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Twitter ends free SMS updates for Europe

I got an email from Twitter this morning saying that outside of the US, Canada and India they are no longer going to provide free outbound SMS updates. The web announcement is here and predictably there is a bit of chat in the blogosphere here, here and here. Unsurprisingly the reason is the cost, which Twitter founder Biz Stone explains thus:

Mobile operators in most of the world charge users to send updates.  When you send one message to Twitter and we send it to ten followers, you aren’t charged ten times—that’s because we’ve been footing the bill. When we launched our free SMS service to the world, we set the clock ticking. As the service grew in popularity, so too would the price.

and he estimates the cost thus:

Even with a limit of 250 messages received per week, it could cost Twitter about $1,000 per user, per year to send SMS outside of Canada, India, or the US.

Aside from wondering why the situation in North America is different from Europe (the carriers there are not generally known for being more forward thinking) the really interesting thing will be to see how this plays out as a case study of a service that starts mobile, achieves massive growth largely because it is on mobile (or at least that is my perception – interested if yours is different?) and then retreats to the web because of cost.

One thing playing in Twitter’s favour is that whilst I suspect that most people make heavy use of SMS updates when they start using the service many then migrate to the web when the volume of updates starts clogging up their SMS inbox. Certainly that is what happened to me, and a couple of friends have said the same thing. If this turns out to be the general experience then Twitter will have executed on a great ’start with expensive mobile service and migrate people to a free web service’ strategy.

I’m still not sure how they are going to monetise though…

PS – Twitter have outlined a bunch of mobile app and mobile browser options that allow people to continue to get free updates on their phones, but my guess is that iPhone aside those won’t be compelling enough from a user point of view to drive much volume.

August 14th, 2008 | Category: Blogging, Business models
  • It may be true that many migrate back to using the web when twitter traffic gets too high, but what about direct messaging (DM)? DM was an integral feature for my social group and I no longer know how useful twitter will be as a social tool. For me, it may just become my feed reader of sorts.

    As for North America, don't twitter make money on every SMS sent over there?
  • nic
    Antony - I have heard that Twitter makes money on every SMS in North America, but I have looked around a bit and not seen an explanation of how. If you know of one...

    Thanks for the comment.
  • Like you Nic, I used Twitter via SMS extensively when it first launched, but not at all in the last 12 months. Why? Simple answer...API's. I now access/update Twitter via a variety of web based services on my PC (Netvibes, Alert Thingy...), which suits my needs fine. I am not troubled by their announcement today (although I can see why others will be!).
  • Unlike the rest of the world, SMS users in USA and Canada are charged to 'receive' SMS. It may seem bizare but it is true. Presumably it was this daft business model that Twitter hoped to persuade the rest of the mobile world to adopt.

    As well as depressing usage, the 'receiver pays' model is one that rewards spammers and one that is not going to be adopted by other mobile carriers/operators.

    Sitting in their Californian bubble this seems to have escaped Twitter.
  • Tom
    Nic: Because one must pay to send AND receive SMS in the US, Twitter usage generates more text message across all the networks. The US telcos can see that they are generating lots extra revenue from consumer-sent messages, and non of it goes to Twitter. The cost of maintaining an SMS network is minimal for them at this point. Even the all-you-can-eat SMS plans generate profit on average, since very few people are doing 1000+ SMS per month.


    Mike: Keep in mind that one does not get SMS spam in the US BECUASE the recipient would have to pay, and no company will convince the FCC that consumers should pay for ads.

    One question about DMs? Isn't that just a standard text message? How important is it not to have the person in your phone book anyway?
  • Tom - you are right that Premium Rate SMS is very tightly regulated in the USA making it very hard to launch legitimate markleting campaigns.
  • azeem
    Nic,

    The guys at Zygo (who you know) are launching http://www.zygotweet.com/ which will route tweets to SMS and beyond for you. It'll be available in a few weeks. Will work in UK and most other countries.
    a
  • Hi Nic,

    I see some chances to monetize Twitter, precisely with the SMS and other functionalities. If you check the recent comments on the news published in their blog, some people (a minority, of course) is opened to pay a fee for the SMS service.
    So, I see some possibilities with premium services of a few paying the use of the majority of the users. Other possibility is naturally advertising, but this is a tricky subject and it needs to be carried out with finesse and extreme PR help. Some can come out as the service evolve.
    I don't see a problem except for the investors to demand a more quicker cash in.
    Regards,
    Rui
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