September 1, 2010 | In: Technology

Twitter: A Business With No Business Model Desperate To Be Sold

Twitter is not a stock, but it’s a business that may be very well bought (It was rumored that Google once wanted to buy it), or even go for its own IPO (although I find it hard for the current business model to justify an IPO).

Let’s talk about the Twitter revenue stream, it is, with all due respect to Twitter’s executives, negligible. Twitter is so famous yet so poor. Twitter has been burning through venture funds for years now, even adding more employees, but apparently nobody cares.

People using the Twitter platform are making money (through as spammy model called sponsored tweets), but Twitter, in and for itself, makes none (Twitter though has since promoted its own version of the sponsored tweets, the promoted tweets). There is no advertising at all on Twitter, save for the fact that the trending topics are sometimes manipulated by Twitter’s engineers to inflate a new product/movie/etc.., for example, Avatar (although I’m not sure if Twitter gets paid for this or not).

Since Twitter is a website, let us examine its traffic:

As you can see from the above graph, Twitter’s traffic has been increasing steadily for the past few months (notice the huge spike between February and March of 2010, hmmm…)

So as a website, Twitter is interesting to its users, but as a business, it is, to this moment, a complete flop, and I’m not sure when and how will the investors react. Twitter can make money using ads (even using the Google ads), but probably the Twitter people think (and rightly so, imagine seeing this tweet surrounded by ads) that the public will perceive the website as spammy. After all, the longest paragraph on the website is a 140 characters.

There must be a business model, but until now, I can’t figure it out, and for that matter, nor does anyone at Twitter. Which explains why Twitter didn’t get bought yet, no one, including potential buyers, can think of a sustainable business model that can make this website profitable.

But Twitter has its own problems. How many times/day do you see the large whale being carried by birds or the robot saying that there is something technically wrong. At peak times, I see the whale 30 to 50% of the times, and the robot once a day. Even after years in the business, Twitter still doesn’t have a reliable infrastructure in place. I don’t know for how long people will tolerate this.

Twitter is not a website that can disappear in a week, but unless they start thinking about a serious business model and expand their infrastructure to support the growing needs, they may very well end up like myspace, losing a considerable amount of traffic every month. Twitter is very easy to mimic, but it has succeeded in branding itself (Google tried to destroy it with Buzz but they failed).

The only logical and happy ending for Twitter is to get bought fast by Google or Microsoft who will probably exploit it to increase traffic to their websites. Even media giants such as Newscorp and Time Warner can see value in this website. Twitter doesn’t have all the time in the world like facebook, it must be sold as soon as possible, or face dire consequences such as serious competition (remember how people flocked from myspace to facebook), and perhaps obsolescence (after all, Twitter is a technology, and technologies become obsolete very fast).

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