Twitter’s IPO generated a lot of speculation about the social media site’s ability to generate revenue. Yes, Twitter is very popular with an active user base of 241 million people. This growth, however, is slowing, as telling statistics from Q3 to Q4 2013 show. The number of active monthly users increased only 4% during that time according to Forbes and the number of times Twitter feed refreshes decreased by 10%, according to the New York Times. This is in spite of Twitter’s efforts to make its interface more visual by displaying certain photos and videos directly in the feed.
Chart by CNN Money
If you are active on Twitter and follow several hundred accounts, you have to admit that your feed just gets unwieldy at times. What it boils down to is the issue of quality vs. quantity. The fast and furious nature of Twitter causes people to tweet impulsively in an effort to be heard among the crowd. Combine this with the auto responses, promoted tweets and duplicate content shared to other social networks as well, and you have, well, a whole lot of tweets to sift through.
Sanjay Sanghoee over at CNN Money has an interesting idea. What if Twitter could somehow encourage users to share more high quality tweets and fewer rants about how hungry/tired/drunk/poor they are? One way to encourage this would be for Twitter to charge per tweet. At first, this sounds a bit harsh on Twitter users, but it could turn out to be a meaningfully inexpensive way to greatly improve Twitter’s content. If you were charged $0.01 per tweet and sent 25 tweets every day of the year, your annual cost for using Twitter would add up to under $100. This fee is not so high that it would prohibit people from using the service, but it might encourage people to be more selective in what they share. Overall anyone reading through their Twitter feeds would benefit from the tweets’ higher quality.
I agree that increasing the amount of quality content tweeted could be huge for Twitter. Twitter has an issue with retention, with only one out of every four Twitter accounts created becoming what Twitter calls “active accounts,” according to Business Insider. This means that three out of every four people who create a Twitter account are not being compelled by what they see to return to the network.
What would such a fee mean for Twitter’s bottom line? Sanghoee’s conservative estimate puts the revenue earned from charging users one penny to tweet at $900 million annually. Compare this to Twitter’s 2013 Q4 net income of $9.77 million. While Twitter is currently on sound financial footing, higher profits could boost investor confidence. The end result is a win-win situation where Twitter becomes more profitable and users receive a better Twitter experience.
I see the charging per tweet idea as interesting and agree that it would have a positive effect on the tweeting habits of Twitter users. I don’t think, however, that it would be a sound business decision in the end. Since no other top social network charges users to post content, it would be too drastic a move for Twitter to start charging. Also it takes away from Twitter’s accessibly, especially in emergency situations where Twitter is the social network of choice for reporting vital updates. Charging per tweet would rob Twitter of the appeal it has for being the pulse of the latest news and happenings around the world. A better approach to improving the Twitter experience and encouraging people to use it more often would be to somehow refine Twitter’s interface to organize tweets into a format that is easier to digest, allowing users to more easily identify meaningful tweets.
What do you think of this idea? Would you be a fan of paying every time you tweeted?
Twitter bird image by elkekarin