It's impossible to tell if the new $250 million valuation of Twitter makes it a bargain buy, or a money-eating monster. That's because no one has ever published a serious dollar estimate of how much Twitter spends per month sending out tweets (the short text updates typed by members) for free as SMS messages. Twitter the company pays for those itself, so a fast-growing audience means a fast-growing phone bill.
Yesterday I listed the missing stats we need: The number of SMS tweets per month -- preferably for several months, so we can extrapolate growth -- and the price per message Twitter has negotiated with wireless carriers. Twitter co-founder Biz Stone politely emailed to me to say that sorry, no, they won't tell us those numbers.
My fellow biz-bloggers, though, had plenty to say. Valleywag editor and Twitter power user Owen Thomas emailed a snappy 182-word rebuttal:
There is a pretty fundamental mistake here, which is that it assumes all Twitter users use text messaging as their primary interface to send and receive messages. They don't. I don't think most do. I used Twitter on my cell phone for about a week before concluding it was driving me mad.
It's pretty easy to see how many messages are sent via text message; look for tweets which say "sent from txt." Much harder to divine: How many are received via text message. But it's safe to assume that someone who is using, say, Twitteriffic to post messages is also using it to read messages. No cost to Twitter. And many people may send messages to Twitter with their phones, but read friends' messages online. (That's how I do it.) Small cost to Twitter.
On modern, Web-capable smartphones, people use browser apps rather than text messaging to send and receive tweets. No cost to Twitter.Twitter's Web usage has also grown dramatically. To the extent that people are using the website, especially on their phones, the whole Twitter=SMS=cost equation falls apart.
Thanks, Owen, but you've only added another variable to my math: What fraction of tweets are delivered to recipients via SMS? Owen? Anyone?
Comments
Who cares, Twitter is not a publicly traded company, and as such does not have to disclose financial data. What's your point with all this? Envy?
You can check twitter stats you need at http://tweetrush.com/, and can extrapolate by client over 4 weeks.
This study from last April by ReadWriteWeb may help. It shows % of tweets by client/source. http://www.readwriteweb.com/archives/top_twitter_clients_definitive_list...
One assumption you are making is that Twitter pays per message. Once you hit $20k/mo in text messaging delivery costs it becomes a flat fee. That is, it doesn't matter how many messages you send once you reach scale as the cost is fixed. Other folks who pay on a fixed basis are companies like 4Info etc.
I just checked my twitter stream -- not a single one of them in my first 2 pages (the only 2 pages I bothered checking) were sent by SMS. They were all sent by twitter clients or the web.
The bottom-up approach is to estimate server/bandwidth costs and # of employees * salary. That will probably get you a better idea of actual burn.
Twitter could also probably argue that they're a net win for the wireless carriers, because anyone who's likely to subscribe to receive tweets on their phones is probably also signed up for an unlimited messaging plan, possibly even _because_ of twitter. Organized properly, it should be possible to structure this deal in such a way that twitter doesn't pay for those messages and they're entirely subsidized by the end users. It should be pretty obvious to the carriers that twitter's continued growth is very good for their bottom line and that twitter should not be absorbing all (or possibly even any) of these costs.
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