The 5HITS

Twitter has some scaling issues we all know that, but its addictive. Twitter also has a blog, new offices and new funders in the form of Jeff Bizos (Bizos Expeditions) and Bijan Sabet (Spark Capital) not to mention Union Square Ventures and Digital Garage. So its all happening over at Twitter HQ.

The stated strategy is to “become a sustainable business supported by a revenue model”. Thank goodness for that, capitalism aint dead, profits are king.

But, the profits will have to wait. Twitter believes “our biggest opportunities will be worth pursuing only when we achieve our vision of Twitter as a global communication utility. To reach our goal, Twitter must be reliable and robust”. All from the Twitter Blog.

Well Twitter is not reliable and not yet robust, but I believe there is much effort in process to get this right. So assuming we have a reliable and robust product, whats next.

Looking at the Twitter top100 90% are based in the United States (US), 2 we were unable to determine, 1 was from Europe, 4 from the United Kingdom (UK), 2 from Australia and 1 from Mars. Who knew? So we have a global userbase already, even though it is skewed to the US. But then we would expect that, given the size and military might of the US.

By all accounts growth is exponential, just look at Twitterfacts. Twitter facts was updated in February 2008 and states that users are expected to reach 1 million by April 2008. Twitdir etimates current users around 2,1m although no date is given. On review of the top100, Mars Phoenix was the 14,693,823th thing to sign up for Twitter and that was fairly recent. In fact the first post was 13th may 2008. So 28,125 followers in 2 months, not bad. No stats were available on active users at the time of writing.

Will Twitter ever become a Global Communications Platform?

Currently the profile of users across Twitter seems stacked towards a Twiteratti, mostly with their own shows or ways of promoting their Twitter feeds, for example Leo Laporte via TWIT, Cali Lewis on Geekbrief TV and Jason Calicanis on just about anything he can find.  Great, they have the numbers and the platform. In fact around 10% of the people on Twitter appear to be following the Twitteratti, when they make up less than 0.001% of the twitter population, based on the top 100 and signups of around 15m. This is even more if you factor in accounts that are dormant which seem significant.

Most of the Twitteratti use Twitter as a means of promotion, look at TheRealDvorak, and Jason Calicanis to mention a few. These guys have to be respected, they have built an audience, maybe 75% of their posts are not related to their own sites but the rest drive traffic to an article or whatever. Lets be clear, there is no issue here, just the fact that may be more a way of rapid updates and interactive news from niche sources than a communications platform. These guys also work hard for their audience at an average of around 2,205 tweets per person normalised and around 15,244 followers each. Or maybe not if you consider madrid, the top updater who has made 322,230 tweets to date, and Im sure counting.

If one considers the distribution, there are the freaks, the guys who have followers because. Take Mars Phoenix for example. I hate to imagine what would happen in Paris Hiton started Twittering. Twitter promotion through other channels is also obviously a key part, but then it pretty much drops off a cliff to the mere mortals who have maybe a couple of hundred followers if that. Then there are the stalkers, the worst being Delft who follows 168,763 people. Must be a speed reader with a couple of flat screens daisy chained together to follow that feed. I note he or she is not in the top 100, even though it would appear from our research that around 10-20% plus of the people you follow, follow you back.

Twitter in organisations

Another train of thought is Twitter in large organisations as a means of communication within the organisation. Great, let the lunatics run the asylum. Image 10,000 people wtih twitter accounts in a single business. Probably only 50% if that would use it, leaving half the company unaware of what was going on, which is probably not abnormal anyway. Then there would be the stunts to gain followers, the policies required from legal to manage the usage and then the demographic weighted toward the 20 year olds, leaving the 50 year olds out in the cold, but still thinking they are in charge. How effective would that be? Back to reality.

Making Twitter profitable

Let us consider the following assumptions:

• You have to build an audience by either being funny, providing news or shocking. Being yourself may be interesting to you and your mum, but will eventually wane with others, unless of course you are Paric Hilton
• There is value in an audience, not just from the notoriety gained from being a top twitterer (Is that a word?) but also from the value of the traffic Twitter can drive, instantly
• On average people who use Twitter on a regular basis will follow more people or things than be followed, so there will always be a Twitteratti

So, If you can drive 5-10% of your followers from a tweet to your website and you have around 15,000 followers. Lets say, in addition you only pass on a relevant URL every 1 in 10 updates so as not to spam your followers and you update around 2,200 times. That equates to around 165,000 – 330,000 clicks. Assuming your updates dont take much though and each one takes you around 2 minutes max, then you have spent just over 73 hours. Not a bad return on effort, and you are dealing with a partially captive audience who sort of want to hear what you are saying at Twitters expense. You can work this number many ways, I wont debate that, but whichever way you look at it, excluding brand building value, there is a number of clicks to be gained from a large following.

Making money

Stuff the global communications platform model. Why not charge users who exceed a certain number of followers on a sliding scale. Charge on a click through basis, say 1c per click. Taking again, just the top 100, that would be 247,000 tweets to over 1m followers. I acccept that initially these people did not have all these followers but over time it would stabilise, and there would be upside. On the assumption above, only 10% of the tweets will have URLs embedded and of these only say 5% actually click through. At 1c per click that would bring revenues of around $125m. Great stuff, except for the fact that the top 100 twitters would all be very poor. But a charge would focus the mind, the audience would still have to be built through value.

The Twitter Model

Maybe this should be called twitertisement and is the new Adwords, you have a platform with a large number of users, you build an audience by being useful and then get charged a small amount by adwords standards for clicks from your updates. The system would be self regulating, as spammers would have no followers and following would largely be a function of value.

The only challenge then will be managing this circus and secondly keeping the people on Twitter and not Plurk or Brightkite of one of them. So far so good.