Popular Dishes

Wednesday, April 28, 2010

Twitter and social networks: when having millions of customers is not enough - Part 2

Hence, advertising alone will not save Twitter. To convert users and traffic into money, Twitter should start charging users, even if it entailed losing momentum and giving up growth. In fact, if the service is really creating value, people must be willing to pay for it. Still, no social network has ever attempted to charge users as they all fear to crash their business. And it sounds logical: when people get accustomed to using a service for free, they will resist whatever fee on the same service.

But let’s imagine just for a second a world where phone calls have always been free. Sure people would resist a sudden charge of the service, but would they really stop making phone calls rather than paying a reasonable fee? Impossible to say with certainty, but it’s highly probable they would not. Moreover, it’s not necessary to charge all users, Twitter could just charge big users which are more likely to keep on using the service.

Such a reasoning doesn’t work just for users. There are lot of companies and applications avidly following the huge stream of information generated by Twitter. This stream – the so called fire hose – has always been offered for free. What would happen if Twitter started charging for it? Deals would be formalized. That’s what happened when Twitter announced it would start restricting its fire hose leaving full access only to paying customers.

A question remains unanswered: would the freemium strategy – offering some features for free to attract users and charging some features to make money – work also with users?


ufo3d said...

Thanks for the interesting post!