Twitter’s new business model

Twitter’s new business model


Twitter recently announced a significant change to their business model by introducing advertising on the site.  Does this constitute a business model change?  Yes!  Twitter’s current business model has no revenue.  Twitter’s new business model bets hat they have established enough consumer loyalty to interrupt users with advertising.

This may be risky for Twitter.  Recent web failures like MySpace proved that web users can be fickle.  We may be in the age of Web 2.0; however there is a seedy underbelly to Web 2.0.  Specifically:

Twitter also faces additional challenges to its business model:

In spite of these potential issues, I believe Twitter can effectively pull off this business model change.  Twitter has a strong place in their market niche.  Effectively, Twitter has no real competition.  Twitter has embraced add-on software to raise switching costs should a competitor appear.  As long as Twitter’s ads are not excessively disruptive, users should accept them as they have on Facebook and Google.

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