links. Or how about all of the links that point towards Google SERPs, now think what it would mean if they changed into links that integrated the AdSense for Search program. Are you seeing were I am going with this?

Twitter as a payment gateway: Back in June of last year, Nate Westheimer proposed the idea of Twitter becoming the next big payment processor, by monopolizing on the mobile communications industry’s need for a mobile payment processor like PayPal. I still think this is a solid idea and I am shocked that not many have talked much more about this. Westheimer tells us that combining Twitter’s carrier free social messaging service with a payment processor could put the company in a position to define the mobile standard for payment processing.

The true power behind popular protocols can almost never be predicted, mostly because they are defined by how they are used. This means that as Twitter grows it will have to remain observant of emerging trends of its users, so that they can wield their protocol in ways that allow them to prosper with the aide of their users. For myself, I am excited to see the future.