Twitter has Produced $1 Million in Revenue for Dell + More Speculation on Twitter’s Business Model

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Even though Twitter founder Evan Williams seems to be in no hurry to monetize Twitter, there is no dearth of naysayers like Valleywag and Business World saying that he can’t, or well-wishers telling him how to.

Ad Age spoke to a bunch of Twitter watchers and came up with a list of ten ways to monetize Twitter, including enabling mobile payments, selling Twitter branded merchandise and selling out to Microsoft, Google or Facebook! It seems to me that AdAge had to stretch really hard to reach the magic number of ten.

Rafe Needleman at CNet similarly suggests eleven potential business models for Twitter.

However, Union Square Venture’s Fred Wilson, who has invested in Twitter, seems to be in no hurry either –

To me its really simple. You can’t monetize web services very well until you have an audience of scale. Jason Calacanis suggests that 10mm monthly uniques is where you have scale. I think it can be less in some cases (highly targeted services) and more in some cases (social nets). But every ounce of time, energy, money, and brainpower you spend on thinking about how to monetize will take you away from the goal of getting to scale. Because if you don’t get to scale, you don’t have a business anyway. (Fred Wilson)

“It’s like the stupidest question in the world: How’s Twitter going to make money?,” said Union Square Ventures’ Fred Wilson, another investor. “It’s like ‘How was Google going to make money?’

“Eventually Google was going to make money and they figured out how to do it and they figured out a great business, and I think the same thing is true with Twitter.” (Fred Wilson in Wired)

VentureBeat summarizes the spate of speculations well –

Everyone loves talking about Twitter’s business model — because there isn’t one yet, and they’ll keep talking about it until there is one. But it’s becoming more clear that while a business model is of course important, Twitter is perhaps the perfect example of a company that can afford to take its time in finding the one that is perfect for it. That’s because other businesses are building so much on top of the micro-messaging service and using it for their own services. If worst came to worst, and Twitter had to sell, there would probably be a bidding war of a magnitude that would make it seem like this country wasn’t in the midst of a recession.

Evan Williams has often suggested that Twitter may consider search ads, but would like to focus on revenue streams that are organic to Twitter’s model of opting in to live content, like sponsored tweets enabling discovery of branded Twitter accounts, and charging for additional services for such commercial accounts, like verification and analytics (see his interviews at Conversational Marketing Summit and Web 2.0 Summit). He has also promised a firm announcement about Twitter’s business model in early 2009.

In the meantime, Twitter has become an important business tool. Many business, including Dell, Red Cross, Jet Blue, and Zippo are using Twitter for customer outreach, sales and customer support. According to Internet News, Twitter has produced $1 million in revenue for Dell over the past year and a half through sale alerts (also see CNet) –

People who sign up to follow Dell on Twitter receive messages when discounted products are available the company’s Home Outlet Store. They can click over to purchase the product or forward the information to others.

Dell started experimenting with Twitter in March of 2007. There are now 65 Twitter groups on Dell.com, with 2,475 followers for the Dell Home Outlet Store.

Dell had earlier estimated its Twitter revenue at $50000 in a Wired story.

In fact, it seems that Twitter may be at the verge of breaking through into the business mainstream, even as the confusion about actual Twitter usage continues. It’s a proposition that has prompted Shel Israel to write Twitterville, a business book on Twitter. Shel Israel has earlier written Naked Conversations, a book on business blogging, with Robert Scoble.

It seems that Twitter’s strategy of first focusing on its functionality and infrastructure, before worrying about its business model is beginning to pay off.

Update 12/16: Michael Arrington reports that Twitter is looking for a product manager to bring in revenues.

Update 12/17: StockTwits triggers off the debate on whether third party applications built on top of Twitter are easier to monetize than Twitter itself –

The problem is that when looking at the value stack, it seems that the stuff people might be willing to pay for resides largely on top, and not inside, of Twitter. In short, I believe Twitter needs a robust and well-resourced business development function to cut deals with leading applications and to get into the flow of the revenue. (Roger Ehrenberg)

Also see: Andrew Finkle, Mathew Ingram, Sarah Milstein, Allen Stern, Dave Winer, Jason Calacanis, Peldi Guilizzoni, WATBlog.