It doesn't.

Twitter right now is one of the most used social websites across the world right. So if your a finance or management major in college or even someone just interested in these things, you've probably asked the question, with Twitter's popularity how do they profit? Well because they are so new they believe in the "Information is free" philosophy for now. So how do they manage their expenses, how do they maintain their severs pay for security pay they small staff's salaries or even pay for the traffic it encounters? Well from the information I have gathered I believe they initially had in total to this day $160 million from venture capitalist who right now seem to be asking the same question as me, since twitter is not making any money worth talking about, how will they make money in the future?

Lets use history to try answer that one as I can't see the future but I can try to predict based on past experiences. Facebook initially was against third party applications and developers use of their platform and also never featured these ad's on the right side of your home screen. Google also initially didn't feature ad's and never had a need for third party ap's but now both companies and many others like Yahoo, MSN.com, MySpace all feature millions of ad's now and have become a more open business to allow third party applications to be created upon their platform. [The one company who is against this business model is Apple which we shall leave for a later post] Well Twitter already has over 50,000 third party applications created for the use of their website (The more popular ones being: UberTwitter, Twitpic, Tweetdeck, Tweetphoto, Cotweet) but do not directly profit from that if anything they actually decrease the amount of traffic they received in 2009 by allow people to strictly update their tweets from these third party applications rather than using their website. So the question now evolves to, will they also encompass the ad structure business model that we see other sites have adopted and have become very successful in doing so?

I honestly believe so and I think CEO Evan Williams is going to take it much further, because out of simplicity profit can be made. Take for example Facebook gift's - simple graphics sent from one person to another, well as of today Facebook has over 400 million users. Lets use a conservative figure and say 1 million users out of that 400 million users use paid gifts, every time those million users send a gift worth a dollar Facebook makes 1 million dollars. Thats not using ad's to generate your own revenue in a very simple fashion. I'm sure in due time we'll see Twitter using these creative methods to try and generate revenue as it's also evident that their initial capital is almost depleted. However the founders Evan Williams and Biz Stone have their business model thought out already and they say that advertising is low on their list and is more leaning towards charging companies who need consumer data or consumer behavior, doesn't sound very sustainable to me and personally I don't think that that revenue stream could generate massive profits for them, typically in a situation like this the costs always comes back to the end user but with all said Twitter definitely knows what that are doing, they just leaving it up to the world to sit by and speculate.

Good luck twitter,

Andre South