Tweet! Tweet! Tweet! Tweet!
- Bobby Day (1958)
- Michael Jackson (1972)
- You (20??)
Think back a long, long, long time ago to a time before Twitter – way back in June of 2006. Who would have thought then that a company based on sending 140-character messages would in three years time become an internet darling and be compared with MySpace and Facebook? If you haven’t tweeted, you will. It’s coming upon us like squeeze-bottle ketchup, the mobile phone and all those other cool innovations that we just can’t do without. Yet, for all the hype and all the giddy would-be investors, Twitter still has not shown if it is a money-maker. Up until now, Twitter has been more interested in attracting users than earning a profit. Like many an internet company before it, Twitter banked on figuring out along the way just how to earn a profit. Has that time finally arrived?
A story in TechCrunch from March 12, 2009 (How Much Is A Suggested Slot On Twitter Worth? Jason Calacanis Offers $250,000) illustrates Twitter’s attractiveness to advertisers. You can read the story at the TechCrunch website by following this link:
In a nutshell, Twitter is a service that keeps people in touch. Users send out “tweets” which are 140 characters or less. Tweets can be sent out a number of ways, typically by SMS or internet. Once a tweet is sent, each of the sender’s followers receives the message. This could be something as mundane as, “Just waking up and having a cup of jo” or as profound as “it’s high time that we did something about world hunger.” Sounds simple, doesn’t it? So what’s all the fuss?
Mr. Calacanis, the CEO of Mahalo, believes that Twitter’s suggesting him as a contact is worth a cool quarter million. If Mr. Calcanis’s prediction is correct, this will be quite a bargain. The article quotes him as saying, “I believe that in five years the top 20 recommend (sic) slots will be worth $1m a year each – super bowl commercial level in fact.” While that figure is not quite enough to get you a 30-second spot for the super bowl, it is enough to attract the attentions of marketers. Here is how it works…
When you open a new Twitter account, the site recommends 100 names that you might like to add as contacts. Mark their name and this will make you their follower (no, you are not joining a cult. In Twitter lingo, the people that receive your messages are called your “followers”). Right now, you are likely to see names like Barack Obama and Lance Armstrong, or companies like CNN and The Wall Street Journal suggested to you. These sites attract many of their followers from the mere suggestion of Twitter. Mr. Calacanis thinks that two years worth of suggestions is worth a lot of money. Are we seeing a glimpse of Twitter’s future?
Let’s hope not. While the offer may at first seem like a good idea, it is a dangerous course. Once Twitter has signed on the dotted line, they will lose a little something. Twitter could immediately morph from a user-based content service into service based on marketing. In Mr. Calacanis’s defense, he has promised to send a maximum of ten tweets per day to insure that Twitter does not become a spamming medium, but other marketers might not be able to resist, especially if they have paid six figures for the privilege. With that said, Twitter will have to make money somehow. Investors may be content to sit back for a few years while Twitter builds a user base, but eventually they are going to want to see a return. Just how Twitter will do this is still up in the air. I doubt the company is even 100% sure itself just how that will happen, but at least now, there is an offer on the table.
What do you think?
(1) Should Twitter consider Jason Calacanis’s offer to list his name as a suggested contact for two years in exchange for $250,000?
(2) Can you think of any alternatives to the Calacanis plan for Twitter to earn a profit?