Twitter to monetize by credit based system?


Is Twitter going to set up a credit based system for sending / receiving messages? A screen I saw the other day suggests so. It was from my mobile, so I did not react in time to make a copy, but it basically said to me: “Not enough credits to send message”.

At that moment I just saw the error message, but now I think they will be testing that way to monetize soon. It also makes sense now to first increase the user base to a critical mass and to get them addicted, and then find a way to charge for it.

I am not denying twitter a way to monetize it, I am just curious if they will manage to set up a system which will not screw up. I assume that it needs to be a system charging me to send out messages (but then I am going to be more careful about what I send to the world) or depending on my user base (1K users per 1 credit).

It has been done before
Back 20 years ago, I had my first encounter with Chat, in a pre-internet system called BTX (comparable to Minitel in France). Many may look back with desire to the days because then there was working micropayment plus the killer application: chat rooms. And it was monetized too: For every message you would send or receive, you were required to pay money.

Today we kind of have the same with SMS: In America both parties pay unless you do have a unlimited plan, in Germany for example the receiver never pays unless it is some premium subscription thing (I even receive SMS for free in roaming).

The net crowd however seldom uses SMS, we do use online chat / IM systems from our mobile phones if at all. Twitter probably changed that more than others, but only because it resembles something obviously unknown to many: the system of a chat room on IRC.

Why a chat room is a different conversation than IM
With an IM system, I need to talk one on one – and you would not just ping a person and throw in some comment if you would like to start a conversation. In a chat room though you can: With your usual crowd, you either see somebody picking up the conversation or you don’t. It is okay to just join a channel and say “Stupid / Great day!”.

I never understood why all IM systems neglected this absolute basic lesson from IRC, and only later would include “group chats”. To this day most systems like Skype etc do not have the feature set of IRC clients from 10 years ago!

Why Twitter is more convincing than other IM systems
As IM systems are based on fancy stuff, they all either require some installation or flash on websites. Too slow and not usable for many. Entering Twitter: Simple web page, simple registering process, interactive badges for the website to display the conversation, mobile access.

It is simple enough, yet does exactly the opposite of what IM does: enable group chat. Given, in a very clunky way and everybody is screaming – wait for it – for functionality one knows from IRC (separate channels, ignore and highlight), but way better than the rest. It is faster than SMS as it allows for group messaging, and it gives me online access as well.

Will users pay with a per credit system?
I started using it due to group pressure ;) about a year ago and like many others my blogging has declined as the attention span goes down with chat. Which btw is one of the reason I stopped using IRC and am often not plugged into Skype, and only rarely into Gtalk – it is a distraction to me.

Twitter is a guilty pleasure, but also easy to set up for events and other uses. The last numbers I received where like 750K users, but as I alone have 5 users and I know of many others who do the same, I would guess the real number lies lower than this. But still, it can grow especially if they manage to position themselves as a working group SMS system.

What could work
Twitter is giving me some value and to a certain degree I will be willing to pay money for it, but I doubt they can monetize it as much as for example mobile carriers earn on SMS today. SMS earnings depend on people not caring that they pay something like 20-40 dollar cent per message over here; or they have an unlimited data plan.

I am assuming that Twitter would go with something similar: Credit based for lower output and a flat fee for heavy users. How much is twitter worth to you? 5 dollars per month, 10? Free to use together with a plan from mobile carrier XYZ or as an added benefit package, preparing the users for even more spending on their mobile phone bill?

I use Twitter mainly from the web page and the mobile web page, as the SMS alert system is not easy enough to control and setup, they have limited it to 250 SMS anyway, suggesting I will be able to by a package with more SMS.

Which leads me to the usual:

The international question …
Up until now, everything I wrote above makes perfect sense for the American market. And American carriers. They are already paying for Twitter, either through receiving SMS cost or part of their data plan. Yet I know a lot of people who are not in the US and who use Twitter extensively. I can only imagine that Twitter – as most other US based companies – will be blind towards the implications running around this issue.

Yes, SMS alert is way more expensive when sent internationally – which for example is why many people use the mobile option, it is way cheaper for me to go on a data tariff than send an expensive SMS to the UK to update my twitter. (Due to the US system of how SMS works I also receive my twitter SMS on my German mobile phone number in roaming mode, as it does not cost me anything, but my US prepaid will not receive those …)

My assumptions
Charging money changes the dynamics
It will be the question how much users value the convenience of Twitter charging money or if they will start using other systems like Gtalk pushed to the phone. Currently there is no reason to go to another system, but charging money changes that fast. I only can imagine that they will be able to bill for credits to send out messages, as otherwise a lot of people will unsubscribe from most of their subscription list as well as to everybody just blabbering.

Other mothers have nice looking sons too
Second, we may be locked into Twitter as no other service provides the convenience, then again, services like Jaiku exist. They are not as sexy now – but adding a credit charge to twitter makes a tool like Jaiku suddenly waaay more interesting.

Ad sponsored twittering?
In the past, Twitter has highlighted events where somebody more or less commercial uses twitter to do mass updates to spread out information. Will I be able to buy credits to spam x thousand users with this demographic soon? (People have wondered about the 20 missing characters, but this is used for “says xxx”). Or just a general blast for all the users not paying money to Twitter, or both credits for sending and receiving advertisement?

My personal conclusion?
Whatever they do, I expect them to be stupid enough to only work with / for the American market. Which may lead to an increase domestically, but neglects the millions of possible users internationally. This will lead to international users switching to local copycats or other competitors like Jaiku etc. Been there, seen that.

That aside, it will depend a lot on what they are charging. I am not sure yet what I would pay for it, but the one thing I know is this: As soon as they are starting to charge money, I will start demanding features and stability.

How much will you pay for Twitter?

Additional Link:
NYT: If You Can’t Let Go, Twitter puts the users of Twitter in a very narrow demographic and even if just a small sample, not at all with the teenage crowd, the most likely to go bezerk over a service like this.


6 Responses to “Twitter to monetize by credit based system?”

  1. Sebastian says:

    Or, you just exceeded the 250 message limit. I heard from somebody you have to take the phone number out of notification and put it back in.

  2. Nicole says:

    Nope, I do not use that feature at all. The mobile access updates it as a “web update” and is from the browser in my mobile phone.

  3. There’s another aspect: even if the Twitter community was important enough to me to make me willing to spend money on it, I’d expect a lot more reliability as I’m currently provided. As long as Twitter doesn’t solve its problems of losing messages or being completely unreachable, I won’t even start thinking about opening my wallet.

  4. Scott says:

    Funny that noone else seems to be getting this message, at least according to Maybe it’s just you :-)

  5. Nicole says:

    Jochen: Exactly. Responsed from twitter suggest something like 5-20 dollars, but only with increased stability and more features.

    Scott: True – then again the message is SMS related, which is even more strange. :)

  6. I think Sebastian is right. But I’d like a messaging service to be up and reliable before they think about charging me.