• March 27, 2009
• Blog

Everyone knows about Twitter. Many are tweeting instead of —
or in addition to — texting. (If you aren’t, please check it out so you’re in the know.
You can’t fight social media. It’s bigger than all of us).

Twitter is such a phenomenon that morning talk shows have
started covering the social media networking Web site because, as crazy as it
seems, people in the morning show target market are interested. Yes, that means retirees and stay-at-home parents have moved into the realm of social media with college students and recent college grads. (The “Today
Show” did a detailed piece last week, if you’re interested in checking out a
summary of the service.)

But that’s not really the point of this post. The point is
that despite Twitter’s ever-increasing popularity  — Compete.com sets the site at third in ranking of largest
social networks behind Myspace and Facebook at roughly 6 million users in
February 2009 — the company is not yet turning a profit.

Why? In the “About Us” section of Twitter’s homepage, an
answer to the question “How do you make money from Twitter?” is listed. To
paraphrase, the statements says the company has received many offers but wants
to concentrate more on developing user services. “While our business model is
in a research phase, we spend more money than we make,” the answer states.

Since Twitter isn’t jumping on the cash train after two
years of operation, other Web sites are. If you snooze, you lose, right? Well,
I’m not sure Twitter is losing anything — the company was recently predicted to
be worth $250 million — but it will be wise for the company to team up with
these sites once they get their money-making plan up and running.

German start-up Magpie & Friends would be a great partner. The company recently began paying Twitter users for
the right to sell ads in their tweets. Advertisers typically pay $13 per ad,
and registered users get a cut of the check for lending out their tweets. To
make the money, Magpie collects a series of keywords that advertisers would
want to associate with their ads, like iPhone or NCAA. The advertisers then bid
on those words. The winning bidders’ ads are paired up with a registered
Twitter users’ message streams, and VOILA! The ad is seen by the users’
followers. Money is made. All is content in capitalism.

Social media blog Mashable is also
cashing in on Twitter but in a different way. The blog recently began
soliciting brans like JetBlue and MailChimp to pay to have their tweets
featured on its Web site alongside the normal banner ads.

Twitter co-founder Biz Stone said the company is already
keeping an eye on sites like Magpie and Mashable as it prepares to launch a
fee-based service later this year. And collaboration is very much in the
picture. 

“We want to work with those companies that are already
making an effort,” Stone told The Wall
Street Journal.

But until that time, Twitter is taking small steps in the
right revenue direction. In a recent interview with “Media Money” of CNBC,
Twitter CEO Evan Williams said his company plans to work with its larger
corporate users, like Zappos.com and The
New York Times, to “make it more valuable for them in a way that also
benefits users.”

Just this week, ExecTweets, a Web
site that posts tweets of the nation’s top business executives, announced it is
giving Twitter its first taste of revenue. The Web site is putting display ads
on posts from business execs and giving a cut of the revenue to Twitter.

What do you think is next on Twitter’s revenue plan? How
will they turn a profit when the service is free? Will users be willing to pay? 

Alyson (@ Twitter)