BloggingBusiness models

Twitter lays the foundation for it’s revenue model

By January 22, 2009 17 Comments

To much dismay amongst the digerati Twitter yesterday announced a limit of 20,000 calls per hour to their API for whitelisted apps.

My guess is that Nick Halstead has it right when he says this is about them setting themselves up to charge apps that want to go over that limit:

To me twitter needs to put in place a charged API – and before you all start screaming ‘NOOOO!’ think how else this can ever work, the fact is everyone is concerned about twitters long term survival – it does need a revenue model and it being based upon it being a central hub of micro-messaging that is reliable and scalable (which I think they are now starting to prove) is the most natural solution.

And because Twitter has opted for a totally distributed where they don’t force people back to their site the whole time charging for their API is about the only good revenue option I can think of.  And remember that this distributed model is generally regarded as one of their strengths.

However this argument isn’t clear cut – Louis Gray sees things a little differently:

Twitter’s move, at its heart, looks to be one to protect themselves. As API Lead Alex Payne wrote yesterday, “This is essentially a preventative measure to ensure that no one API client, even a whitelisted account or IP, can consume an inordinate amount of our resoures.” (sic)

And further:

But there didn’t seem to be any options for services …. to get a work-around.  There was not an option to pay to get increased access capabilities, or even tips on how to optimize code so that it takes less effort to achieve the same result.

If Nick is right in thinking this is a step on the way to charging for volume access to the Twiter API, and I think he is, it would seem to make sense to me for them to be clear about that.  The uncertainty they have created at present will be a disincentive for developers to put time into working on Twitter based apps.

It is worth noting that so far the whole ecosystem of apps that has sprung up around Twitter has been a free party funded by Twitter’s VCs.  At some point that had to stop – Twitter itself has to make money and so do any of the Twitter based apps that have ambitions of being more than a passing fancy.

I’m sure things will get clearer over the coming days.