Twitter Business Model - isn't that Oxymoronic?

Dave Winer points to a post from Allen Stern talking about Twitter's business model (or lack of it).

Of course, the obvious business model is to sell to Google - but Jaiku did it first

Anyway, sez Dave:

Here's what you do if you're Twitter.

Distribution.

How much you want to bet that Twitteriffic reaches a very small number of Twitter users.

Twitter, of course, reaches every Twitter user.

So what could be easier than to offer to sell everyone a client that makes Twitter work a lot better?

And of course Twitter would be entitled to some of that money.

Dave also goes on to suggest they think about a Twitter Cellphone* (like 3 UK's Skypephone mayhap) or a TwitterPod sort of thingy.

Its actually an interesting thought, because its not the bog standard "I know, lets sell advertising" approach that no doubt was the initial bizplan the Twitterpeeps reached for (assuming they put aside the "I know, lets sell it as a subscription service" pdq).

In fact, Twitter operates in a two sided market - there are people who will pay for distribution, and there are people who will pay for access (via being advertised to) so Dave is probably on the right track with his idea of taking a % off people who wish to reach the subscriber base.

The other model worth looking at is the Offset Model, ie sell to someone who can use Twitter to drive revenue from some synergistic service they offer....sort of like like eBay buying Skype, but smarter

Then there is the school that no doubt argues for first getting traction, then working out how to make money.....also known as the How to Cede Founders Share to Your VC Month by Month gambit

Update - Jason Calacanis reckons Twitter is a billion dollar business based on Ads and/or Freemium Subscriptions.....but at typical SocNet CPM's of c $1, thats c 1 trillion impressions per annum.

Hmmmm..... d'you know, I can't get a fix on Twitter's current user base via Google, but if we assume its about 10 million (high, I'd submit) then thats 100,000 ads per person per annum, or (about) 300 per day. I don't think so - I suspect its about 2 orders of magnitude less..................

Functionally, Twitter is something between a Web 1.0 chat group and Yahoo Groups (except you sub to people, not interest groups). Groups uses ad inserts, chatgroups typically do Freemiums where you get extra facilities if you pay (Silver, Gold, Platinum etc).

*Not a totally bad plan considering the amount they must spend on SMS subsidy!