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August 19, 2008

"Sites like Twitter and Facebook will never make much money from advertising: social media users are too busy being social to pay attention to ads." - Inspired by Ben Kunz

Kunz lists several ways in which Twitter could potentially try to make money, and then systematically takes apart each and everyone of these.

Twitter could ask users to pay – but once a free service has already been established, it's hard to get them to pony up.

Twitter could get messages to pay by selling them as product placement – users would likely rebel if their tweets were hijacked for text ads.

Twitter could get money from selling user data – users would definitely rebel and privacy concerns don't make this viable.

Finally, Twitter could get money from ads. Although this seems like the most likely path that the site will go down, Kunz maintains that this won't bring in much revenue either. He writes: "Response rates will be low, since other social media, such as Facebook and MySpace, have fared poorly selling stuff to their users. It seems social media users are too busy being social to pay much attention to ads. As marketers see poor results, they will move their ad budgets to other, more responsive ad media. The social media value bubble will be pricked by reality.

In the end, Twitter will most likely be sold and become a hood ornament to another service, like Gmail is to Google or Hotmail is to Microsoft, The corporate buyer won't get much ad revenue, but it will pull millions of communicating consumers closer to its own business model."

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