Twitter entered the public lexicon around 18 to 24 months ago and has been the butt of all jokes that make a pun on the word ‘tweet’ ever since. While Twitter hasn’t been around all that long, in a technological timescale, it has, since it’s inception, been a money sink; there’s simply no great way to make money off of it. You can’t really sell advertising money from it (like Google would), because it’s a ubiquitous technology, almost no one is going to Twitter.com to access their service. Most people will use a Twitter app on their phone, or on their computer instead of bothering with going to the web site.
Another approach would be to sell their information to marketers. That works in theory, but the practical nature of Twitter is that you have many people writing in 140 character bursts. There simply isn’t a ton of information to be gleaned (not to say that it is entirely absent of valuable data).
The most important question with any web site/service trying to make a buck is: how many people use your site/service. Twitter has, what I would consider, a high number of users, or do they? I stumbled onto this link the other day and I thought it was interesting. According to their data, there are 175 million registered Twitter accounts, but only 56 million accounts follow more than 8 people. I would set a person following 8-20 people on Twitter as a ‘low volume user’, and this data says that only ~1/3 of Twitter would even be considered a low volume user. That’s simply insane for a service that markets itself on low barrier to entry.
What about higher volume users? 12 million follow 64 people or higher. Less than 10% follow what would be considered a low number of friends on Facebook (full disclosure, I have less than 64 friends on Facebook. I’m lame.)
What this data tells me is what I’ve thought all along: Twitter is a great promotion agent; it is not a great social network. People use Twitter to interact with a few, very focused users. They don’t need it to be a Facebook replacement, as it is clearly not.