Starting any piece of writing with ‘in these turbelent financial times’ is becoming somewhat of a cliché these days, but when it comes to all our favourite Web 2.0 apps, the credit crunch could really be honing in fast.
It seems so long in our memories now, but it was only this summer when the sight of the infamous ‘Fail Whale’ was a regular occurence for Twitter users.
It is to the credit of Biz Stone et al that Twitter didn’t lose its user base as quick as it earned it. Twitter is thriving, but I fear it could be on the verge of a breakdown.
When discussing the BBC coverage of US Election night with a colleague, I brought up the very impressive use of Twitter that I noted from the third debate. Let’s see it again, I said. My colleague agreed, but we both acknowledged that there is a very real possibility that Twitter will slip into temporary coma on Tuesday when the tweets flood in. And for this reason, it won’t be factored too heavily into the BBC’s coverage.
I think this is a shame. Never before have we had such an immediate reporting tool for Joe the Plumber Public to air his views. Brilliantly, Twitter puts information into the hands of everyone who needs it. But on big events, I argue it can’t be trusted to keep on working.
This problem means it’ll never mature beyond its current size, unless it can make money.
It doesn’t take a genius to know that had Google not expanded quickly and profitably, it would still just be a simple search engine, powering the likes of Yahoo to produce simple results based on metatags.
Instead, it’s now the world’s most powerful company. Yahoo isn’t fit to shine its shoes.
Silicon Valley Insider has this brilliant post about how some of the most widely used Web 2.0 tools are considering paid models — including Twitter.
The theory is thus:
- Create a service/network for free
- Build a thriving userbase
- Come up with a pro option with added benefits
- Hope that the userbase loves your service that much it’ll want to pay
I don’t think it’s such a bad idea. It’s certainly worked for Flickr, whose upgrade package offer enough bonuses to make it worthwhile, but the core purpose remains intact.
But is Flickr making money? This page seems to think the revenue generated by Flickr pro accounts is in the region of $2 million. Flickr have yet to release the number of pro users. I took a look through Yahoo’s 2008 revenues, and while it tells of Yahoo’s overall revenue ($1,786 million for Q3), it does not break down how much of that is solely from Flickr. But I think it’s safe to say that Flickr is getting there.
Could Twitter do the same? The pro upgrade possibilities are not difficult to think of; expanded text messaging services, audio/video tweets, expanded features for integrating Twitter with blogs (the badges just don’t do it for me). I’d pay for those — particularly the text messaging. It was a sad day indeed when you could no longer receive updates by text, but it was clearly a great expense that Twitter couldn’t afford.
Whatever becomes of the services mentioned in the Valley Insider blog — and I think Twitter has it the easiest — it is clear that the typical start-up mentality has had to change.
Before, budding social-networking entrepreneurs had to produce something that a) worked b) was cool and c) attracted investors. Option D would then pop up some time later: when will this make money?
But now, option D comes right in after option A. Investors won’t be willing to depart with huge amounts of cash on the off-chance they’ll fund the next Google monster. They’ll only want to know how much money it’ll make, and how quickly it’ll make it.
For social sites like Twitter, it’s make or break time. Either prove you can turn your successful free model into a successful paid one, or consign the history of Twitter to a pursuit of the tech-loving minority.
The utterly brilliant fail whale animation at the top of this post was made by Flickr user somenice. His site is here.
A few media commentators have used the Brand/Ross fall out to take swipes at the BBC licence fee. I fear it’s a debate that will escalate even more now that Jonathan Ross has been suspended for 12 weeks, an admission that the presenter got it very, very wrong.
