Blog Post

How Twitter Can Become A New Breed Of Technology Company

Khris Loux is the founder and CEO of Echo, a commenting platform. He tweets at @Khrisloux.

With leadership from its founders and a significant infusion of cash from investors, Twitter has created an innovative no-charge service for users and industry-standard APIs for developers. But more recently, access to its data through those APIs has been fairly inconsistent, with particularly opaque procedures for getting at its most coveted dataset, its full stream of Tweets.

Twitter has recently begun selling publishers, big and small, access to all its Tweets. Its licensing of the “full firehose,” as it is also known, to Google (NSDQ: GOOG), Microsoft (NSDQ: MSFT) and Yahoo (NSDQ: YHOO) marks Twitter’s first big move towards monetization. The micro-blogging company has yet to make public the terms of these deals, but according to one report, Twitter is bringing in a combined $25 million from those agreements. Meanwhile, Twitter has granted small startups access to the same data at rates “proportional to the size of the company,” according to Ryan Sarver, Director of Platform at Twitter.

This points to a potential conflict: Quiet deal-making, variable pricing, and uneven access across Twitter’s partner base could create questions about the commercial viability of the entire ecosystem. Twitter has an opportunity to maximize its own value and retain its inter-galactic goodwill with users and partners alike by fostering a new level of transparency around the licensing deals.

How to do that?

Twitter should license the full firehose to publishers, whether directly or indirectly through partners, in a real-time feed that includes all the elements of the Tweets, like geotargeting, time stamp, etc. And the communication between Twitter and those potential partners over pricing, process and terms should be open and transparent.

Similarly, Twitter has an opportunity to create either value or angst for the developer community. The Twitter platform has led to countless third-party innovations, resulting in a rich set of applications that enhances the core platform. And Twitter has publicly encouraged these developers to join in the “gold rush” of opportunity and build businesses on its platform.

Indeed, the staggering growth of the service and a healthy ecosystem of complimentary applications have made Twitter a sort of benevolent king.

Now the hard part: building a business without becoming a tyrant.

Twitter’s recent release of Twitter Lists, for example, undercuts the work of partners like TLists and shows the tightrope that Twitter (indeed all proprietary platforms) must walk to both grow their core platforms while also making sure that developers have an incentive to build on top of those platforms. Twitter’s failure to strike that balance could alienate a prime engine of its long-term value and growth.

These issues are obviously not unique to Twitter; many successful companies (especially on the web) face these same challenges as they mature. But for its part, Twitter has an opportunity to figure out that happy medium in a way that has eluded companies such as Microsoft and Facebook. And if its executes well, Twitter can establish itself as a new kind of technology company.

In short, it’s the ultimate opportunity for Twitter to create a radically open business model, one that mimics the open nature of the Twitter service itself.

7 Responses to “How Twitter Can Become A New Breed Of Technology Company”

  1. Interesting article!
    Social media after all is a very powerful tool.
    David Plouffe’s,( President Barack Obama’s point man on social media) innovative strategy not only got Obama elected but also managed to raise the largest amount of campaign funding in election history.
    At the IMD OWP 2010 , David Plouffe will share his insights on the historic Obama campaign.

  2. dr g balakrisgnan phd

    now tech companies started hiring non techs is a change connundrum. so nothing is permanent as such , so wise counsel is connect with all by unbiased opinions and it is nothing wrong to read biased opinions that give new think process, after all earth is spherical and everything happenning on earth similare charectaristics!

  3. I don’t think Twitter has much of a choice, it can’t leave money on the table. If someone has a lucrative business built on Twitter then someone will go after it, why not Twitter itself? It has investors and it’s under pressure to make revenues. It will go for the low hanging fruit first, and if that happens to be Seesmic or someone else, then it will. That’s the way the world works… But, it would be better if it acquired rather than cloned…

  4. ….Can twitter or any of the current crop of tech companies become “A New Breed…”
    Without changing the fundamentals of the their business models that put member content creators and developers that add value to their services at the bottom of the pyramid….its ironic that twitter can sell access to the api to other companies (An api that is only valuable because members have added content) and not return any of this revenue to the members that have contributed the content..
    In my view to be a “New Breed…” means a break away from the share cropping model and to move towards a model where content contributors and developers that receive an equitable share from the value that they have added

  5. Nice firehouse analogy in regards to Twitter, in fact let’s take it a little further.

    The telcos owns the fire hydrant (SMS) and the water supply (data) and you suppose to think the guy who spilling all the water in the streets for the kids to play is special, right?

  6. Thanks for mentioning TLISTS, Khris.

    I should point out however that we’re not an example of the danger you mention.

    In contrast to an undercutting situation, our SuperList Channels were designed to utilize Twitter List meta-data. I can’t speak for other API users but Twitter has always been especially conscious of *not* adding features or making changes that would limit the success of our concept.