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Wednesday 11 February 2009

Twitter Looks at Charging Business

In Asia, Twitter and the whole microblogging concept is just starting to take off. In the US, Europe and other parts of the world Twitter is an already established social media service. Twitter, like it's social media cousins Facebook and MySpace, has a significant audience but hasn't yet established a viable business model. This article from TechCrunch discusses the concept of Twitter starting to charge companies who are starting to realise marketing benefits that Twitter offers businesses - currently at no cost.

Twitter To Start Charging Companies For Having An Account?
By Robin Wauters on February 10, 2009.
Companies using Twitter for commercial purposes may soon start getting charged for that activity, according to an interview British trade magazine Marketing (part of BrandRepublic) held with co-founder Biz Stone.

This is what Stone reportedly said:

“We are noticing more companies using Twitter and individuals following them. We can identify ways to make this experience even more valuable and charge for commercial accounts.”

No big surprises there, as this is often cited as one of the most obvious moves Twitter could make to start generating revenue, although many are expecting more from the startup who has become notorious for its lack of an apparent business model even after nearly 3 years of existence. Stone also said they will not start charging individual users, and that the move could “create revenue-generating features to tap into the way brands use Twitter as a hybrid marketing and customer-service tool.”

Stone did not give any details regarding pricing or the specific way Twitter would go about charging users and for what exactly. As a reminder: the startup has raised $20 million in venture capital to date and recently turned down an acquisition offer from Facebook.

One of the most recent examples of companies using Twitter for commercial purposes is Dell, who reportedly made $1 million in sales during the holidays via the micro-sharing utility, and recently started giving discounts exclusively to its followers.

We’ll see more of this type of behavior in the future beyond any shred of doubt, but I’m wondering what exactly is considered as ‘commercial usage’ by Twitter management: does it mean any way of promoting a product or service or only when there’s sales activity connected to the corporate accounts? And will companies be prepared to pay up for use of the service at all?

Marketing got in touch with Bob Pearson, VP of communities and conversations at Dell, with that exact question and got a telling response: “If it becomes complicated and costly, our instinct would be to move elsewhere.”

Update: as Peter Kafka points out in comments, there was good article two days ago in New York Magazine which reveals a little more of where Twitter is headed.

Update 2: Twitter’s Biz Stone has written a post related to the rumors:

However, it’s important to note that whatever we come up with, Twitter will remain free to use by everyone—individuals, companies, celebrities, etc. What we’re thinking about is adding value in places where we are already seeing traction, not imposing fees on existing services. We are still very early in the idea stage and we don’t have anything to share just yet despite a recent surge in speculation. When we do, we’ll be sure to let you know.

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