How is Twitter revenue?

Twitter business model is similar to the business model of other social networks. It requires users to create a profile and then those users can post short status updates or “tweets” under 280 characters. Registered users can post tweets, but those who are unregistered can only read them. Users can post using the website, app or even SMS. It is also called “SMS of the Internet”.

The users can follow other user accounts and then they can view the tweets of the accounts they chose to follow. The users can share videos, images, and links through their tweets. The users can also directly message each other.

Of late, Twitter has been shifting its focus to video content and content creators, as video has far higher engagement than text or banner advertisements. To incentivize video makers, , where the creators get 70% of the cut and the rest is kept by Twitter. This is better than the 55% cut offered by YouTube to content creators. Twitter, with the help of Periscope, has been trying to bring live-streaming into the foray. It bought the digital rights of NFL in the US for US$ 10 million in 2016. It wants to get exclusive digital rights to big events like NFL games, political debates, award ceremonies etc to enhance its bussiness model. While it has a lot of competition from YouTube and Facebook, it can also be a boost to its decreasing revenues if the costs are managed well.

In terms of value proposition, Twitter offers its various stakeholders the following benefits:

  • User Benefits – Users share content with the world, get real-time and relevant content in return and also get to participate in conversations with people through tweets or messages.
  • Advertiser Benefits –  Viral global reach, unique ad formats, real-time connect with the audience.
  • Data Partner Benefits – Access, search and analyze data and generate insights to monetize.

Twitter has always tried to strengthen its business model through acquisitions and partnerships instead of internal user or revenue growth. Some of its acquisitions and partnerships are listed in the next section.