Tweeter was featured in an article in the Financial Times earlier this week. Unsurprisingly, the question of how to monetize the service is still unanswered, even by IVP, the VC firm that pumped $35MM into the company last month:
"Then there is the issue of making money. The $35m investment was a "leap of faith", admits Mr Fenton. Biz Stone, co-founder, says Twitter will never charge a fee for its basic service, though it has considered charging business users for extra functions.
If Twitter succeeds in attracting a mass audience, there will be "all sorts of revenue opportunities", claims Mr Chaffee. But for now, with plenty of cash in the bank, it can afford to build its audience for "years" before worrying about how to make money, he says."
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Sweet to tweet
Twitter To say anything compelling in so brief a format is hard when up against millions of other pithy utterances. Will this online fad make money? [=140 characters]. Richard Waters evaluates the prospects Wired life
At first glance, Twitter has all the hallmarks of an internet fad. The microblogging serv ice, which limits posts to 140 characters, has become a favourite of celebrities and the restless digerati who always seem to be "discovering" some hot new thing. Britney does it and so does Lance. Barack, of course, has been at it for ages.
It comes with its own quirky language. Messages are known as tweets and people who read your messages are called "followers". Then there are the particular Twitter culture and modes of behaviour: sociability is enhanced by "retweeting" messages you find particularly illuminating - rebroadcasting them to your own followers. Among hardcore users, gratuitous selfpromotion is frowned on.
Yet there is more to this new internet fashion than meets the eye. For in its deceptively simple way, Twitter has stumbled on a formula that a whole generation of recent web start-ups has been searching for: a way for people to connect with friends, express themselves and find information that stands a chance of one day becoming as popular as other mass online trends such as blogging and social networking.
Twitter itself - a service run by a tiny Silicon Valley company with only 29 employees - has yet to prove that it has true mass-market appeal, or that it can find a way to make money from the idea. But even if it falls short, the new forms of behaviour that are developing around it point to an entirely new area of online interaction that others will rush to exploit.
"As the media changes and expands, the way we respond to it has to expand," says Peter Norvig, director of research at Google. Early ways of interacting over the internet are already evolving into new forms, he adds: for instance, among younger people, e-mail has largely given way to communication based on a mixture of texting, instant messaging and posting messages on social networks.
In this online world where communication, self-expression and media consumption are constantly mutating into new forms, Mr Norvig says that Twitter looks like more than just a passing fad, even if the longer-term picture is still hard to discern.
Twitter users post short messages, either from a personal computer or mobile phone. These are usually made public, though they can be restricted to selected people. Anyone who wants to track a Twitterer's public "tweets" can choose to become a "follower": the "stream" of messages is then mixed in with streams from all the other people that are being followed, whether just a small number of friends or a large group made up of celebrities, politicians and others who have rushed to get a voice in this new domain.
Launched three years ago, Twitter first won an enthusiastic following among technophiles. Celebrities and other public figures later latched on to it and, since late last year, it has shown signs of gaining a much wider following. According to the Pew Internet and American Life project, a research grouping, 11 per cent of US internet users say they are broadcasting short updates about their actions, moods or thoughts, though much of this may be taking place on an existing network such as Facebook.
The growing interest explains why Silicon Valley's financiers sense that this could be the next big thing on the internet and have been clamouring to invest in the company, even though it has no revenues or much of an idea yet about how it will make them in future.
"I think people aren't aware of how big these new media properties can get, and how quickly," says Todd Chaffee, a partner at IVP, a venture capital company that took part in a $35m (£24m, €27m) financing for Twitter last week. Pointing to the global audiences built by YouTube and Facebook, he adds: "These are massive media properties and Twitter is headed in that direction. There's a viral network effect that's giving explosive organic growth."
Could a trendy little short-message service really be the next YouTube or Facebook? After all, despite the passionate enthusiasm of its users, Twitter almost from the outset came to symbolise a wave of so-called Web 2.0 internet services that have expanded the sociability of the internet but made precious little money.
Yet plenty of heavyweight thinkers caution against dismissing the idea out of hand. John Seely Brown, a former head of Xerox's renowned Silicon Valley research laboratories and co-author of The Social Life of Information , an influential book that predated this decade's explosion of online social media, argues that Twitter has added a new and useful element to online behaviour. The blizzard of short messages on the service "extends peripheral awareness", he says, with the nuggets of observation and information flying by creating a richer "context" for online life. They also lubricate a broader range of social interactions: "It gives you an awareness of what's around you. It's easy to take up and have a one-minute conversation with the community I'm following on Twitter."
The Twitter phenomenon has much to do with the fundamental simplicity of the idea. Operating at the juncture of blogging, texting and social networking, the service defies easy categorisation. "Because it's undergoing such rapid evolution, it's hard to slap a label on it," says Peter Fenton, a partner at Benchmark Capital, who has just joined Twitter's board. "We haven't hit on a simple tagline or description yet."
Its elements - including the real-time nature of the comment flow, the fact that tweets are searchable and followers choose which streams they receive - have combined to create something that scratches an itch most internet users did not even know they had. As it has grown, a network effect has also kicked in. "The more users, the more valuable it is - there's a compounding effect," says Mr Fenton.
One early technological decision made for the service is starting to look smart. Twitter's founders created a way for other developers to write internet applications that ride on top of Twitter - leading, for instance, to independent search services and organisational tools that draw on data from Twitter.
As similar approaches at Facebook and Apple's iPhone have shown, opening up like this can turn a technology into a platform on which innovation takes place, in turn attracting more users. It is only in the hands of users that services such as this come alive or fall by the wayside. "It's more a triumph of humanity than a triumph of technology," says Mr Fenton.
Tony Hsieh, boss of Zappos, an internet shoe retailer, displays the enthusiasm of the new Twitter faithful - he confesses to checking tweets on his BlackBerry Pearl while "waiting in line, or at a red light, or if I'm walking". In the two years since he became hooked on the service, he says, the way it is used has "evolved quite a bit".
At first it was about building a network among like-minded, tech-savvy people, though it has become "more about relationship building" as user numbers have grown. With many posting links to things they have read or seen, it has also turned into a media sharing service. Says Mr Hsieh: "I generally get all my news through Twitter."
Not surprisingly, businesses have also been exploring ways of tapping into such a rapidly growing network. The fact that users choose which messages they want to receive could open the way to a new form of "opt-in" marketing. "Twitter is symbolic of focused content that matters, when you want it," says Bob Pearson, head of communities and conversation at Dell. The computer maker, for instance, issues a stream of tweets about new discounts on its products, to which anyone can subscribe.
Beyond the social or business connections it lubricates, Twitter's blizzard of short messages has created a new way to catch the mood of the virtual world - and one that works in real time. That, says Mr Norvig at Google, may be its most intriguing addition to today's internet: "The expectation when you come to Google is that you search for things that happened before, not what's happening now."
On Twitter, the aggregated voices of millions can be heard in unison. "It's like saying, 'Hey, we're experiencing this together'," says Mr Norvig. "That fact that I said I was at [President Obama's] inauguration nobody cares [about] - but if 1m people say they are there, it be-comes interesting."
This has turned big global news events into a new form of shared experience. Traffic on the website jumped during the inauguration as users who were there, or watching it on television, turned to the service to talk about their feelings - a contrast with Google and Facebook, which saw dips in traffic during the event. As last year's siege of Mumbai played out, a flow of eyewitness accounts turned Twitter into both a source of news and a place for people to respond immediately to it.
"You get this picture of what's happening really quickly," says Frank Eliason, director of digital care at Comcast, the US cable television company. "On Facebook you can search groups, but you can't search what people are doing or saying."
None of this, of course, guarantees that Twitter is here to stay - or even that other "microblogging" services like it will succeed in connecting with a mass audience in the way that social networking has done. Information overload, or simple resistance to the new, could stunt its growth. Barriers to entry on the internet are low - as Twitter itself has proved - and the Darwinian struggle among social media services is intense. Something else will no doubt emerge to claim the increasingly stretched attention of the Twitterers.
Then there is the issue of making money. The $35m investment was a "leap of faith", admits Mr Fenton. Biz Stone, co-founder, says Twitter will never charge a fee for its basic service, though it has considered charging business users for extra functions.
If Twitter succeeds in attracting a mass audience, there will be "all sorts of revenue opportunities", claims Mr Chaffee. But for now, with plenty of cash in the bank, it can afford to build its audience for "years" before worrying about how to make money, he says.
This "build it and they will come" approach has produced many of the biggest names on the internet. It was the strategy behind household names such as YouTube and Skype as well as Google itself. Twitter still has a long way to go to join that club but, among the many consumer internet services that are struggling for attention, it has a better chance than most.
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