10 ms·

An Open Letter to Twitter: Let me pay for better service

76 points by siddhant 16y ago

tedunangst 16y ago
Twitter can't let you pay them. That would immediately cap the market value of each user and Twitter's target valuation per eyeball is way more than you'd likely be willing to pay.
- donnyg107 16y ago
  They'd still have ambiguity in ad sales revenue. And if this development is as profitable as this guy claims, I don't think twitter will be concerned about how accurately people can value their company. The price will tend toward actual worth and profit per share in the end anyway, so they'd probably prefer the profitable decision over the ambiguity of their target valuation. That's not to say I think it would be profitable, but if it is, they should definitely take the concretely profitable choice over the choice which allows investors to believe they might be a little more profitable than that.
- tptacek 16y ago
  Explain? I agree that the LTV of a Twitter user is higher than he thinks, but don't get the "capping" thing. (I think Twitter "pro" accounts are a bad business move for other reasons, in the same sense as Google Search Appliances might be more trouble for G than they're worth).
  - tedunangst 16y ago
    Fake numbers: Pro accounts will go for $10/month, but Twitter promised investors that free accounts are worth $20/month. This is going to lead to some awkward questions, like "How do we convert the pro users to free users?", or they'll be forced to revise down the expected value of a user. There are a lot of companies with freemium models that work, but they mostly treat the free version as a loss leader. I don't think Twitter is valuing its free accounts in loss leader territory. That's my take, anyway.
    - tptacek 16y ago
      If Pro users pay for quality of service, you can probably still sell ads to them, or sell their data to marketers; that's what I was thinking. I agree that Pro users won't be lucrative for Twitter.
      - lloeki 16y ago
        They might just be indirectly lucrative: pro users might just happen to be the ones contributing the most to the Twitter firehose, thereby generating traction for free users. In short, even if not lucrative, pro users may be a worthwhile investment.
- orijing 16y ago
  Interesting point. Let's see what that really means. Twitter was on track for 200m users in 2011 [1]. Twitter was valued at 7.7b dollars a few weeks back [2]. That's about $38.5 per user. Surely fewer than half the users would pay for Twitter, which would mean that those paying must be worth at least 77 dollars. At a discount rate of 15%, each of those paying customers must yield 11.55 annually in free cash flow (i.e. after costs) to justify Twitter's valuation. Of course, Twitter could always find ways to extract money from the non-payers, but yes, you bring up a great point: Is it reasonable to expect that half the users will pay about $12 bucks a year on top of his fractional costs to continue to use the service? [1] http://www.tgdaily.com/software-brief/52284-twitter-on-pace-to-reach200-million-users-by-2011 http://www.tgdaily.com/software-brief/52284-twitter-on-pace-... [2] http://www.mediabistro.com/alltwitter/twitter-7-7-billion_b6132 http://www.mediabistro.com/alltwitter/twitter-7-7-billion_b6...
  - tedunangst 16y ago
    Cool, real numbers. :) I think monetizing by any means half of all users is very optimistic though. I have several accounts, long dormant, created as jokes. If that's typical (perhaps not), you'd have to divide by at least five or ten to get a real eyeball count.
    - alexgartrell 16y ago
      http://twitter.com/#!/cooltedsays http://twitter.com/#!/cooltedsays
  - deleted 16y ago
    [deleted]
  - vgurgov 16y ago
    I believe that: 1) Its unreasonable to expect 50% of paid users for freemium service. 2) Twtr is expected to be a "growth company". This means that his investors expect this 7.7b valuation to grow significantly (we talkin 100s %), not just pay back in 5-6 yrs and/or bring revenue. Conclusion: Thats why Twtr just HAVE TO innovate and figure out how to make money on ads
  - 16y ago
Kylekramer 16y ago
People who want to pay needs to understand that: A. You are the exception. I am willing to bet .1% of users would be a overestimation of Twitterers willing to pay. B. Setting up premium accounts and a payment system would probably run fairly close to break even. Not mention the additional customer service that would be expected and the complications that arise from splitting the userbase. C. You aren't the real money. Twitter wants Coca Cola's money, CBS's money, etc. They don't care about pocket change from Joe Blogger. They are selling a package of 200 million people straight up, not a package of 200 million minus the most engaged and loyal users.
- f1lt3r 16y ago
  Yeah but those companies, Coca Cola etc, can only pay as long as Twitter have the user-base. And if the adverts cause users to go visit the site less, then their revenue stream from advertising would shrink. Would they put averts in the Developer-API responses too? One one hand it's free to use, on the other hand it's being paid for by advertising. What company wants to be a slave to advertising companies? That sounds like a difficult situation to be in.
  - flyt 16y ago
    A 30-minute long TV show is actually only about 21.5 minutes long. The rest is advertising. People will tolerate it if the rest of the content is relevant and engaging. If the ads are well targeted then they make people even more accepting of them.
    - padobson 16y ago
      I pay Netflix $9 a month and I have no commercials to speak of. What is the marginal ad revenue of every user on Twitter? If it's <$1/mo then there should be a premium, ad-less Twitter available for purchase at $1.99/mo.
      - MatthewPhillips 16y ago
        You're not accounting to the effect a premium service has on marginal ad revenue per user. It goes down as the people with disposable income (the most desirable demographic) opt out of ads.
jedberg 16y ago
As someone who runs a site that receives similar requests (I paid for reddit gold, why don't I get faster access), let me tell you, it just isn't that easy. Their architecture, like ours, can't just be split into fastlane and slowlane. So while I appreciate what the guy is asking for, it just isn't that easy.
- f1lt3r 16y ago
  It's amazing to have watched Twitter grow in the last four years. Now people even tweet from space. I think with regards to the architecture, it's not an old problem, and there are existing solutions from much larger entities. If they had the money, they could invest in an architecture worthy of a communications system that is so ubiquitous that it is being used to ignite social revolutions, manage humanitarian crises and talk to people buzzing around the themosphere in a tin can. It's time for some real upgrades. And they do have a user base to support that. I would most definitely pay for better Twitter services if they were available. I think the question is, how do you not neglect the people are unable to pay for these services? How do you make it a fair service?
- AndrewDucker 16y ago
  Oddly enough, it's something that Livejournal does: http://www.livejournal.com/support/faqbrowse.bml?faqid=74 http://www.livejournal.com/support/faqbrowse.bml?faqid=74
  - jacobbijani 16y ago
    They also wrote their own web server.
  - metabrew 16y ago
    Last.fm do something similar: subscribers get a special cookie which jumps the queue on the http load balancer (perlbal). Thing is, if there are queues at the load balancer, something already went wrong.. so it only really benefits subscribers on certain, rare occasions.
- mncaudill 16y ago
donnyg107 16y ago
While this person would be willing to pay for twitter, giving a payable, better option, would make much of the user base feel like they're paying for something they should have and always have had for free. Blogging and microblogging have appeal in their universal availability, don't they? Either nobody would buy it, or everyone would and some twitter users not willing to pay will lose loyalty to Twitter inc for asking them to pay for the product which works. Creating pro accounts would be like handing out 600 sham-wows, and informing everyone that the sham-wows do not absorb properly, but they can pay for a working one. If the majority of the people liked it, why inform them that the product they are holding is sub par? And if one were to argue that this is a concern of the majority of users, then twitter would have to just fix the problem to hold onto such a huge percentage of their user base, not create fixed pro accounts and essentially ask people to leave if they're not willing to pay. Either way, loyalty and new accounts would drop, which would undoubtedly affect ad prices in the long term. Also, why the hell would twitter spend time and money debugging and then apply the improvement to only a select few users? They found the problems, why not just increase the comfort and experience of their website for everyone and establish a larger and more loyal user base? That'd kick up their ad revenue far more than any alienating platinum account will. At this stage of the start up game, Twitter better focus on creating the most loyal and comfortable user base they can, and work on finding a stronger long term source of revenue. This would be a short term pay off for twitter, and they're definitely working to break out of fad status rather than make a quick buck. Twitter is the only product I've ever observed that most celebrities and news stations use regularly that I can't convince most of my friends to get into because "its stupid and pointless" (Besides exploitation of public sympathy toward third world countries maybe. MAYBE.) Until Twitter doesn't have a user base which loves them and general aggression from everyone else (probably within the next few years), they can only debug and look for sources of revenue which won't create discomfort. (To the Y combinator people who read this as they evaluate my application: Hey guys, Love your work, I got pretty into HN. I'd just like to mention that this highly informed and apt internet user states that he gets all of his news from Twitter right now. Just sayin'. Thanks, Donny P.s. I have a new twitter account, and its MrGreenbergMD. I listed a different account on my application.)
seanMeverett 16y ago
I agree with everything you've stated. I'd pay just to remove the dickbar.
f1lt3r 16y ago
What is the actual issue? What is the technical problem that Twitter are actually facing? Does it simply come down to something like processing power?
ulugbek 16y ago
Economics of startups and ad industry is a lot like that of farmers and corn. Hard to find quality food without junk load of corn syrup in it, and farmers are always poor. Ads, like corn will keep winning unless tech crowd is able to think of equally innovative ways of monetizing their innovative ideas.
rishi 16y ago
How much would you actually pay for twitter? $2/mo.? Twitter is trying to make way more money per month from you via advertising.
zi 16y ago
I don't think that Twitter having any sort of paid service model would correct any of the beef that the author has got with them. I use Twitter on a pretty frequent basis just like the author claims, but have very few of the same arguements. The "Who to follow" section for me is always fairly accurate, suggesting individuals who are posting useful and cool information similar to what I already read. I've had very few UI problems with either the web client or the iPhone app. Kinda just sounds like the author either didn't really use it enough to find it useful, or just griping about simple problems that all social network sites will eventually face.
Nick-e 16y ago
I will definitely be willing to trow 5 bucks a month for a PRO account that will let me read other people private messages.
- astrofinch 16y ago
  OK, maybe I was wrong and this article did do something. http://news.ycombinator.com/item?id=2371530 http://news.ycombinator.com/item?id=2371530
hoggle 16y ago
I wouldn't mind to pay for a twitter pro account myself (although I'm on a tight budget momentarily). How would this option hurt the current free business plan? I think there is even a possibility that it would enhance the perceived value not only with current users but also for would-be users. Could it be that there is some kind of inferiority complex behind the lack of decisiveness by twitter management? It's not 2007 anymore, a lot of people "got it" till now. The problem isn't the monetization of the service which could drive people away, it is the potential incremental death of the culture which would. Twitter management just need to carefully observe successful services like github or flickr (pre & shortly post yahoo) which were magnets to mavens and spread from there. Examples for big mistakes in that regard recently were Sony (killing Linux support for PS3), Nintendo (generally too many "casual games" over the last couple of years, and now the 3DS region lock - first on a Nintendo handheld). I know those companies are highly profitable but I see their base crumbling already which always are the "power users". I know talk is cheap and things are not that easy but don't be stupid, think 2011 already.
MatthewPhillips 16y ago
Bad idea for twitter. They can't get rich off a couple bucks a month for a tiny segment of their user base, I doubt they can even break even. Worse, having a pro account would cause ad prices to plummet. Who's going to pay premium prices for ads when the people willing to spend money have opted out of seeing them?
lloeki 16y ago
Vote with your cash: buy a 3rd party Twitter client and skip the ads altogether. Maybe Twitter will come back to their senses and provide an ad-free, paid Tweetie^W Twitter app again.

76 points by siddhant 16y ago

Twitter can't let you pay them. That would immediately cap the market value of each user and Twitter's target valuation per eyeball is way more than you'd likely be willing to pay.

donnyg107 16y ago
They'd still have ambiguity in ad sales revenue. And if this development is as profitable as this guy claims, I don't think twitter will be concerned about how accurately people can value their company. The price will tend toward actual worth and profit per share in the end anyway, so they'd probably prefer the profitable decision over the ambiguity of their target valuation. That's not to say I think it would be profitable, but if it is, they should definitely take the concretely profitable choice over the choice which allows investors to believe they might be a little more profitable than that.
tptacek 16y ago
Explain? I agree that the LTV of a Twitter user is higher than he thinks, but don't get the "capping" thing. (I think Twitter "pro" accounts are a bad business move for other reasons, in the same sense as Google Search Appliances might be more trouble for G than they're worth).
- tedunangst 16y ago
  Fake numbers: Pro accounts will go for $10/month, but Twitter promised investors that free accounts are worth $20/month. This is going to lead to some awkward questions, like "How do we convert the pro users to free users?", or they'll be forced to revise down the expected value of a user. There are a lot of companies with freemium models that work, but they mostly treat the free version as a loss leader. I don't think Twitter is valuing its free accounts in loss leader territory. That's my take, anyway.
  - tptacek 16y ago
    If Pro users pay for quality of service, you can probably still sell ads to them, or sell their data to marketers; that's what I was thinking. I agree that Pro users won't be lucrative for Twitter.
    - lloeki 16y ago
      They might just be indirectly lucrative: pro users might just happen to be the ones contributing the most to the Twitter firehose, thereby generating traction for free users. In short, even if not lucrative, pro users may be a worthwhile investment.
orijing 16y ago
Interesting point. Let's see what that really means. Twitter was on track for 200m users in 2011 [1]. Twitter was valued at 7.7b dollars a few weeks back [2]. That's about $38.5 per user. Surely fewer than half the users would pay for Twitter, which would mean that those paying must be worth at least 77 dollars. At a discount rate of 15%, each of those paying customers must yield 11.55 annually in free cash flow (i.e. after costs) to justify Twitter's valuation. Of course, Twitter could always find ways to extract money from the non-payers, but yes, you bring up a great point: Is it reasonable to expect that half the users will pay about $12 bucks a year on top of his fractional costs to continue to use the service? [1] http://www.tgdaily.com/software-brief/52284-twitter-on-pace-to-reach200-million-users-by-2011 http://www.tgdaily.com/software-brief/52284-twitter-on-pace-... [2] http://www.mediabistro.com/alltwitter/twitter-7-7-billion_b6132 http://www.mediabistro.com/alltwitter/twitter-7-7-billion_b6...
- tedunangst 16y ago
  Cool, real numbers. :) I think monetizing by any means half of all users is very optimistic though. I have several accounts, long dormant, created as jokes. If that's typical (perhaps not), you'd have to divide by at least five or ten to get a real eyeball count.
  - alexgartrell 16y ago
    http://twitter.com/#!/cooltedsays http://twitter.com/#!/cooltedsays
- deleted 16y ago
  [deleted]
- vgurgov 16y ago
  I believe that: 1) Its unreasonable to expect 50% of paid users for freemium service. 2) Twtr is expected to be a "growth company". This means that his investors expect this 7.7b valuation to grow significantly (we talkin 100s %), not just pay back in 5-6 yrs and/or bring revenue. Conclusion: Thats why Twtr just HAVE TO innovate and figure out how to make money on ads
- 16y ago

Kylekramer 16y ago

People who want to pay needs to understand that: A. You are the exception. I am willing to bet .1% of users would be a overestimation of Twitterers willing to pay. B. Setting up premium accounts and a payment system would probably run fairly close to break even. Not mention the additional customer service that would be expected and the complications that arise from splitting the userbase. C. You aren't the real money. Twitter wants Coca Cola's money, CBS's money, etc. They don't care about pocket change from Joe Blogger. They are selling a package of 200 million people straight up, not a package of 200 million minus the most engaged and loyal users.

f1lt3r 16y ago
Yeah but those companies, Coca Cola etc, can only pay as long as Twitter have the user-base. And if the adverts cause users to go visit the site less, then their revenue stream from advertising would shrink. Would they put averts in the Developer-API responses too? One one hand it's free to use, on the other hand it's being paid for by advertising. What company wants to be a slave to advertising companies? That sounds like a difficult situation to be in.
- flyt 16y ago
  A 30-minute long TV show is actually only about 21.5 minutes long. The rest is advertising. People will tolerate it if the rest of the content is relevant and engaging. If the ads are well targeted then they make people even more accepting of them.
  - padobson 16y ago
    I pay Netflix $9 a month and I have no commercials to speak of. What is the marginal ad revenue of every user on Twitter? If it's <$1/mo then there should be a premium, ad-less Twitter available for purchase at $1.99/mo.
    - MatthewPhillips 16y ago
      You're not accounting to the effect a premium service has on marginal ad revenue per user. It goes down as the people with disposable income (the most desirable demographic) opt out of ads.

jedberg 16y ago

As someone who runs a site that receives similar requests (I paid for reddit gold, why don't I get faster access), let me tell you, it just isn't that easy. Their architecture, like ours, can't just be split into fastlane and slowlane. So while I appreciate what the guy is asking for, it just isn't that easy.

f1lt3r 16y ago
It's amazing to have watched Twitter grow in the last four years. Now people even tweet from space. I think with regards to the architecture, it's not an old problem, and there are existing solutions from much larger entities. If they had the money, they could invest in an architecture worthy of a communications system that is so ubiquitous that it is being used to ignite social revolutions, manage humanitarian crises and talk to people buzzing around the themosphere in a tin can. It's time for some real upgrades. And they do have a user base to support that. I would most definitely pay for better Twitter services if they were available. I think the question is, how do you not neglect the people are unable to pay for these services? How do you make it a fair service?
AndrewDucker 16y ago
Oddly enough, it's something that Livejournal does: http://www.livejournal.com/support/faqbrowse.bml?faqid=74 http://www.livejournal.com/support/faqbrowse.bml?faqid=74
- jacobbijani 16y ago
  They also wrote their own web server.
- metabrew 16y ago
  Last.fm do something similar: subscribers get a special cookie which jumps the queue on the http load balancer (perlbal). Thing is, if there are queues at the load balancer, something already went wrong.. so it only really benefits subscribers on certain, rare occasions.
mncaudill 16y ago

donnyg107 16y ago

While this person would be willing to pay for twitter, giving a payable, better option, would make much of the user base feel like they're paying for something they should have and always have had for free. Blogging and microblogging have appeal in their universal availability, don't they? Either nobody would buy it, or everyone would and some twitter users not willing to pay will lose loyalty to Twitter inc for asking them to pay for the product which works. Creating pro accounts would be like handing out 600 sham-wows, and informing everyone that the sham-wows do not absorb properly, but they can pay for a working one. If the majority of the people liked it, why inform them that the product they are holding is sub par? And if one were to argue that this is a concern of the majority of users, then twitter would have to just fix the problem to hold onto such a huge percentage of their user base, not create fixed pro accounts and essentially ask people to leave if they're not willing to pay. Either way, loyalty and new accounts would drop, which would undoubtedly affect ad prices in the long term. Also, why the hell would twitter spend time and money debugging and then apply the improvement to only a select few users? They found the problems, why not just increase the comfort and experience of their website for everyone and establish a larger and more loyal user base? That'd kick up their ad revenue far more than any alienating platinum account will. At this stage of the start up game, Twitter better focus on creating the most loyal and comfortable user base they can, and work on finding a stronger long term source of revenue. This would be a short term pay off for twitter, and they're definitely working to break out of fad status rather than make a quick buck. Twitter is the only product I've ever observed that most celebrities and news stations use regularly that I can't convince most of my friends to get into because "its stupid and pointless" (Besides exploitation of public sympathy toward third world countries maybe. MAYBE.) Until Twitter doesn't have a user base which loves them and general aggression from everyone else (probably within the next few years), they can only debug and look for sources of revenue which won't create discomfort. (To the Y combinator people who read this as they evaluate my application: Hey guys, Love your work, I got pretty into HN. I'd just like to mention that this highly informed and apt internet user states that he gets all of his news from Twitter right now. Just sayin'. Thanks, Donny P.s. I have a new twitter account, and its MrGreenbergMD. I listed a different account on my application.)

seanMeverett 16y ago

I agree with everything you've stated. I'd pay just to remove the dickbar.

f1lt3r 16y ago

What is the actual issue? What is the technical problem that Twitter are actually facing? Does it simply come down to something like processing power?

ulugbek 16y ago

Economics of startups and ad industry is a lot like that of farmers and corn. Hard to find quality food without junk load of corn syrup in it, and farmers are always poor. Ads, like corn will keep winning unless tech crowd is able to think of equally innovative ways of monetizing their innovative ideas.

rishi 16y ago

How much would you actually pay for twitter? $2/mo.? Twitter is trying to make way more money per month from you via advertising.

zi 16y ago

I don't think that Twitter having any sort of paid service model would correct any of the beef that the author has got with them. I use Twitter on a pretty frequent basis just like the author claims, but have very few of the same arguements. The "Who to follow" section for me is always fairly accurate, suggesting individuals who are posting useful and cool information similar to what I already read. I've had very few UI problems with either the web client or the iPhone app. Kinda just sounds like the author either didn't really use it enough to find it useful, or just griping about simple problems that all social network sites will eventually face.

Nick-e 16y ago

I will definitely be willing to trow 5 bucks a month for a PRO account that will let me read other people private messages.

astrofinch 16y ago
OK, maybe I was wrong and this article did do something. http://news.ycombinator.com/item?id=2371530 http://news.ycombinator.com/item?id=2371530

hoggle 16y ago

I wouldn't mind to pay for a twitter pro account myself (although I'm on a tight budget momentarily). How would this option hurt the current free business plan? I think there is even a possibility that it would enhance the perceived value not only with current users but also for would-be users. Could it be that there is some kind of inferiority complex behind the lack of decisiveness by twitter management? It's not 2007 anymore, a lot of people "got it" till now. The problem isn't the monetization of the service which could drive people away, it is the potential incremental death of the culture which would. Twitter management just need to carefully observe successful services like github or flickr (pre & shortly post yahoo) which were magnets to mavens and spread from there. Examples for big mistakes in that regard recently were Sony (killing Linux support for PS3), Nintendo (generally too many "casual games" over the last couple of years, and now the 3DS region lock - first on a Nintendo handheld). I know those companies are highly profitable but I see their base crumbling already which always are the "power users". I know talk is cheap and things are not that easy but don't be stupid, think 2011 already.

MatthewPhillips 16y ago

Bad idea for twitter. They can't get rich off a couple bucks a month for a tiny segment of their user base, I doubt they can even break even. Worse, having a pro account would cause ad prices to plummet. Who's going to pay premium prices for ads when the people willing to spend money have opted out of seeing them?

lloeki 16y ago

Vote with your cash: buy a 3rd party Twitter client and skip the ads altogether. Maybe Twitter will come back to their senses and provide an ad-free, paid Tweetie^W Twitter app again.