Is Twitter Suddenly Profitable?

twitter cash

This may not be a sign of a potential economic upswing, but it's surprisingly positive financial info nonetheless: Twitter is profitable all of a sudden. And it's all thanks to Google.

For months the way Twitter works financially has been a bit of a mystery since its amazing popularity would've launched it into some profit-making scheme much sooner, or so the Web had thought. But Biz Stone repeatedly denied Twitter would be moving into a Web-advertising mode—which would have seemed the easiest way for Twitter to earn cash—and has been touting business extras like analytic tools as Twitter's road to profitability, over the long term.

Which is why the news over at Business Week about Twitter's profitability is so surprising. The theory is that the extremely high-profile live Tweet-feed search deal with Google (and Microsoft too) is the key: It's earned Twitter some $25 million in licensing fees. Combined with internal cost-cutting and leveraging of Twitter's massive popularity to reduce the fees cell phone networks charged the company for SMS-based Tweeting powers, this has resulted in a positive number on the bottom line of Twitter's financial statement.

Perhaps this isn't such a surprise, and Twitter's independent stance on how it works has obviously paid dividends. As I wrote last week, you could almost see the Google tie-up as a sign that even the mighty Google monster is slightly humble before the success of the lifecasting/microblogging/Facebook-challenging Twitter. Google has long made it clear that it wanted to get search working right up to the second, and it obviously couldn't get its own microblogging system working as well as Twitter, nor could it buy the company. The one remaining option was to pay Twitter for access. The figure seems to have been about $15 million, according to Business Week—with $10 million for the similar Bing deal with Microsoft.

Which, when you remember the surprisingly high amount of cash Dell said it had made by using Twitter, leaves one wondering what Biz's company will do in 2010. What's the next surprise it has in store?

[Via BusinessWeek] Want to learn more? Follow me, Kit Eaton, on Twitter.

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2 Comments

  • Sam Stone

    Twitter is almost certainly not profitable or sustainable. I just can't see how it's going to turn into a long term business. It's novel and a bit exciting now so it's getting loads of press which makes it valuable, but they'll run out of money eventually and have to either a) generate revenue or b) raise more, and you can't do b) for ever.

    Ad revenue is only going to take them so far, and sharing tweets with search engines is a good idea, but once the fad is over the search engines won't want the tweets any more. It's a tough situation to be in for sure. Millions of users and virtually no concrete way to monetise.

    Free 3G iPhone

  • Aly-Khan Satchu

    Which is why the news over at Business Week about Twitter's profitability is so surprising.

    Its hardly a surprise. I accept Twitter is a very c21st and disjunctive Platform but it has scaled with breathtaking Speed. Its very simplicity means that its ultimate Market is Practically the world of 6b Souls or anyone with a cell Phone.

    The Value in the Platform or Ecosystem if You will is in its multi Ecosystems. There is an overarching Twitterverse and then there are Galaxies and smaller Systems within its universe. Biz Stone has understood the Value of Scale before Commerce and that was plain commendable.

    I remain bamboozled at how slow Google were to realise the value and so trady at waving a very Big Cheque.

    Twitter is a Phenomenon and it remains in a Parabolic Growth Phase.

    Aly-Khan Satchu
    www.rich.co.ke
    twitter alykhansatchu