Twitter Turns a Profit (Really)
Oft-criticized for its lack of a business model that could actually make the company some money, Twitter may be able to shut up those critics for a bit. BusinessWeek has learned that the company will be able to post a small profit for 2009, thanks to the content deals it signed during the year.
Its deal with Google was worth about $15 million, and another deal with Microsoft for Bing was worth about $10 million. Without actual data on the company's operating expenses - it does not publicly release this information - BW is guessing expenses would run about $20-25 million. That means Twitter may actually have an ever-so-small profit this year.
Helping Twitter to achieve this feat was efforts at cost reductions. Its text messaging offering, which sent tweets to mobile phones, was one of its biggest expenses - with Twitter very popular, the company was able to leverage this to get better deals on messaging rates.
It remains to be seen whether Twitter can remain profitable. Job one of course seems to be these content deals, the easiest way for the company to generate revenue. Plans to charge for commercial accounts is another way - tweeting is the new fad in customer relations - and advertising is another way.
Such changes may affect Twitter's feel slightly as it becomes more commercial, however the current business model is not very sustainable. There's just no way in it for the company to make money. Venture capitalists are in the business to make money, you know.