Twitter has no real revenue model in place.  Money is being brought in from investors still, as they struggle with growth.  Consumers of the service are actually handling business deals and negotiations, while Twitter sits idly by, while not always available recently, helping out.  If we compare how Twitter is going about earning their own revenue, they are almost announcing that they will not be in business long on their current pace.  Even with the current rumblings of it being worth 1 billion dollars.  The company is not worth the suggested market price, it is the users of the service that are being valued.  Let me explain my thought.

Everyone knows by now that Twitter sucked up the powerful Twitter search engine Summize (which kindly goes to http://search.twitter.com now).  I found it interesting this occurred after some more financing took place too.  Let's take a twist on the purchase.  Suppose they did not do it just to enhance their own ability to offer searches of past tweets.  Instead, they are bringing in Summize to augment an ad generated content stream that sees what you talk about and drives you down an ad path.  It sees keywords, topics, meta info and a billion other things.  From there, they sell ad space (in the tweets as short links) to targeted consumer spaces based on this meta information.

Imagine the amount of data you have shared about yourself via Twitter?  Location, foods, travels, friends, shows you attended, books you read, articles you read, music you listen to.  It goes on and on.  Summize has all of this, with your name attached.  You have effectivly opened yourself up to being targeted directly by vendors willing to spend money on 140 character text lines.  There is no TiVo to skip over the commercials, you will get them.  I imagine being able to block them out won't be an option either, unless you go premium paid service.  Also, all those nice little links you place in your tweets, imagine a redirector capturing where you go and what the content was.  From there, you get a small ad pop-up before you get the actual site.  The possibilities are endless, and you gave them the ammo.

Instant messaging clients followed this same trend if you had not noticed.  When the services first came out, providers such as AOL and Yahoo gave the service to members of their network.  AOL was a paid service and Yahoo was ad driven.  Then demand pushed them both into allowing anyone to use just the chat pieces.  It worked well to get their name as the leader until usage out grew infrastructure costs.  So AOL and Yahoo both inserted ads into their clients.  This ad revenue is not only blind, but based on other items of what you have done under your logged in name on their sites.  Twitter now has that same ability.

Doing a search, Aidan Henry on RWW brought this same idea up in May in this article.  He had a slightly different slant, saying maybe every 20 tweets would be an ad, but we btoh agree there would be a premium ad free model that costs users.  Coupled with this would be support for more advanced features.