Twitterland is chirping with this morning’s news that Twitter has announced its intention to start charging commercial users of the service. If anything good comes to Web 2.0 out of the economic downturn it’s the realization that the “free” (don’t get me started on free) business model is not sustainable and actually hurts users.
The report appeared in a piece by Fiona Ramsay in Twitter to Begin Charging Brands for Commercial Use* in Marketing Magazine (UK), in which Twitter co-founder Biz Stone said, “We can identify ways to make this experience even more valuable and charge for commercial accounts.” Stone did not elaborate on what those ways are, or what kind of charges might be assessed. He also gave his assurance that individuals would not be charged for Twitter.
Why It’s Good News
The announcement is great news. First, Twitter could use the revenue to build more reliable IT infrastructure. Service interruptions, unpredictable availability of features and spotty performance are chronic Twitter problems. The monthly service charges probably wouldn’t fund a new data center, but the validation that Twitter can make money would increase its valuation and attract more investment. Ultimately, a commercial model will bring new reliability and new functionality to all users.
The other important outcome of this was touched on by Chris Anderson in The Economics of Giving it Away in the February 2 Wall Street Journal:
“Free is not enough. It also has to be matched with Paid … today’s Web entrepreneurs have to not just invent products that people love, but also those that they will pay for. Not all of the people or even most of them — free is still great marketing and bits are still too cheap to meter — but enough to pay the bills. Free may be the best price, but it can’t be the only one.”
By making the move to at least a partially commercial model, Twitter is sending a signal that the service has worth (and costs). Not everything in the online world wants to be free, nor can it be.
I know it sounds like I am arguing against my own best interests when I advocate the transition from free to paid for the services and content I use. But when I consider the alternative, a world in which everything is “paid for” with spam, contextual crap advertising, and phony informational content that is not so subtly marketing a product or service, I am glad to pay for a few choice things.
What Is a Twitter Account Worth to a Large Business?
Along with HTML and the web browser, e-mail, and instant messaging, I doubt there is anything that has changed the way people use the Internet, and the way they communicate, more than Twitter has. But just what is Twitter worth to a business? Twitter hasn’t made any such announcement, but let’s assume that “commercial users” are companies over a certain size, say, 100 people. (I would hate to see my good friends at House of Jerky or Etsy craft people charged to use Twitter, for example. That would certainly drive them off the site.) How much does a large corporation pay to keep up its web site home page, and what are the comparable benefits of using Twitter?
I have no idea what Twitter is thinking about this, but $20 a month or even $100 seems like nothing to GM (no bailout joke intended here), Dell or Comcast. And speaking of Dell, according to the Marketing piece “Bob Pearson, vice-president of communities and conversations at Dell, said: ‘If it becomes complicated and costly, our instinct would be to move elsewhere.’” Where Bob, Plurk? Pownce? If you’re a consumer business and you find benefit to being on Twitter, there is no elsewhere.
This raises a number of questions. Is the move is a good thing for individual users? For businesses? What criteria should be used in identifying “commercial” Twitter use? Would the term apply to anyone selling a product or service? How much should Twitter charge for commercial use?
Update: Apparently the Marketing UK reporter misinterpreted Biz Stone’s remarks. According to a blog post by Stone, ideas for how Twitter might make money have been “shared publicly for quite some time,” and there is nothing new to report.