I wrote a comment on Twitter's Business Model: Brilliant or Non-Existent? on the Harvard Business blog, that turned out to be rather long, so I post it here as well:
I believe Twitter has done the right thing given the funding they have had and the potential value they can create, extract and control. The potential value lies in the number of users and the number of sent messages, so by improving the user experience the number of users, and the number of messages per user, increases along with the number of applications using Twitter streams. In comparison with most other internet services, Twitter has the ability to become a de-facto standard for a new type of data to be mined. The key question is how much of the value created that will be captured and controlled by the company, and how much of the value that will be extracted by others mining their data. What I find perhaps most impressive is that Twitter has managed to get so many application developers to build applications on top of its API without an outspoken business model, assuring the continuous ability to do so with or without fees or advertising.
There are many speculating about future premium versions using a Freemium model, but with or without paid versions I believe there are so many great ways to monetize the Twitter data. Twitter is increasingly becoming a standardized platform for real-time data, now used by actors such as Microsoft and Google, and their search algorithms will probably be updated with algorithms ranking pages on links from Twitter users, RTs by other Twitter users, by the number of followers, by webpages linking to Twitter profiles etc. This is of course of great value for Internet users, as well as for search- and content companies, and brand owners, that want to know what is going on right now, what are the latest reports within a certain area, who are the people in the world that by interest or profession stay on top of everything that happens within their field, local community etc. It is of course also of great value for the Telcos getting increased amount of data transfer from mobile phones.
Content in Twitter messages will probably soon trigger other services. Say that I Twitter about a book that I have read, it would be in the interest of Amazon to ask me to comment the book on Amazon and recommend a new one, in the interest of the writer to get my feedback, in the interest of my local cinema to tell me about when the movie is coming out, and in the interest of mine to know what friends also read the book and who liked it and who didn’t. By cross-referencing twitter messages with past messages, messages by others or from friends in social networks such as Facebook or LinkedIn, there will be great opportunities for interesting services and business models.
My twitter stream (@sundelin) will probably not be ranked as high as @NYTimes for general news but perhaps my stream will be considered more important in relation to business models, where I tend to find things faster than most others.
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