In Twitter's Scoble Problem, a Business Model

116 Comments

Twitter, our favorite tool for narcissism and the eponymously named San Francisco company behind the service may not have a business model, but it surely has the buzz. Whether it is their new round of funding or their inability to keep the service running — the blog world loves to twitter about Twitter.

After talking to some of sources, I have a theory that could help Twitter solve its scaling conundrum and also help the company make money. (I am sure there are others who are thinking along those lines.) And in order to do that, I will use fellow blogger Robert Scoble, who has over 25,000 followers, as an example.

Robert is the perfect embodiment of what is wrong with Twitter, but he also offers the best hope for the company to figure a way out of their current infrastructure-scaling conundrum. I am not picking on Scoble, but using him as an example of “extreme” user who can put any system through a major stress test. Leo Laporte is another such extreme example, and has 37,000 followers on Twitter.

First let’s start with: What is the problem? Instead of using my words, lets go with Twitter’s self-acknowledged infrastructure problems.

Twitter is, fundamentally, a messaging system. Twitter was not architected as a messaging system, however. For expediency’s sake, Twitter was built with technologies and practices that are more appropriate to a content management system.

First, I am glad to see that they are not passing the blame onto their hosting providers, like Joyent. They have recognized a fundamental problem with their service, as pointed out by Assetbar in an earlier post, who wanted to offer a proxy service for Twitter.

The way Twitter is architected, when Scoble sends out a “tweet” it is sent to 25,000 of his followers — whether they are checking it from a desktop client, a mobile phone, Chat client or on the web. The message goes into a database, which then figures out how those messages are to be delivered to each of the followers. This causes the database to behave like an overweight man who gorged on a buffet at local Chinese restaurant.

Dare Obasanjo explains how it stresses out the database in his post, and correctly points out that by giving ability to add an unlimited number of followers, Twitter might have brought all the troubles on to themselves. Facebook, on the other hand, is smart to restrict you to 5,000 friends. Why? Because to process the social graph of 5,000 friends is compute-intensive, and costly.

Anyway, to put Scoble and his Tweets in context, let’s assume for a minute that he always has 25,000 followers and he sent them 12,000 updates which are all 140 characters long, the maximum size allowed by Twitter. Again, hypothetically speaking, assuming each update is 100 bytes, then 12,000 updates generated used up 30 GB of data. (12000 updates * 100 bytes)* 25,000 = 30000000000 (30 GB)

So here we come to the good part. This massive database of followers is what Twitter should turn into a business. Twitter should charge Scoble, Leo, me, Michael Arrington and anyone else who has more than 100 friends and followers. How about something simple? $10 a month for 1,000 subscribers. 25,000 subscribers means someone like Scoble should be paying them around $250 a month.

Let’s take it a step further. Twitter should limit people to 500 free messages a month. Any more should come in a bucket of, say, 1,000 messages for $10. Businesses like Comcast that want to use the service for commercial reasons should pay for the service, and so should startups like Summize, which want to build their businesses based on Twitter’s API.

This would also fit the Freemium business model that Twitter investor Fred Wilson so loves. And at the same time, it would help Twitter overcome its abhorrence for adding advertising to the messages. I think many of us have a lot to gain from the service: My alerts about my posts on the system are a form of advertising for my work, and generate enough attention that paying for the service makes lot of sense.

There are some who are going to argue that this will kill the service. I don’t think so. First of all, average people don’t have 25,000 followers. Most have about 25-50 friends and possibly an equal number who are a degree removed but are still part of social environment. I think that for the average person Twitter will remain free. I think offering a premier-tier service will help stop abuse of the system by curbing the random following that has become rampant on the system. It will force many of us with excessive number of followers to be more selective. By doing so, Twitter is also going to help lower the noise and make the system more usable. This will give them time to figure out how they are going to become a real messaging-based company.

Will Twitter be brave enough to make such a move? Chances are, no: They are stuffed with VC dollars and signs of wild growth (including outages) can help them flip the company, making it someone else’s problem. Still, I wanted to throw it out there. It is a holiday weekend, after all!

Recommending reading:

* Dare Obasanjo on Twitter and its scaling issue.
* Hueniverse: Scaling a Microblogging Service.
* Twitter-proxy: Any Interest?

116 Comments

Trevor Plantagenent

Om, you’ve nailed it, and don’t let the naysayers (freetards) dissuade you. The super users are using Twitter as a free direct mail newsletter service. I’d suggest that you be given a 100 free followers and after that either you pay to allow them to follow you, or they pay to follow you. The only people who wouldn’t like that are the freeloaders (i.e. the so-called A-list) that are abusing the service for their own ends.

Tom Raftery

Om,

no, I think you missed my point, sorry I was obviously not clear.

If I have no control over how much I pay per month, I will be very nervous about using the site. Anyone can sign up to follow me at any time, I have no say in it and this costs me money.

If 10,000 people suddenly (for what ever reason) decided to follow me, I’d have to give up using Twitter as I couldn’t afford the $90 a month.

This could become a way to drive people off Twitter. Have large scale flash sign-ups costing people a fortune.

Tom Raftery

Om,

no, I think you missed my point, sorry I was obviously not clear.

If I have no control over how much I pay per month, I will be very nervous about using the site. Anyone can sign up to follow me at any time, I have no say in it and this costs me money.

If 10,000 people suddenly (for what ever reason) decided to follow me, I’d have to give up using Twitter as I couldn’t afford the $90 a month.

This could become a way to drive people off Twitter. Have large scale flash sign-ups costing people a fortune.

Sal Cangeloso

Just to echo Brian Paul’s comment above…

30GB? Maybe in bandwidth but not actual storage. The message would not have to be stored 25000 times. As Brian stated, there are transactional costs, but this is not exactly what the article seems to state.

Lee Bryant

Interesting post. But …

They have huge amounts of funding sloshing around and you propose that the most extreme user pays just $250 per month? How is that going to (a) make meaningful money, or (b) fix the technology problem they have?

Twitterholic shows only 75 users above the 5k followers threshold and it is highly unlikely that non-geeks and other later adopters will ever want to or be able to get to the Scoble level, so that doesn’t add up to a whole lot of money compared to what VCs are prepared to donate to this currently free service.

Or have I got it wrong?

I like Twitter a lot, BTW.

Mack D. Male

This will generate more revenue for them, but it doesn’t solve the underlying problem. Are they meant to take that revenue and purchase more servers? I don’t think that’s a very solid solution. Are they meant to take that revenue and hire more engineers? No guarantee they’ll be able to solve the problem.

I agree with Joe above – fixing Twitter is about more than coming up with a business model.

Sharon Bray-McPherson

@astrout said:

“Bottom line, Twitter either needs to start licensing out its technology or begin to allow advertising/sponsorship money as its business model.”

I agree. I understand that they don’t want to pimp Twitter, but if placing ads on the service will help alleviate their downtime issues, I wouldn’t mind it.

Sharon Bray-McPherson
@sbraymcpherson

Om Malik

@ Dan Woolley,

Good idea. I think that might be one more way to get this monetized. Ala Feedburner.

@ Alistair Croll, I agree. The issue is of scaling Twitter to be a messaging app, not some web app with messaging features. They clearly have a lot of work ahead of them. Consider this – there are more Facebook apps which have more users and consume more traffic than Twitter but use fewer resources.

Twitter needs to be real time, and that isn’t easy. But then all successful services have to go through this to become truly successful.

Om Malik

@ adam,

you got it and this comment of yours “Pay to receive phone calls. Pay to receive texts.” is spot on. Since Twitter is being viewed as a new communication channel, they can easily have a free tier or perhaps use flat pricing to make some money.

@ TomRaftery, so with 1000 users, you mean to say you won’t spend $9 a month for a service you dearly love. Or do you dearly love it because it is also free.

@Aaron Stroud, I think that is why 100 is a good number. @TomRaftery is a great example – not scoble, but still popular enough.

@others, I think what i am suggesting is that if you are going to rely on a service, want them around, help them figure a business model. if they want to embed ads in the messages great, but they should be thinking about building a biz here. The loyalists think this is better than sliced bread….

Dan Woolley

How about a combo model – charge excessive users as proposed, but allow that user to offset his costs by checking an “allow ads” box. The ads could offset the charges, potentially back down to zero. Publishers control whether to pay or have ads, and receivers who don’t want ads could choose to unsubscribe from that feed.

Aaron Strout

Om,

I love the fact that you are looking for a solution here vs. just restating the problem. Two issues with your logic however. 1) I don’t imagine there will every be enough Scobles to make a monetary difference. Right now, there probably aren’t more than 1,000 people on Twitter that follow or are followed by thousands of people. 2) one of the reasons people like me use Twitter is that I have access to people like Scoble and Arrington. If they jump onto a new “non-paying” service like Friendfeed, Twitter loses a lot of its luster to the rest of us.

Bottom line, Twitter either needs to start licensing out its technology or begin to allow advertising/sponsorship money as its business model.

Best,
Aaron | @astrout

Alistair Croll

Good analysis, Om. IMHO when something breaks and people complain it’s a sign that there’s a business model inside somewhere. It’s also fascinating to watch the “market” work here, with the recent Twitter Diet to put it all into perspective.

I think the data problem is a lot bigger than you suspect. The issue isn’t with bytes, it’s with the number of messages and the range of delivery options.

One aspect of it is reliability. Do we need guaranteed message delivery, or best-effort? The former is harder to architect.

Another is the architecture; Twitter is fundamentally a massive publish/subscribe model, similar to the stock tickers used by banks to track the stock market. That problem’s been solved there before (millions of people tracking GOOG or CSCO concurrently) but it’s a very different architecture from a traditional read/write database.

A third is the number of downstream clients. For every message sent, there are dozens of adjacent sites like Plaxo and Friendfeed pulling that data in, and clients like Twhirl polling at regular intervals. Both sites and clients poll regardless of whether there’s a human around to see things.

The guys at Twitter have a challenging problem, and the money comes from solving it and having people pay for the privilege.

Mike M

On the charging for Twitter idea front, it might feel like a total kick in the balls to the customers that you are charging most heavily. Presumably if you charge these power users heavily they will move to a new service that does not charge them, taking most of their followers with them, providing the perfect opportunity for a competitor to grab the most valuable early adopters. Does Twitter really want to alienate the key nodes in their user base like this?

Mike M

Om – have you done the maths on that? Like can you estimate how many users have 25,000 followers times $250 a month, how many 100 followers $10 a month, etc.? Why not estimate the churn rate of users leaving the service due to charges being introduced? Hey just some simple guestimates on numbers would be really interesting.

Is it all that much total revenue per year? Is that going to justify Twitter’s valuation? I’d like to know, and it seems like if you’re going to propose a business model, you should at least do some sums however rough to spit out some key metrics at the end. That would give posts like these real weight.

These are the real questions in our industry. People just don’t seem to do the sums, or if they do sums, they are on crazy pills. They wave some BS half business case in their air, say we’ve got loads of users and we’re growing fast and investors have got to jump on this bandwagon, and hey presto you have a $$$ billion valuation.

Let’s see more posts trying to analyse these problems that face many of our coolest start-ups as they move from mass adoption to monetisation, not add to the problem by continuing the legacy that half baked business models are OK.

Tom Raftery

Michael Arrington is bang on the money (no pun!).

I have over 1,000 followers on Twitter. I didn’t go looking for them or pimp my Twitter account details.

I didn’t get a chance to decline their following me so I don’t see how Twitter could justify charging me for the number of followers I currently have.

Tom Raftery

Michael Arrington is bang on the money (no pun!).

I have over 1,000 followers on Twitter. I didn’t go looking for them or pimp my Twitter account details.

I didn’t get a chance to decline their following me so I don’t see how Twitter could justify charging me for the number of followers I currently have.

| Balu |

But Om, won’t charging people for usage kill the purpose of twitter.
If people are charged, fewer people will use the service. So lesser the possibilities of news (like china earthquake)being ‘released’ on twitter. May be there can be a tweet limit (number of tweets/day) just like there is a character limit for a tweet.

| Balu |

But Om, won’t charging people for usage kill the purpose of twitter.
If people are charged, fewer people will use the service. So lesser the possibilities of news (like china earthquake)being ‘released’ on twitter. May be there can be a tweet limit (number of tweets/day) just like there is a character limit for a tweet.

william fischer

Instead of punishing the popular, presumably, one chooses to follow individuals on twitter for one of these reasons:

To be amused/informed by them
To have access to them and/or potentially their audience
To demonstrate to others that they are in the loop
To hope to maybe get followed themselves

In one dimension or another, Twitterers with mass audiences are delivering value, what about charging a micropayment to follow folks with audiences over (x) thousand? Perhaps this micropayment could be an ad.

bill
twitter.com/wmfischer

Grant

I wouldn’t speculate on the actual numbers that Twitter would potentially use to separate paying and non-paying users. I’m sure they have a line in mind already, based on hard and fast usage statistics.

I don’t know much about Twitter’s implementation, but I really can’t imagine that they actually record and transmit each message to each receiver. That would make no sense.

For each text message or IM subscription you do have to transmit each message. But for most tweets they’re just tacking a few bytes onto a table per message per user, not the entire message again.

Brian Paul

Just to clarify, I am assuming that your 30GB of data is bandwidth usage. I bring this up because in the paragraph previous to your calculation you’re speaking about the database. You wouldn’t store the message 25,000 times in the database. You would store the association of Scobles followers (their numeric id in the database and his.) You would store his message once. You would then query for all messages posted by any id associated with the requesting users id.

Now, that data does have to be passed around 25,000 times (or more) as people receive the message in various forms. So transactionally the 12,000 messages might be expensive, but I think the big cost is bandwidth usage.

Aanarav Sareen

Michael,

An approval system used by Facebook or LinkedIn could work. LinkedIn has public profiles. However, in order to be a contact, you have to be approved.

The same thing could work for Twitter. Approve certain people and don’t approve others. This is obviously a personal preference. For companies that gain immense benefits from Twitter, they’d be happy to add more followers.

– Aanarav

Joe Cure

Fundamentally I don’t think it’s wise to change a business model to solve a technology problem

Dennis Bjørn Petersen

Good point from Michael Arrington. I have to pay because people chose to follow me?

I’m not sure the average twitter has 25-50 followers. I’d guess at least 100. I’m no big celeb blogger or similar and I have 250+ followers.

I think it’s fair that you can open a business account and charge companies for that.

Those interested in using the API should be charged too.

It’s always difficult to take the banana away from the monkey, so I think twitter will use a lot of it’s fan base if they start to charge.

There is always pownce or Jaiku (perhaps even FriendFeed) as an alternative.

Noah Simon

as much as I think Robert Scoble, Leo Laporte and Chris Brogan are spineless non opinionated vanitizers that let they’re hordes cyberbully anyone who doesn’t fit in they’re politically correct worldview and never use they’re position of power to speak out… I fail to see you non supply side solution. They are truly social fascism at it’s worse, but I’m not going to charge them for it. Profit should come from licensing the technology out.

Adam

Michael,

That’s what I thought originally, too. But then I realized, hey, isn’t that like cellular service in America? Pay to receive phone calls. Pay to receive texts.

Not saying I particularly *like* that, admittedly, but… I think Om’s idea is reasonable. After all, who benefits most from having lots of friends? Again, not meaning to single only Scoble out here, but as an example… I think he gets FAR more value out of broadcasting a message to 25,000 people than the recipients individually. Whether each individual’s scoble-derived-value x 25,000 meets or exceeds Scoble’s enjoyed value, I’m not sure, but it is worth pondering.

michael arrington

Om,

How do you deal with the fact that the number of “followers” is determined solely by everyone except the person you propose to pay?

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