Will Twitter Start Making Money?

Days after Salesforce.com announced that it would offer a CRM application for Twitter, reports are emerging that the officials in charge of the increasingly popular micro-blogging tool are eyeing ways to get money out of their free service.

 

According to the AFP, Twitter co-founder Biz Stone said the company has “patient investors” and time to experiment with revenue generation.

 

“That being said, we’ll start experimenting this year,” Stone reportedly told the venerable Paris-based news service. “We don’t have to hit a home run right away but we’re looking forward to showing some progress in this area.”

 

That seems to jibe with what the company says on its Web site about making money: “Twitter has many appealing opportunities for generating revenue but we are holding off on implementation for now because we don’t want to distract ourselves from the more important work at hand which is to create a compelling service and great user experience for millions of people around the world. While our business model is in a research phase, we spend more money than we make.”

 

The tech media began to focus on Twitter’s money-making possibilities when Stone this week said during a radio interview that the company could start charging fees for commercial accounts used by businesses to spread messages.

 

Stone then confirmed to the Silicon Valley Insider blog that Twitter does plan to offer “commercial features” for a fee in the future.

 

That makes sense.

 

Social networking sites long have puzzled over how to monetize their services – services that seem to spread like viruses (think of Facebook (News - Alert) and Twitter alone) among casual Web users and now, especially with integration into mobile devices and applications, business users.

 

Consider the the rising importance of Internet advertising in Manhattan-based Web services company AOL, LLC’s decision to hire an executive from the industry’s distant leader as its new chairman and chief executive officer.

 

Tim Armstrong, a senior vice president at Internet ad and search leader Google Inc., will take over for Randy Falco, who is slated to leave the company, along with Chief Operating Officer Ron Grant.

 

The move follows disconcerting reports that AOL’s (News - Alert) falling ad revenue fueled a 20 percent overall revenue decline in 2008, to $4.2 billion. The company is facing a workforce reduction of about 10 percent, or 700 workers.

 

Jeff Bewkes, chairman and chief executive officer of the company that operates AOL, Time Warner Inc., described Armstrong as the “right executive” for this time.

 

“At Google (News - Alert), Armstrong helped build one of the most successful media teams in the history of the Internet – helping to make Google the most popular online search advertising platform in the world for direct and brand marketers,” Bewkes said. “He’s an advertising pioneer with a stellar reputation and proven track record.”

 

So who wouldn’t want to make ad money on what long has been a free service?

 

Twitter has a unique place in the social networking world, even though the far larger Facebook is seeking to incorporate some of its real-time functionality.

 

With Twitter, users can pepper one another with messages of 140 characters or less. Despite its meteoric rise, Twitter hasn’t been able to make money – yet.

 

In a blog posting a few moths ago, Stone blogged that the company was eyeing a concrete plan to do so.

 

“We are now positioned extremely well to support the accelerating growth of our service, further enable the robust ecosystem sprouting up around Twitter, and yes, to begin building revenue-generating products,” Stone said in the posting.