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Nobody's naming names right now, but Social Times reports from SXSW that "a number" of companies are paying Twitter hefty fees for unrestricted access to the "firehose." While some Twitter data is accessible free through the company's developer program, the full data set is only available to those willing to write a check – and, it turns out, a substantial one.Back in October, Twitter inked high-profile data-licensing deals with Google (GOOG) and Microsoft (MSFT), which brought in $25 million and put the social media service on the revenue map. Since then, it has brought more clients into the fold through its data-licensing program, including Kosmix and Scoopler, by opening up what it calls the "firehose"; i.e., unfettered access to the Twitter data stream.
Following the deals with Microsoft and Google, it looked as though there was some pressure on the data-licensing business model, as Yahoo! (YHOO) opted to go with limited access in order to pursue its real-time search dreams at a minimal cost (and ostensibly because it saw no need to drink from the firehose). Yet, with six transactions completed recently, it looks like the model is alive and well. Further, the money appears to be far from trivial.
Social Times has learned that at least several of Twitter's clients are paying six-figure monthly tabs for access to the firehose. The smallest six-figure monthly amount, of course, is $100,000. Over a year, that translates to $1.2 million. Since we don't know where in the six-figure spectrum the deals actually all, the results could be much higher. At $500,000 a month, for example, equates to $6 million in revenue. Stretching the hypothetical further, if the Twitter's six recent clients are paying $100,000 a month each, the revenue stream is worth $7.2 million a year. And, as the monthly fee gets bigger, obviously, the revenue grows.
While six companies a year for $7 million may seem small next to the $25 million in combined fees from Google and Microsoft, you need keep the right perspective about the October deals. Both companies signed multi-year data licensing agreements with Twitter, and the terms were not disclosed. And, we don't know how much the new clients are paying. As a result, the new clients with strange names may be paying rates competitive with those forked over by established industry players.
And there's more to come.
Word from SXSW is that more companies are in "actively involved in conversations with Twitter" about firehose licensing deals. It looks like there's more revenue to come, and it will arrive in increments starting at $1 million. Since there are small companies finding ways to overcome this hurdle, the market for Twitter's data appears quite large. Going back into the realm of hypotheticals, 100 clients paying $200,000 a month each turns into $240 million a year. For a company said to have annual expenses of around $20 million a year, the margins are stunning – and they will be made wider with the launch of Twitter's online ad model, expected before the end of the second quarter of this year.
It looks like there's some hope for Twitter's investors after all. Doubtless, the best endorsements are often found in the actions of competitors. So, Facebook's plans to tap its own firehose next month only confirms that Twitter has found a winning business model.
Social Times has learned that at least several of Twitter's clients are paying six-figure monthly tabs for access to the firehose. The smallest six-figure monthly amount, of course, is $100,000. Over a year, that translates to $1.2 million. Since we don't know where in the six-figure spectrum the deals actually all, the results could be much higher. At $500,000 a month, for example, equates to $6 million in revenue. Stretching the hypothetical further, if the Twitter's six recent clients are paying $100,000 a month each, the revenue stream is worth $7.2 million a year. And, as the monthly fee gets bigger, obviously, the revenue grows.
While six companies a year for $7 million may seem small next to the $25 million in combined fees from Google and Microsoft, you need keep the right perspective about the October deals. Both companies signed multi-year data licensing agreements with Twitter, and the terms were not disclosed. And, we don't know how much the new clients are paying. As a result, the new clients with strange names may be paying rates competitive with those forked over by established industry players.
And there's more to come.
Word from SXSW is that more companies are in "actively involved in conversations with Twitter" about firehose licensing deals. It looks like there's more revenue to come, and it will arrive in increments starting at $1 million. Since there are small companies finding ways to overcome this hurdle, the market for Twitter's data appears quite large. Going back into the realm of hypotheticals, 100 clients paying $200,000 a month each turns into $240 million a year. For a company said to have annual expenses of around $20 million a year, the margins are stunning – and they will be made wider with the launch of Twitter's online ad model, expected before the end of the second quarter of this year.
It looks like there's some hope for Twitter's investors after all. Doubtless, the best endorsements are often found in the actions of competitors. So, Facebook's plans to tap its own firehose next month only confirms that Twitter has found a winning business model.
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