Twitter investor sounds like a twit

by | Sep 25, 2009 | Blog | 0 comments

According to one of its venture capital investors, Twitter’s path to profitability lies in charging for mobile use. In an exclusive interview with UK’s Guardian newspaper, Joi Ito, chief executive of Creative Commons, made some startling statements that appeared to highlight a considerable lack of knowledge on how the mobile market operates.
His first ‘clanger’ was, “when Twitter grows, SMS usage goes up.” Ummm, no, Mr Ito, Twitter is actually an alternative to SMS. Most mobile users Twitter away over a data connection (mobile, fixed or WiFi) and bypass the operator’s SMS altogether.
He went on to suggest that Twitter could generate revenue from mobile by possibly charging either the networks that see traffic grow from its use, or the users that access it on their phones. “If you have a clear value [to the user and network], you may experiment and find out that one way of collecting money is going to work better than another,” he said. “If you have the users and the traffic, you can experiment and iterate and usually figure out a way to make some money.”
Ummm, wrong again, where does he get the idea that ‘charging networks that see traffic growth’ from the use of Twitter will ever fly. This suggests that mobile networks become not only a ‘big fat pipe’ for Twitter and it’s users but that the networks pay Twitter for the privilege. Wow, that is a novel approach! That might hold water in the few remaining markets where data usage is charged by the kilobyte (and where it is least likely users would even access Twitter) but where data is bundled the last thing an operator will want is lots of heavy traffic generating no extra income AND having to pay Twitter to boot.
Ito suggests that because of Twitter’s phenomenal growth, it now has the clout to deal with large organisations such as mobile networks. Really?
Although Ito emphasised that he was not speaking on behalf of Twitter, his comments, and apparent lack of industry knowledge on how Twitter could generate revenues, may have a resounding effect on the next round of funding rumored to be around $1 billion.

According to one of its venture capital investors, Twitter’s path to profitability lies in charging for mobile use. In an exclusive interview with UK’s Guardian newspaper, Joi Ito, chief executive of Creative Commons, made some startling statements that appeared to highlight a considerable lack of knowledge on how the mobile market operates.

His first ‘clanger’ was, “when Twitter grows, SMS usage goes up.” Ummm, no, Mr Ito, Twitter is actually an alternative to SMS. Most mobile users Twitter away over a data connection (mobile, fixed or WiFi) and bypass the operator’s SMS altogether.

He went on to suggest that Twitter could generate revenue from mobile by possibly charging either the networks that see traffic grow from its use, or the users that access it on their phones. “If you have a clear value [to the user and network], you may experiment and find out that one way of collecting money is going to work better than another,” he said. “If you have the users and the traffic, you can experiment and iterate and usually figure out a way to make some money.”

Ummm, wrong again, where does he get the idea that ‘charging networks that see traffic growth’ from the use of Twitter will ever fly. This suggests that mobile networks become not only a ‘big fat pipe’ for Twitter and it’s users but that the networks pay Twitter for the privilege. Wow, that is a novel approach! That might hold water in the few remaining markets where data usage is charged by the kilobyte (and where it is least likely users would even access Twitter) but where data is bundled the last thing an operator will want is lots of heavy traffic generating no extra income AND having to pay Twitter to boot.

Ito suggests that because of Twitter’s phenomenal growth, it now has the clout to deal with large organisations such as mobile networks. Really?

Although Ito emphasised that he was not speaking on behalf of Twitter, his comments, and apparent lack of industry knowledge on how Twitter could generate revenues, may have a resounding effect on the next round of funding rumored to be around $1oo million.