One of these days, Twitter will need to decide what it's going to be when it grows up. There's a huge microblogging community growing, but Twitter is starting to fall behind in features to other services.
Recently Identi.ca introduced groups -- which gives the service a slight edge in features, though it still lacks the kind of userbase that makes Twitter more compelling, for now. But to get real functionality out of Twitter, it almost requires the use of third party tools -- and what's the fun in that?
Right now, Twitter is growing (adding users) by leaps and bounds, and looks like it might even start breaking into wide mainstream use -- but the question is, when is Twitter going to find a revenue model? I'm a big fan of microblogging, but I'm wondering a bit whether it's worth my time to stick with a proprietary service that doesn't seem to have any long-term direction.
- Develop an ad revenue strategy. This is the path of least resistance for the service, since it wouldn't require charging users and (if done right) it wouldn't turn off too many Twitter followers. (Of course, ad-resistant users can take their toys and go home -- or to Identi.ca / Laconica, anyway.) This could be anything from banners and text ads on the site, to 140 character ads fed into the microblog stream. Since many Twits use third-party tools to access the site, Twitter would probably have to insert ads into the feeds themselves to reach the majority of users.
- Offer premium services. Twitter itself is pretty sparse. Third-party tools like Power Twitter or Gwibber make microblogging more useful and easier with additional search features, inline photos, integration with other sites, and so forth. For a reasonable fee, I'd pay a little extra to have some additional utility. Up the character limit for $5 a month, or make it possible to create friend groups or other ways to fine-tune the feeds and posts. It might be nice to be able to post some things to Twitter that are only visibile to a specific group, for example.
- Near real-time marketing data. Surely it'd be possible to analyze the conversations on Twitter for information that'd be valuable for marketing purposes. How many people liked a certain movie? Reactions to last night's debates? (God knows I couldn't get away from Sarah Palin discussions on Twitter...) Twitter could strip-mine public updates and provide some interesting analysis if they developed the right tools.
- Premium partnerships. Instead of looking to users to pay for Twitter, what about offering features to premium partners? For example, content sites (like this one) could use Twitter to allow comments attached to Twitter username - and authenticate against Twitter instead of needing to set up a new account. (Sort of like openID, but I hope easier to use.) When users leave comments, they could have an associated post on Twitter with a TinyURL to the comment and article. (Thus driving more content to the publisher.)
- Get bought. This is my least favorite. I don't see many scenarios where Twitter becomes part of another service or company without losing some value. But Twitter's investors and founders stand to make money if this happens.
No matter how they do it, though, Twitter really ought to find some way to make money pretty soon. Without a way to sustain itself and support additional services, the service will eventually lose to open source players like Identi.ca or competitors seeking the eyeballs.