Wednesday, April 15, 2009

The Fragile Flight of the Twitterlings

The Fragile Flight of the Twitterlings

Twitter executives don't disclose much about their plans to make money from the microblogging site. But that's not stopping scores of other companies trying to build their own businesses on the back of the increasingly popular communication tool. Take Tweetie, whose downloadable software makes Twitter available on Apple's (AAPL) iPhone. Sales of the $2.99 application have been climbing "exponentially," says developer Loren Brichter.

Twitter has inspired the creation of hundreds of third-party products and services, Twitterlings that make up a vibrant ecosystem reminiscent of those growing up around other devices and tools such as the iPhone and social network Facebook. San Francisco-based Twitter makes its code available to outside developers, who in turn use that knowhow to build tools that help people search, organize, or otherwise make better use of the millions of brief messages known as tweets sent over Twitter each day. "It's a symbiotic relationship," says Boris Veldhuijzen van Zanten, who created a site for Twitter analytics.

A variety of business models are emerging among these Twitterlings. Some, like multimedia-upload site Twitpic, rely on ads; others, like TwitterHawk, charge fees for information about potential customers on Twitter. Among 18 app developers contacted by BusinessWeek, almost half said they were drawing significant revenue. Almost all said they were still experimenting with different models.

Suddenly, Obsolete or Impossible to Find

While alluring, Twitterpreneurship carries risks. The site's sporadic service outages can hurt a company's reputation, and changes to its coding platform can have adverse effects on tools. With no notice, Twitter itself could replicate features found on some apps, rendering them obsolete. And the looming prospect of Twitter's acquisition by a larger Internet player with a different strategy further complicates any developer's long-term plans. "What happens when you wake up one morning and your application doesn't work anymore?" asks Oren Michels, founder of Mashery, a consultancy that helps companies, including Best Buy (BBY) and the New York Times Co. (NYT), open their own platforms to third-party developers.

Makers of Facebook-related tools and apps have learned the hard way the risks of hitching one's fortune too closely to a fast-rising social media property. Many third-party developers were left in the lurch last year when Facebook design changes relegated outside apps, or widgets, to harder-to-find locations on the site.

Few third-party Twitter developers need to invest in expensive technology like servers, but their sites suffer when Twitter's own servers get bogged down by the many millions of messages posted to the site each day. "One of the big challenges we face is when Twitter is slow or goes down," says Misty Lackie, CEO of Go Smart Solutions. Her Twitbacks service offers free custom backgrounds for Twitter profiles. "When this happens, our users can't post their backgrounds and oftentimes assume it is an issue on our end," she adds.

Some Twitter offshoots may ultimately find themselves vying with Twitter. "There is already an element of competition from Twitter as it improves," says Iain Dodsworth, the creator of Tweetdeck, a tool that lets users view and send tweets from the desktop. In December, Twitter CEO Evan Williams said at an event that the company is working on adding the ability to sort friends into groups, a feature available on Tweetdeck.

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