WebProNews are reporting that new Twitter accounts are on the decline for the fourth month on the run.
At risk of sounding extremely old-fashioned, Twitter are yet to reveal how they’re actually going to make money.
Yet if or when they do finally start producing revenue, there’s little doubt that only a very small percentage of their user base will contribute.
In other words whether they charge for pro features, sell advertising or offer a decent desktop client that doesn’t look like a Windows 3.1 application, they can expect their sign-up rate to be low.
But let’s look at those figures. Let’s round down to 90 millions users. 1% would be 900,000 people, 0.1% would be 90,000 and 0.01% would be 9,000.
Let’s imagine they introduce a really nice desktop client. And they charge a very reasonable fee of only $1 per month.
Realistically, the vast majority of their users won’t care, even at the low price. So assuming only 0.01% start paying, that will be an income of $9,000 per month or $108,000 per year. Peanuts.
So let’s imagine that they start to sell very targeted advertising through their website. There are a lot of assumptions here, but bear with me.
The article mentions 9.5 tweets per user per month, so around 855 million tweets per month. Let’s estimate that around half of these are through the web interface – so around 425 million per month. And let’s assume than 0.001% of those generate a click on an ad; 425,000 clicks a month.
Let’s take one more estimate of an average price per click of $0.10, and we’re looking at a monthly revenue of around $42,500. Not quite peanuts, but no hint of a return for the Twitter investors.
And pro features? They’re going to have to be somewhere between remarkable and mind-blowing to make a significant number of people reach for their credit cards, so I think we can discount that.
The decline in new users is significant, however the publicity gained by Oprah and the “Twitter Revolution” will have temporarily boosted their signups, and then resulted in a perceived decline as they died-down.
The big issue is how they are going to monetise. They definitely have the numbers, but converting users of a free service to paying customers is no simple task. And conversion rates of 0.001% can sometimes be incredibly optimistic.
So my first prediction for 2010:
2010 be the year when Twitter monetise, or start to die trying. Draw your own conclusion as to which is more likely.
Number of New Twitterers Declines
