Dear Twitter. I Want To Share My Revenue With You.
tweetminer.net
tweetminer.net
After all, who will you complain to if one day twitter decides that tweetminer has to die. Better if you have a win/win and it costs them too if they shut you down.
These 'third party products' on top of other peoples infrastructure are a recent thing, and I have to admit I'm still getting used to it and not really comfortable with it.
A project like that should be called a 'feature', it's not an independent business by any definition, even if it does make money.
That way you're not completely dependent on just the one platform. Ebuddy is a nice sample of a company that did that right, they started out as single platform and now support a whole bunch of them.
1. Build a product that gets lots of users. (check) 2. Build a platform on it that is easy and compelling to develop for so third parties can build apps. (check) 3. Let developers figure out how to make money off of those apps. (currently in progress) 4. Create a payment system to make accepting payments from Twitter customers as easy as tweeting, take a cut of the revenue from that.
They're working on it right now, and I've enough experience with ads to tell you they're never going to make Google money off of their self-serve stuff. Why is too detailed for this, but suffice it to say their actions make me think they feel the same way, but also agree that their platform can make more.
This is not to sound sarcastic or not. I made use of the Twitter API back in 2007 to deliver mobile content and RSS to SMS, but those were just features of an application and not a business that relies on Twitter.
Do you really believe the Twitter ecosystem is viable for business in the long term?
A more interesting question, IMO, is the "market size" of Facebook apps, irrespective of your chance of success. I've built a few apps that generate $800k-$1MM in revenue per year.
It's just much easier to get massive scale on Facebook than outside on the web, and the monetization methods are constantly improving.
Of course, it's hard to say if you can just build a viable ten year business out of it, or if the Platform will be dead in two years. But you take what you can get now, factor in the risk of long-term failure, and branch out it ways that protect you against that.
There's certainly enough money to sustain a decent business in a short-to-medium-term.
A business stands on its own strengths, and minimizes its dependence on outside factors that threaten its existence.
If your business is solely dependent on Twitter or Facebook you should be trying to diversify like mad.
:s/REAL/big
It's called an ecosystem because of the web of interdependencies. If it makes money, it's a business.
Biologists define an organism as a "thing that eats, poops and reproduces." Let's just define a business as "a thing that eats resources and poops profits".
In which case, businesses that are "just features" certainly count as businesses. http://en.wikipedia.org/wiki/Gut_flora
By that definition large numbers of web 'businesses' are not businesses (yet) because they do not make profits. Their owners might disagree though.
And there are plenty of 'real' businesses out there that make a loss.
It's really not that simple to put out a definition of what really is a business, but I think that something that lives by the grace of an API as a total dependent on some other company does not count as a business in its own right.
Every now and then you come across a rant somewhere from someone that got 'cut off by google' because they depend for 100% of their sales on search engine traffic, and google happened to provide the bigger portion of that.
Suddenly they find out that even though they were profitable last month they did not have an actual business, they forgot to realize they were actually a small extension of the google ecosystem and were only able to make a profit because of that. Anybody that has been in business for a while would realize that is an accident waiting to happen.
Making your company 100% dependent on FB or Twitter is no different.
It's easy money if and when it works, but easy come, easy go.
Now, the above mentions one or more third parties. Having redundant providers significantly reduces the risk of being cut off like that, but while having a known single point of failure may seem stupid, it's not as if only businesses that don't have any are real.
Whether or not something constitutes a 'real' business does not hinge on that business' dependencies or any other risk factors. Whether you'd want to be a stakeholder in it is an entirely different matter.
How many of us in the software world would actually have a real business within this definition of dependencies if you consider how quickly we'd all go in the red if google somehow ends up blacklisting us? With a somewhat grown-up business, you don't need 100% of your sales to evaporate to be in serious trouble..
Exactly.
> Whether or not something constitutes a 'real' business does not hinge on that business' dependencies or any other risk factors.
If a business is created with the explicit goal of being in the position of building right on top of another business for which there is no alternative, then I doubt the right of that business to call itself an independent business.
Sure, no business is without risk, there are always factors that increase or decrease the risk. You should always be trying to minimize those risks, and if there is one thing that is a huge red flag for investors or buyers then it would be a dependency like that.
The 'What if you get cut off' question is absolutely unanswerable. If you manage to get it to the point of a contract with termination clauses and such then that's a different story, but until then, to just build your enterprise on top of an API and hope for the best is not a good long term strategy.
Your point about google is well taken, I'm happy to report that my business depends for less than 2% of it's traffic and income on google, I wouldn't have it any other way.
Of course there are numerous examples of companies that did great building for instance software on top of the microsoft platform, but worst case there would have been other operating systems that they could have ported their software to in case microsoft would go under.
If a company like twitter or facebook would go under or decide they no longer want you or that you become too much of a threat you're done.
Instantly.
And you don't even have any recourse, simply because you never had a contractual right to be there in the first place, after all you use an API at the providers discretion, and nowhere in their terms of service does it say that you have a right to access, no matter how popular or profitable you are.
That's not the same as being in a business relationship, even about something as mundane as buying and selling pencils.
The self sharpening pencil, by the way, has been done:
http://en.wikipedia.org/wiki/Mechanical_pencil
And, more in jest:
http://www.pencilthings.com/product.php?productid=100664?utm...
But they didn't put any pencil sharpener producers out of business, though I suspect the typewriter and the word processor may have caused a few of them to find different sources of income.
If it doesn't, it's a hobby.
Amazon, Google, and Yahoo are businesses. Facebook and Twitter are, to date, very large and elaborate hobbies.
http://www.techcrunch.com/2009/09/15/facebook-crosses-300-mi...
It will take a while though before they've recovered their investment to date though.
You're right. Facebook is now a real business. I'll be curious to see what the eventual ROI is for their investors.
Google tried it with 'orkut', that didn't work out very well except for Brazil, chances are they'll go and do with Facebook what they did with Youtube, buy it to avoid someone else buying it.
Microsoft seems to have missed out on the user generated content almost completely, Facebook might be very attractive to them.
The payoff for FB investors/owners will likely be unlike anything else seen in the history of the net.
"Unlike anything else"? That's a grand claim. The net's seen some real craziness in the past.
I remember when AOL was valued at $166 billion. MSFT was around half a trillion dollars at one point. It's unlikely that Facebook will come even close.
I certainly have vendors (server providers, contractors, etc.), so if that's not what you mean...what do you mean?