Innovation. Ideas. Insight.

The Economics of Twitter

In Ideas, Innovation on May 13, 2009 at 4:09 pm
Tweets for sale, buy one get one free

Tweets for sale, buy one get one free

I’ve written about the economics of Twitter a couple of times in the past (here and here) looking at both sides of the issue. Recently, others have chimed in, including Seth Godin and Johnny Vulkan.

Usually, the ‘monetize’ Twitter conversations revolve around advertising, TechCrunch has written about this a couple of times. The idea of user contributions has also been raised (see Johnny Vulkan link above). I’d like to propose another option and then take a look at a different side of the Twitter economy.

What if every Twitter user was required to deposit a micropayment (1 or 2 cents maybe) for every follower. Think how that would effect the signal to noise ratio. Now, like Facebook, you would have to approve a potential follower. But that person would have to have clearly demonstrated the value a relationship with them would bring. And if you wanted to follow someone you better have a proven track record of contributing to the conversation.

It wouldn’t prevent people from having one or two thousand followers, but there would be no reason to allow just anyone to follow you. Now every relationship would more likely be meaningful. People would be valued not by how many followers they have – and we all know how people game that system – but rather by how many people you are following since you needed to get permission to be a follower.

That flips everything. Now, Ashton Kutcher isn’t the big cheese, it’s @BarackObama who has been accepted by 771,000+ friends. By comparison, Kutcher is following just 146 people.

Finally, here’s another interesting aspect of the Twitter economy, TweetValue. TweetValue assigns a dollar value to your Twitter account based on, well, they seem to be a bit secretive on that. But the idea of assigning a dollar value to Twitter profiles is interesting more in the practical aspects than the theoretical. What’s the value of Chris Brogan, iJustine or Oprah tweeting your link or product? It doesn’t take much imagination to see somebody getting 1 million followers and then saying: “$1000 for a tweet, $1,500 for a retweet” Would it be worth it? Only if they had credibility and the product/service was relevant. I’m not suggesting I’d like to see this happen, but it’s not inconceivable. By the way, my TweetValue is $1,115, what’s yours?

But hey, what do I know. Let’s call in the professionals. Warren Sukernek, aka TwitterMaven, what’s your take on the Twitter Economy?:

I think the options that you described are all relevant and potentially viable.  However, my perspective is around the importance of real time conversational search.  This type of search seems to have significant potential as in many cases, it will be much more relevant than highly ranked SEO links that may be much older. 

For example, a hotel review on Twitter from someone who just stayed at the property will be much more helpful than an old review from TripAdvisor that has high page rank. Thus  I think Twitter can monetize around search in two ways:

– Relevant topical advertiser links (a la google adwords) in the sidebar, perhaps on th search site (and website) where trends lies today.

– Enhanced analytics for advertisers to learn more about those tweeting about their keywords by including data like demographics, retweets, reach, share of conversation, related tweets,  as well as an ability to engage directly with the tweeter in a much more trackable manner.

Given the size of Twitter and their organization, I see the enhanced analytics as more viable to them as they don’t have the infrastructure to be able to sell advertising in the manner described.  Of corse, they could sell twitter as another Google search channel, but I don’t think that is the direction they want to head in.

Good stuff Warren, thanks. If you’re not following Warren on Twitter, you really should. What do you think? What other aspects of the Twitter economy are worth exploring, or creating? Please share your thoughts here.

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