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On Complements and Showdowns and TweetSense

By - September 16, 2009

SAI points to an interesting piece by Chris Dixon, founder of Hunch, in which he argues that Twitter will inevitably be competing with its core developers (complements to Twitter) at some point. This is always true for development ecosystems, however, and I don’t think, in fact, it will be as bad as Chris claims. His argument:

At some point, significant (non-VC) money will enter the Twitter ecosystem. I have no idea whether this is will be by charging consumers, charging businesses users, search advertising, sponsored tweets, licensing the twitter data feed, data from URL shorteners, or something else. But history suggests that where there is so much user engagement, dollars follow.

For the sake of argument, let’s suppose Twitter’s eventual dominant business model is putting ads by search results. Who gets the revenue when a user is searching on a 3rd party Twitter client? Even if Twitter gets a portion of revenue from ads on 3rd party apps, there will always be an incentive for them to create their own client app, or to “commodotize” the client app by, say, promoting an open source version.

But it doesn’t have to be so. Witness AdSense. Google doesn’t own the Internet, but it has the largest ad network out there, AdSense. Sure, it’s not nearly as profitable as AdWords on Google.com (100% owned and operated, way higher margin), but it’s a big, big business, and it feeds a ton of data and goodness back to the mother ship, as well as supplies serious oxygen to an ecosystem that makes Google way more important as a business overall.

Hence my argument, made many times over, that Twitter will and must create TweetSense. As I’ve written before, it’s not just search on Twitter, it’s all Tweets that are the searches, and TweetWords will key off those Tweets. TweetSense will be TweetWords distributed to third parties. Those third parties would love to have TweetSense to run on their apps, I am certain of it.

It doesn’t have to be a zero sum game.

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5 thoughts on “On Complements and Showdowns and TweetSense

  1. I agree with you that it doesn’t have to be a zero sum game, but in my opinion it comes down to more or less of a first-mover advantage.

    That is, who’s going to be the first to market. I feel that the lion’s share of the revenue and data benefits will be enjoyed by the quickest in this case.

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  3. bowling news says:

    I completely agree. Twitter has become the perfect place to keep people updated on your personal/business news.

  4. Dig Bands says:

    I think we are only going to see one survivor- facebook or twitter.

  5. They’ll both win, when Facebook buys Twitter. I still think Twitter’s true business model is getting acquired. Most people are already distributing their tweets to Facebook, so it becomes a slightly easier way to update fb, while providing an excellent platform for distributing Facebook ads.