Making money is a business model

After adding a del.icio.us link to this discussion on Dave Winer’s weblog regarding Twitter‘s business model, I noticed a memorable observation buried in its comment thread. A commenter suggests Twitter may provide a return for its investors, but the commenter thinks it can’t “make money,” as in generate recurring revenue. To this, Dave replies:

“I don’t remember what your definition of “making money” is. To me it means money shows up in my bank account that wasn’t there before.

Frankly, I don’t know why you’d want to spend time reading them, but Techmeme is currently tracking dozens of blog posts that have sprung up today regarding Twitter’s business model.

The most consistent phenomenon I’ve witnessed from observing web-culture for the past 12 years is this: When something new comes along and half the tech/new media geeks I know can’t live without it and the other half detest it — I get ready for a tsunami of “what’s the business model?” pontificating, followed by a ferocious chorus of, “Oh yea?”s.

Dave’s right. Making money is a business model. If creating (or buying) something that you can then sell for more than it took you to create (or buy) it, that’s a business model. The wider the spread between the cost and the sales price, the better the business model.

Bottomline: The folks who created Twitter are in the business of developing web products and, well, selling them. The top guy there created Blogger.com. He sold it to Google. Creating and selling Blogger was a business model — a great one. Does Blogger.com today have a viable business model? (That was a rhetorical question, by the way.)

Oh, yes, something else: The folks who created Twitter have created other things that no one found addictive — or even mildly helpful. Some people call such attempts that don’t work out failures. Smart people like Evan Williams know they are just part of the business model of making money.

About Rex Hammock

Founder/ceo of Hammock Inc., the customer media and content company based in Nashville, Tenn. Creator of and head-helper at SmallBusiness.com.
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  • http://mozdawg.blogspot.com Ben Tremblay

    Earlier this evening I was over at Tris Hussey’s similarly themed “Business models and acquisition thoughts and found myself … well, I found myself feeling protective of Twitter.

    I experienced no great increased ease of use at blogspot thanks to that generous take-over.
    I experienced no great ancillary benefit from LJ’s last buy-out, and don’t entertain any pleasant anticipations now after that lovely system has been traded again.

    All in all, within that small domain, I don’t see any real benefit from the big bucks except to the developers. (And not all of them, truth be told and the cards read rightly.)

    I don’t begrudge good folk 7 digits in the bank.
    I just wish that ramified up into user experience.

    –bentrem

    p.s. Sure would be nice to see technorati running on 12 cylinders!

  • Rex Hammock

    I think I agree with everything you’re saying, Ben.