Twitter Should Really…

So I’m a big fan to Twitter, partly for reasons I can explain, which I have, but also for reasons yet to be discovered. I guess that’s what intrigues me so much, that there is so much still to be created on that platform. To that avail, here is my opinion about what Twitter should really do… to make money that is.

The real innovation around Twitter is happening outside the company by developers utilizing the very powerful API Twitter provides. In fact, they just announced the milestone of over one million apps on the platform. There are more than a few nicely funded and profitable businesses running on top of Twitter right now. It’s really a pretty amazing ecosystem. That said I think there is some reluctance among some companies, startups and established alike, to really invest in products on the Twitter API. Just a few months ago, Twitter announced how they might block the API for certain applications and uses. If you build a business from scratch that completely relies on the Twitter API, and there is risk they could just one day, cut you off, well that’s a risky business. Certainly it would be a contention point in raising VC money. The DataSift deal that Mark Suster did actually has a very long term solid contract with Twitter ensuring continuity of service, something I’m sure Mark and his co-investors had to be sure about.

But it doesn’t have to be that way. If I were Twitter, rather than simply build a nice API and encourage people to use it, but fully embrace it, 100% as the single and only product they offer. Guarantee the continuity of the API to anyone and everyone. In return, anyone that uses the API, would contractually agree to pay Twitter 10% of the revenue generated as a result of that use. If no revenue was generated, then no money was to be paid. Simple as that. This would accomplish a heck of a lot.

First, it would totally ignite the innovation because companies would be free to develop products and companies that completely relied on the platform, even more so than they do today. Second, Twitter would have a very clear and easy product roadmap ahead of them; make the API effing rock solid, like nothing else on the planet. They wouldn’t have to worry about picking the right products or the business models that don’t piss users off or any of that balancing act they are doing right now to build real revenue streams. This would of course increase usage, because people would love that Twitter was all about the user experience, to the bone. My hypothesis is that Twitter would make exponentially more money from the revenue share, at a much higher profit margin, than if they build the channels themselves. But more importantly, no matter how many Ex-Google product managers they hire, they will never be able to innovate as good as the startup community at large.

There are details to work out of course, like how to monitor revenue tied to the stream, but it’s solvable. The point is, everyone wins. Consumer wins, Twitter wins, startups win and established businesses win. What other business model, ala ecommerce per Dick’s recent proposal, could accomplish that? Well, none.