Twitter Inc (NYSE:TWTR) is facing two large problems. One, the microblogging company’s user growth rate is slowing, which limits the company’s ability to generate more revenue. And two, most Twitter users share random or annoying thoughts, which irritates sensible users. Sanjay Sanghoee of Fortune magazine says that the solution to both problems is that the company starts charging users for tweets.
Twitter shouldn’t let some users affect its potential
Twitter Inc (NYSE:TWTR) was initially criticized for its non-intuitive and strange format. But the company defied logic to become a wildly popular medium for creating buzz and sharing information. Its 140-character messages fit perfectly with the short attention span of modern people. Twitter has more than 241 million monthly active users as of December 2013. But investors have been concerned about its ability to maintain impressive growth rate, and ad revenue per user. The chart below (via Fortune) clearly shows that Twitter’s growth is slowing.
So, it’s time Twitter Inc (NYSE:TWTR) reexamines its business model. More than 76% of its users access the site through mobile. And its 140-character limit allows users to express only a single thought or piece of information. These two factors make it an incredibly fast medium where timing and relevance are critical. But most users share annoying thoughts like “I have the cutest doggy.” As a result, many users see their timelines cluttered with ridiculous tweets. It compromises Twitter’s potential as an effective medium to exchange important information and ideas.
Twitter can kill two birds with one stone
So, the company should give users a reason to tweet more meaningful and thoughtful information. And Twitter Inc (NYSE:TWTR) also needs to boost its revenues. In this case, charging users per tweet will be like killing two birds with one stone. Users would tweet only those pieces of information that they are willing to pay for. That will bring down white noise. Of course, it will reduce the volume of tweets. Today, users share 500 million tweets per day. Sanghoee assumes charging (maybe a cent) per tweet would reduce the volume of tweets by 50%. That would still generate more than $900 million in additional annual revenues. It should also improve ad revenues because more relevant tweets are likely to result into higher user engagement.
Twitter Inc (NYSE:TWTR) shares skidded 0.35% to $56.43 at 11:52 AM EST on Friday.