Has Twitter just proven the business model of the future?

It’s been a busy time for Twitter lately, firstly with the huge furore that surrounded their announcement to change the rules for developers, and secondly when they announced their acquisition of Tweetdeck (evidently now the two go clearly hand in hand). TechCrunch has recently reported on 2 new rumoured expansions for Twitter : Adwords and photo sharing. It seems they are in the process of new acquisitions that could see them expand their service offering both to advertisers and consumers, which could really see the site come of age among a backdrop that’s traditionally seen them leave the innovation to others.

Launching Twitpic competitor

When they made the announcement to developers earlier this year, Twitter made it clear in no uncertain terms that the apps and clients should be left to them. While this flew in the face of the healthy developer community they’d built up and had seen the site to where it is now, for Twitter it certainly made sense. Why continue to leave the good stuff to everyone else and allow them to make their own name off the back of your service? The likes of Twitpic and YFrog could be the latest vulnerable companies here, as according to Techcrunch, Twitter are due to launch their own photo sharing site any day now. Of course, they could pull a Tweetdeck on us and simply acquire Twitpic instead of launching a native photo sharing functionality, but it’s likely Twitter will want to put their own stamp on this and prove that they can build great products as well as any developer out there.

What this could eventually mean for Twitter is the end of the affair with developers. This latest move shows that no area is off limits to them and even the most established services are under threat (or ready for acquisition, if you choose to look at it that way). This will severely impact developers who are planning new products around the Twitter API as you could have a fairly short shelflife if Twitter just decides to integrate what you’ve taken the time to prove as a viable feature for the service. For Twitter as a standalone entity, this is a good thing. Their strength is going to come from the products and services that they clearly own and a move such as this could show that they’re ready to join the likes of LinkedIn and prepare for an IPO, funding or acquisition (though they are themselves denying this).

Twitter growing up?

With the recent report that Twitter is also due to make another acquisition, in the form of Adwords bidding software AdGrok, it seems that Twitter are growing up and have realised that their approach to make everything open without owning much themselves, wasn’t going to get them far as a serious money-making business. But as seems common throughout their history, the innovation from Twitter is coming from other products as opposed to the site itself. While they’ve experimented with their own features these have often been met with confusion, such as the direction they took with the retweet button when it launched. This is now evidently also true of their advertising product. They’ve been making their own moves here, but the acquisition of AdGrok could see the revenue potential for the site really come into fruition.

It started with Summize

Twitter first showed they were in the acquisition game, when they acquired the search engine Summize (now sitting at search.twitter.com). For those of you that used the site as summize.com regularly will notice that it hasn’t changed much since it was acquired by Twitter. This was an important step in showing how Twitter was going to grow organically as a company, consistently looking for ideas and inspiration from outside of their own boardroom. They recognised that their own search function wasn’t great, that everyone was using summize.com , so they went after them and brought the service in house. Now the co-founder of Summize has just departed Twitter and their search product has been getting stronger and stronger, with the supposed acquisition of AdGrok showing that this could soon be monetised in a very simple way.

Twitter is also not shy of adding new features onto their site to improve the experience, but oddly these seem far less impressive than the acquisitions they’re making, or the existing features on other sites that they’re imitating. Their recent announcement of the ‘stumble’ feature hasn’t gone down too well, which allows you to see tweets of the profiles a user is following (why is the obvious question that comes to mind) :

This feature hasn’t been rolled out yet, but Twitter need to tread carefully with how many features they add onto their site. Twitter are clearly about to enter a crucial time as they consolidate their offering to consumers by bringing much-needed features in-house and adding new widgets and buttons on top of this could start to interfere with the user experience. Twitter are showing us a new type of business here – their work was in providing the original service and they might not necessarily be the right ones to improve on this with their own new features. But this doesn’t discredit them : they have carefully set their own destiny here. Open up the service early on to allow people to innovate and improve, then gradually build up the money to bring these services in house. The best products might not come from Twitter themselves, but they are the ones that have positioned it in such a way that these products can develop and grow on their own. A new business model that is ultimately benefitting Twitter in ways we might not have seen coming.

The business of the future

These recent moves by Twitter, and indeed the entire history of the company show that they are very much a company of the future. The service itself shows this, but the way in which they are growing as a company is indicative of a new way of doing business. They have allowed social technologies to influence the way they have developed, never afraid to bring already popular services under their wing, instead of trying to directly compete with them. The way that their planned photo sharing service will be an important indicator here – whether they acquire an existing service or choose to do this themselves. And though Twitter have certainly been very slow to monetise, they may well just be proving the longer-term business plan that is often lacking at hot new startups from the Valley. Maybe this was Twitter’s plan all along – instead of going for the quick win of monetising instantly, they played the long game and saw acquisitions as the key to their success.