How Twitter Can Become A New Breed Of Technology Company

Khris Loux

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.

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