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.
(Picture from Profy, hat tip to Matt from Made by Many)
Probably tiered usage from basic service for free but analytics will cost (like Flicrk?). Or charge to access API (hope not would kill app innovation). Will be interesting either way.
I disagree it would kill app innovation. I think it would just mean app developers think about the value in what they produce on the basis that it needs to be a commercial success for them (through their own subscription or ad support).
I’ve long supported billing for API use ahead of charging users for accounts.
Ian Hendry
CEO, WeCanDo.BIZ
http;//www.wecando.biz
With all due respect, Ian, that idea is horrible. Developers wouldn’t think smarter, they’d just build around it and scrape content via HTML. Doing that would cause a 5x increase in bandwidth per a request and it would kill Twitter.
We use twitter data in the Learn10 widget to provide live examples of words being used in context.
Our app is for language learners – (currently in private beta) & we feel that twitter content really adds value to the learner experience.
Also, we’ll be running a competition using the hashtag #L10en – a tweet composition (using all 10 words from our daily list in a grammatically correct sentence).
I’d be very interested to find out how a tiered usage payment would tackle these two examples.
Twitter needs a business model or else it will go bankrupt and we will have twitter no more.
I am all for twitter trying to find something sustainable like this one.
Anjali Sen
Twitter is already toast. Their best bet is to sell ASAP and split. Stop trying to be a company. Welcome to the food chain.
I on the other hand am all for Twitter going bankrupt and leaving the A.D.D. wankers pissing in their pants.
Are we talking euphamisms here? Corporates or Businesses? or Business names? What about individuals running their own business other than through a corporate?
In the UK, for example, you can run a business as:
a sole trader
a partnership
a limited company or
an LLP
All quite different and only one is a ‘corporate’.
… It does not matter. If any *business* makes money this way, it is just fair to share it with Twitter.
“We can identify ways to make this experience even more valuable and charge for commercial accounts.” – That suggests to me that it won’t be a case of “If you are a business, you will pay X”, more of a case of, “Hey, we have these extra gadgets and tools you may find of some use. If you want them, pay for them.”
Wow. Now there’s a BUSINESS MODEL if I ever say one. The new Twitter VP of Biz Dev must be a frigging GENIUS !
that’s what I am hearing.
So is Guy Kawasaki a company or a personal tweeter that owns a company?
I think companies will find a way around this at first.
I don’t think it will be a case of “If you are a company you must pay!”, there will be some added benefit from having a premium account, and that benefit will be targeted at businesses.
That is rather confusing but hopefully Twitter will be able to come up with packages that suits everyone.
“If it becomes complicated and costly, our instinct would be to move elsewhere.”
Where exactly is this elsewhere?
Elsewhere = not Twitter.
Because the media landscape is so fractured, there are too many other places brands can go to spend their “social time”.
I think unless there is a tiered service with “free” still being an option, this is a terrible idea.
I don’t think they will be profitable with this model.
Toni, why don’t you think Twitter will be profitable with this model? And if not that one then what do you suggest?
That’s the oportunity then for services like YouAre with a potential on its name/domain and with features that could make any type of marketing/image strategy stronger. Video and images might give more options comercially talking.
I they have reached critical mass, it might work. Question is: will they reach it?
I had quite a long philosophical conversation with journalist from Marketing magazine about this when she was writing the article, which is not entirely summed up with the quote she used (I’ve got some work to do on the pithy sound bite front, obviously).
The challenge Twitter will face is that there’s such a grey line between personal and commercial use.
Aside from the celebrity issue, where they are clearly individuals, but using the service for commercial gain, it’s grey elsewhere too.
If I spend a lot of my time on Twitter talking about business related stuff, where does that leave me?
For brands overtly using Twitter, it’s not black and white either. Look at Ford’s Scott Monty for example (@ScottMonty), who uses his personal account to represent Ford. Even the account we run for Skype (@PeteratSkype) is as an individual not a brand (as is the same for all of Dell’s accounts). And of course Zappos famously have hundreds of employees on Twitter
Let’s face it, one of the reasons that Twitter is popular is because it’s such an interesting mix of both your personal and your business life – if fact, unlike Facebook or LinkedIn, it lets you be the whole you. Twitter will be risking a lot if they try to change this.
Good points, wish the magazine reflected the conversation they had with you a little better.
Like you say, there is a thin line between personal & commercial use. If this post is true (havent heard/read anything yet from twitter) … this reminds me when MovableType released several type of licenses, and that was one of the reasons why Wordpress was seen as an alternative at that moment. The key is offering “freemium” just for features, not for usage.
I’m wondering if they get a Chinese job board like http://twitter..../newchinacareer to pay for tweeting their jobs to give just one example. Where’s the line?
good
I have had a number of good chats recently about how large organisations might take advantage of social media, including Twitter.
Do they “follow” to keep in touch, or can they truely “engage”? Is it possible for a profile user to represent a large organisations point of view?
If there is a benefit to a corporate profile, it’s probably worth paying for.
While twitter might charge companies for a presence it would most likely be from an enhanced presence, paid placement, audience gathering and from a back end perspective of account management.
More than likely twitter has some better revenue models. I did some mockups a few weeks ago showing what the twitter advertising might look like in search and a few other places within twitter.
http://www.twit...asion-has-begun
Cheers!
Rodney Rumford
@Rodney — Interesting site, but it is very difficult to read gray text on a black background. As you well know, or should know, you are losing visitors [and business] because of this design Faux pas…
Well they may need to get some advice form Google on how to generate corperate income forma free service. Revenue from advertisier without intruding on the service. The tweet field might have to be extened from 14o charaters to 180 for a corperate message or hyperlink.
I dont think Corperate world would want to miss the tweeds
Now,lets keep ads out of twitter plz!
There already ARE ads in twitter, it is just not a pay for play model, it is wild west see who wins.
A business model? No, not twitter.
after 3 years of thinking about this, and that is the best they can come up with? i think the only way to do this is to offer premium type accounts with *extra* features, and charge for those.
@Nigel. This is exactly what this model will be. The concern over ‘where you draw the line’ etc is irrelevant. It will be a case of if you want these extra tools, you’re going to have to pay for them.
I think its good idea!!!
Twitter needs to make money at some point which is fair enough. Charging brands could be one area although I would suggest promoting their search tool and associating some PPC to this area might be a quicker revenue stream \(which is also ultimately paid by brands.)
We have the issue of personal brands as well as corporate brands – @wossy is promoting his personal brand at every step – does he get charged? What about Robert Scoble – does he pay for his twitter or do the brands he promotes pay for it?
Also brands like TC and Mashable use Twitter to great effect, but how much do they achieve in financial return may be questionable or hard to pinpoint (TC management may smile quietly knowing the answer…) which has an impact on where the line is drawn. You can bet if it is drawn some people are going to be unhappy…
http://www.twit...om/jamieriddell
(linkback) Smart or Dumb? Twitter To Start Charging Companies For Having An Account? [VOTE] – http://www.thri...rfail.com/922fc
For one thing for “premium” accounts targeted at corporations they could lift the api limit per hour. Is it 100 api requests right now?
This is also discussed in this week’s New York magazine profile:
Neither Williams nor Stone will get into the details of their revenue strategies, though each says that charging companies for brand verification (assuring users that JetBlue’s Twitter is really from JetBlue, for example) and for targeted prompts for users to join company feeds seems to make more long-term sense than straightforward web advertising, which Stone says “feels tacked on.” Another possibility would be charging users to “buy” friends’ feeds, almost like a subscription, though both executives are wary of any model that charges individual users.
http://nymag.co...069/index1.html
I think it is a wonderful idea. Finally, they seem to have some business model in place. Hopefully, it should work.
Why wouldn’t Twitter charge? And why shouldn’t someone like Dell or Amazon, who just picked up 10-20k followers (targeted, voluntary customers) from the Twitter platform, pay to promote products and services on a platform that asks “What are you doing?” not “What are you selling?”
Doesn’t TechCrunch somehow figure out its ad pricing based on it’s number of subscribers? Don’t most media outlets do something similiar when pricing out advertising? How much does Craigslist charge for job postings?
Maybe Twitter is the DIY content channel of the future, maybe not, but either way they have been digging the ditches for the last couple of years and now have a few million “potential customers” in their network. So, when someone like Dell joins with the primary goal of “promoting” its wares to an established base of Tweeters, they shouldn’t have any problem ponying up some dough….when asked.
It’s a start.
As long as a company can realize the net profit potential I think they will pony up. They may kick and scream a bit, but they’ll pay up.
Everyone has a business model for Twitter. And everyone’s a freaking expert, of course.
Everyone outside of Twitter is just speculating, and guessing. It’s all hot air.
But here’s a nice simple idea: –
https://yourcom...any.twitter.com
totally agree with you ..awesome idea
for 100 tweets you will charge 10 cents or 1 buck
spot on.
more power (and value) to the subdomain!
They could also attempt to monetize the api / application developers, rather like Apple do with the iPhone/iPod AppStore and do a revenue share with developers. Though they might have missied the boat on that.
I think the more interesting tweets are by people who work at companies, not the corporate tweets that are this close to spam.
You are right on time with this Jonathan. I’ve received a number of followers from companies, but all of their messages are one-way. They just send, send, send no conversation. It’s like saying you should buy from me, but I don’t care what you’re talking about.
After I figured Twitter out a bit more I stop following those companies.
The value for private companies is the list of followers and access to their phone number/contact info. To enforce business rules would be to prompt at sign-up:
Keep followers private and access contact information?
No – free!
Yes – $999.00 a year or $1 per follower ( which ever is less )
I imagine the backlash from outright selling data would force twitter to abandon any program like this. A better system might be where twitter allowed companies to “target” tweets to users (following or not) for a price. For instance, Dell would probably be more than willing to pay to have its tweet appear for everyone in Silicon Valley.
Imagine an auction based system, such that the volume of commercial tweets is small enough not to annoy users, but large enough to provide substantial revenue.
Precisely
While established brands may be able to pick up thousands of followers quickly, it’s not as easy for smaller companies. In my opinion, for new Twitter users, the ROI is still less clear, even with the volume of pro-Twitter references & resources available.
It’s good that Stone was quoted as also saying, “We can identify ways to make this experience even more valuable and charge…”, since there will need to be an even greater incentive for a business to create a premium Twitter account.
The minute they start charging for companies to use Twitter, is the minute companies will stop using and caring about it.
What business model would you suggest for Twitter? Why do you think companies will stop using and caring about it? It sounds like Dell would still use the service as long as it’s simple and cost effective.
It’s difficult enough to convince the business of the value of Twitter, it being free. You put a $$$ barrier of entry, they just won’t be interested.
Twitter needs to build an advertising model and create an trend/data analytics platform and charge for access to the data.
It all comes down to ROI for any corporation.
An employee has to devote time and effort when they could be doing something else.
Right now it’s free, so it’s an experiment for many. But when you start putting costs to it, you better be able to prove ROI.
A premium account could work if you have added benefits to measure and/or drive ROI.
Charging would discourage some brand squatters while encouraging brands to be smart about their approach to social media – not creating a channel on a whim that is never updated. I think Facebook should consider doing the same thing. But, there is value in the experiment, so the charge should be minimal, and I dont think it should me applied until the value has been mapped and companies have time to see where they fit in the conversation.
I wrote about that 4 months ago, those accounts already exist log time ago it’s just that nobody will tell you about it because of the investment.
Anyways here was my post back in November of last year
http://www.live...s-making-money/
Interesting that they would already have the special accounts happening.
I think people who are saying businesses will find a way around this are missing that this probably won’t be mandatory for businesses but more of a – you pay us and we’ll give you bonus features that no one else gets – type of system.
If they add reporting tools so that business could see how effective it is, it will work. For example, it would be nice to know how many people my followers are following, when they log in, for how long, etc. If twitter created tools that made this a more effective marketing tool, and if they created tools that helped them track ROI, companies would be more than willing to pay for it.
This story is like the old telephone line using paper cups problem. The people at Marketing Magazine in the UK didn’t discover anything but a pure conjecture that Twitter may be able to change companies and may get some companies to pay (with the emphasis on the word “may”) and then tried to put a headline suggesting it was fact. Bad journalism. Glad to see Tech Crunch puts a question mark in the title. We’ve been discussing the business model problem here:
http://www.mpda...with_a_bus.html
The great thing about this entire discussion is Twitter is able to monitor the pulse of what it intends on doing through it’s on network. It will be good to see what business model actually works and for how long.
“THINK, PLAN, EXECUTE!”
What is a freelancer or small biz is 1000% more active on Twitter than a large corporate? How are they scaling who pays for what? Why are corporates being targeted? Simply because their the most obvious revenue stream or because Twitter believes that they will put the most load on the servers? What about a small biz or individual like Guy Kawasaki? Should he be classed as “corporate usage?” or actually is he an asset to Twitter in terms of promo and marketing?
To what I understand from the information in this report, it looks as if twitter will offer an advanced membership for a price. Commercial companies, celebrities, and advertising agencies will be interested to buy this service for a price and get superior control over their twitting.
Other people can remain in free accounts doing what they do. I don’t think twitter will force a price on commercial company accounts. If they do that, it will make people leave it.
As they should. They’re using Twitter as a platform for their own gain. Welcome to Capitalism. Twitter needs to charge for that service.
I think Craigslist has had a similar problem capitalizing on its success.
One way to charge customers such as Dell may be to follow Google’s ad model – if someone clicks on the Dell “tweets” and ends up on Dell’s web site, Dell pays a small amount to Twitter.
This is a good step toward starting to monetize Twitter. This announcement comes just a couple of weeks after hiring someone whose sole job was making the site money. There are a number of ways that the site can think about charging and bringing in revenue. I outlined a bunch of them on my own blog – http://zachhell...verything-else/
Mmm, not very impressed.
What about…
(a) taking any url submitted and then aliasing it (by making it a tinyurl-type link) which has either a splash page advertisement, or advertisement on the top 80 to 100px of the landing page. Also, only show it in semi-random pattern so users don’t get annoyed at an ad every url click. Also, URL CTR is very high. So, I include http://www.abcd.../hijklmnop.html in my message and twitter aliases it to twitterurl.com/foobar which when clicked shows an advertisement for X seconds or shows an advertisement at the top of the page of the original link.
or maybe
(b) in short, create groups where advertisers pay for the group users to tweet about something where the users get a revshare of the tweet just by posting the tweet and/or affiliate-type sharing where a reader clicks the link in the tweet and like PPC, or impression, or conversion, gets paid. So (example) http://www.twitter-groups.com (owned by twitter) has a network of individuals looking to make/earn money just by tweeting. Business XYZ signs up on twitter-groups.com so the network of users can tweet about what XYZ wants. XYZ pays twitter-groups.com to do that and the users are inclined to tweet so they can earn extra cash just for tweeting it. Can earn even extra cash if a link is included and reader clicks on the link, and or, reocurring commissions based on conversion of link follow-through. Can maybe even combine first idea (a) with this idea (b).
This would be a good opportunity for Twitter to make money, obviously they should charge big companies who are making free business from twitter, why not charge for it, makes sense….
Seems like a good way to weed out the blatant sales spam tweeters. You gotta keep the “Free-mium” aka a free platform to maintain current users, but if you sweeten the pot by giving premium(paying) users special privileges like cool customization options & features than you will convert high-level users into customers while maintaining the current userbase.
I was also thinking about some sort of rewards system for evangelists of the service, cause let’s be honest, 99% of the world doesn’t know what Twitter even is yet.
Unless there is some sort of premium account, it isn’t a positive business model. It goes against everything that twitter stands for thus far. Where do you draw the line, anyone who claims employment anywhere? I work at a business, I may drop things for them here and there, but it’s my twitter…
I agree with many of the above – while I do wish for an opportunity as valuable as Twitter to have a chance at revenue, I think it’s counter-intuitive to selectively charge. Again, what defines a company? We’re a small but growing ecommerce company and I Twitter as much for myself as I do for Delight.com. I follow several hundred individuals who Twitter solely to promote themselves – will they also be charged? Will @Mashable be charged? Or @skydiver?
I have to believe there are other options.
They should , if companies are making a profit for using twitter, then a little token from them won’t hurt.
it will give twitter more power to the technology and can help those individual working in twitter.
Nat
What about non-profits? Would they be able to use Twitter and not be charged? For example: libraries. They use Twitter to publicize their services but don’t actual make money off of this. I’d really hate to see libraries and other non-profits be lumped into this group.
This is just a way to get tons of traffic from Twitter by prophesying some doom and gloom.
This is not only be a great move in the sense of adding an additional revenue stream – it could likely become their primary source of income. Considering the value provided by Twitter to many companies marketing efforts, they would likely be willing to pay a significant amount for the service.
I think most companies won’t mind paying since Twitter is such a valuable way to connect with customers and users.
What will be interesting is where the line is drawn. So many celebrities are on Twitter and one could argue that their brand is their company. Will they have to pay? Probably not, but interesting discussion nonetheless.
Rebecca
@alice
I could maybe see following my favorite companies and keeping them separate somehow…but then I could check them for what special deals they were offering, or tweet them with questions on their products or policies etc. maybe, when I had questions for them. I could see something like that being useful to me and to the company… one more vehicle to connect with customers (if they do it well of course). But I don’t do much of that now ’cause I don’t like it mixing in with all my social and work tweeting. It would be nice to compartmentalize it somehow.
To everyone who is complaining that twitter may charge some businesses …
if they don’t find a business model soon, there will be no twitter for anyone!
Services like Google, Twitter, etc. are not charities, nor do they receive government bailouts. They need to make money to stay alive.
I hope twitter finds a business model soon.
Anjali Sen
What you said is very plain business common sense. Even though Google doesnt charge us for search and mail services directly; we pay in time terms by focussing our eyeballs on the ads that are served up!