Several internet analysts believe that Twitter will have 200 million registered users by the end of 2010, which would put it on an extraordinary growth rate much like Facebook’s. Analysts are also quick to point out that Twitter has no model to bring in revenue, and that problem becomes more acute as its user base grows.
It is only four decades ago the print publications began to fold because they did not have the revenue to keep operating. The most well-known of these was Life, the most popular magazine in America from the late 1930s until the early 1960s. The same trouble has emerged more recently with BusinessWeek and Newsweek. Advertising has to be strong when consumers will not pay for a medium.
To be sure, Twitter is even more of a medium than TV or print based on the definition of the word. It is a sort of two-way instant method to exchange information. It is the real-time communication of print, data, audio and video.
One of the incontrovertible rules of media is that as subscribers, or users, increase, so do the costs to serve them. That is the cost of computers, servers, bandwidth, and staff at Twitter. There is no way to estimate these costs from outside the company, but if Facebook is any measure, Twitter’s costs are probably rising exponentially.
Twitter has certainly discovered what Facebook, and MySpace, and YouTube did. Speed kills. Rapid expansion is hard to control and good service is hard to keep up. It all costs more and more money. Subscribers will not pay for free services. Venture capitalists have short horizons. Eventually, these companies need to figure out how to make money.
Douglas A. McIntyre
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