Twitter calls Google (GOOG) a "good role model," but says it isn't ready to rush down the road to advertising.
Nonetheless, an ad-based revenue model is something that cofounder Biz Stone says they "will be looking to do down the line." But, for now, he continues, Twitter is focused on "creating value for our users." For now, revenue generation ideas are being put on paper, "and we're definitely going to get to them," Stone says.
Now boasting up to 60 million users, Twitter has made some steps toward generating revenue, particularly in licensing deals with Microsoft (MSFT) and Google, which would allow both companies to use Twitter data to refine their search engines. A recent announcement by Yahoo! (YHOO), however, shows that search engines don't need to pay for access to Twitter's data. Yahoo! plans to use free tools to gain access, with the goal of reaching at least the same outcome as Google and Microsoft's Bing.
Other business models that Twitter has kicked around include premium accounts for corporate users and advertising. The latter seems to be where the company is leading, particularly given Stone's remark to Reuters that the service can "make introductions between people and businesses" and the change in Twitter's terms of service.
In order to realize its potential as an advertising platform, Twitter will need to drive more traffic to Twitter.com, something it hasn't succeeded at doing yet. Currently, 30% of Twitter interaction occurs on the website, while the rest is facilitated by cell phones and custom applications created by a robust third-party development community -- which is largely responsible for the site's growth in popularity.
To overcome this situation, Twitter has taken steps to make it worthwhile for users to visit Twitter.com. In addition to testing new retweet functionality and rolling out list capabilities, Twitter is creating new paths back to Twitter.com. The latest involves a partnership with popular business social networking site LinkedIn. The integration between the two social media companies now allows for selective status updates to be pushed from Twitter to LinkedIn.
This could benefit Twitter by giving LinkedIn users more content to see, which leads to more possibilities that a link will be clicked, taking the user from LinkedIn to Twitter. As this happens, the increase in traffic would increase the potential revenue to be generated via an advertising model.
Through the arrangement, LinkedIn gets hooked into the hottest new social media tool and gains more on-platform user activity. Though it's been said that LinkedIn is using this new relationship to be more like competitor Facebook, company founder Reid Hoffman makes an important point: unlike other social media platforms, LinkedIn is profitable.
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