You will go to the right - you will lose the horse, you will go to the left ...

This is a translation of the guest post on TechCrunch, from the author by the name of Nova Spivak. A start-up with experience, he talks about why the current Twitter strategy can have a disastrous effect on business and users, which means on ourselves .



I thought about Twitter’s latest tactical actions on its own API field and its relationship with Ubermedia and TweetDeck for several months until today, and nothing adds up to a coherent picture. It seems to me that the company's strategy may lead her away, which ends with the fact that the biggest potential achievement will be missed.



If Twitter continues to follow an expensive media company, without including its own API in the development plan, this may not only lead to the fact that most of the ecosystem will simply go to another place. First of all, it will deprive the company of an excellent opportunity to earn on infrastructure. And such errors, as we know, may end up with the fact that a business simply ceases to exist.

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In the end, Silicon Valley, literally, covered with the burnt remains of the shipwreck of the once great media companies that failed to create and maintain a “third-party” ecosystem: AOL, Friendster, MySpace, Yahoo are just a few. It is very difficult to maintain leadership as an online media company without an ecosystem of third-party applications that accelerate the spread of technology, innovation as such, and increase its use time.



In light of this, I decided to start searching for alternative ways for Twitter, which would use all the features of the API, and it looks like I did it and, I think, this is the best strategy. According to my own experimental projection of profits for the company, such an alternative way is not only good as a tactical step, but also will bring profit, as it will increase the influence of Twitter, the number of users and turnover.



This path fills the fate of Twitter with infrastructure without sacrificing the company's media plan. A media company + infrastructure = a much stronger strategic position.



Another consequence of this proposal is the rejection of the need to purchase TweetDeck or Ubermedia. This will make the whole discussion about the risk of a deal with TweetDeck and Ubermedia absolutely irrelevant, empty topic, and will save Twitter 50 million greens on the article “unnecessary purchases”.



It will also relieve tension between the company and its ecosystem of applications and programs developed by third parties (third-party). That, in the end, will result in even greater profits, especially for Twitter. Finally, it can make Twitter even more and more valuable (in terms of influence), as well as a confident leader in the market of international communications in real time and advertising on this platform.



In order to understand the essence of my proposal, first we will think - what really is Twitter? If history can serve as an indicator, then this is the infrastructure for sending and receiving messages on the web. We will not ask if this is the optimal structure (in the long term: no), it’s enough that it works now.



The Twitter API is a big chunk of the reason why it grew so fast: developers pumped data from Twitter using the API, using all types of applications and services, which led to huge consequences for the network as a whole.



This combined strategy would bring many benefits to Twitter and at the same time eliminate the need to close your own DNA and impose restrictions on the use of the API.



This strategy would continue to support the resource and official applications, but beyond that, to motivate and monetize a whole ecosystem of third-party applications on its own API, including applications that are not inferior in succession to the official Twitter channels.







What is the feature of the combined strategy? She - in a new way to monetize the API. Let's call this option "freemium API". And this is how it works in theory:



Twitter changes API terms of use and provides to third parties

the next choice: or use the API for free, but accept those included in the stream

advertising messages from Twitter; or pay a tweet commission (say, $ 0.1 for

a thousand tweets from / to API, CPM 10 cents). Developers using the paid version

APIs can easily monetize their own applications using ads or

subscriptions to compensate for the $ 0.10 CRM commission paid to Twitter.

If this seems like an expensive option to you, Twitter probably could have reduced the cost.

half and still ride in the oil.



In a slightly more detailed version, it looks like this:



1. Third parties who are not opposed to broadcast Twitter ads can use the free API. Parties will be able to integrate their own advertising at the outlet of the stream, but not in it. This is done to ensure that those who use the free API do not violate the advertising environment, with personalized or targeted tweets / themes, etc.



2. Third parties who do not want to advertise, or do not want to see marketing traces of Twitter’s activities, can use the paid API, pay a commission, monetize and make their own ways. In this case, the parties will not be able to insert their own advertising into the stream, instead they will display the advertisement in the application itself, its interface, without forcing it into the general flow.



Thus, with the launch of the freemium API, there will be several additional sources of income, along with existing streams. Most importantly, I repeat, it will be possible to monetize the entire ecosystem, including every application for Twitter. Agree - it is beautiful: Twitter gets money regardless of the user, 100% from each tweet and viewing. According to rough estimates, this is a much larger business than being just a media company.



As an experiment, I made a calculation - and look at the numbers , they look very good. Of course, the calculation is based on rumors, and not specific data - that is, I heard from a reliable source that last year’s Twitter’s real profit was approaching $ 75 million. If that’s true, then another $ 20 million can be earned by adopting the proposed strategy.



My projection simplifies the view of some factors, which is done for the sake of convenience of financial planning, and, perhaps, the level of growth and the proportion of the audience can be easily challenged. But even despite this, the model can be forwarded with real data and nothing will change: now a lot more people would use Twitter, and the company would earn much more money if such a strategy had been adopted some time ago.



Interestingly, now all data from Twitter is licensed by a third-party company - Gnip . Her services cost $ 0.0001 / tweet or $ 0.1 / 1000 tweets — exactly as I suggested in my model. Instead of leaving the money in the company, they pay them to a third party. I think this is absolute nonsense.



Why should Twitter give its API - its platform to another company? I think it makes a lot more sense to do this at home, and on the Gnip site I’d already worried that this would happen. It is possible that Twitter plans to buy Gnip in the foreseeable future. But in general, companies like Gnip are more dangerous to Twitter than any TweetDeck or Ubermedia.



We looked at a situation in which Twitter uses all the features of a combined strategy, but what happens if they don’t? And here we have two options:



1. If Twitter allows access to third-party applications, but will not engage in the monetization of the API, then most of the profits will be shared by these same applications, leaving Twitter with a free option. This is a problem that has arisen now in TweetDeck and Ubermedia.



2. If Twitter tries to stop the developers from blocking it will not work. First, it will force developers to leave, along with the users of their applications. Already there are many projects whose goal is to kidnap the Twitter audience, and sooner or later it will start to be implemented. But more importantly, if Twitter blocks the use of the API, it will cease to be a platform and the infrastructure will be much more weakened (from the pressure of Facebook or Google).



The conclusion of all this is very simple, at least for me. If Twitter returns to its roots and DNA API, it will not miss a very important tactical opportunity: to be a huge platform, with thousands of developers and hundreds of applications for all platforms, adapting the new user almost on the fly, increasing dependence on technology, creating their own society.



If not, the ecosystem will die, and their business will be carried away by investors right from under their nose.



What do I need to do? Little. Forget about TweetDeck and Ubermedia, it makes no sense to worry about them. Do not think about blocking the API or blocking applications from third-party developers.



Twitter can solve all these problems and double the cost of a business in a simple and elegant way - by launching the freemium API .



In this case, all current enemies will become friends, as before, and the company will be able to concentrate on building a better network for exchanging messages in real time, instead of competing with its own partners.