First of all, I have to say that I love Twitter. I think it is a really useful tool for the rapid spread of what I would call bleeding edge knowledge. It is easy to find and spread the latest news in a variety of domains, mostly through links to interesting blog posts. My fears are for Twitter Inc, the corporation behind the service.

Lately, Twitter has been opening its API like no proprietary web service before. Back in September, when I started working with their different developer tools, the only option available to me was to use an API key to make requests using a limited sets of functions. Today, with the integration of OAuth to the API and the development of other useful tools, connecting to Twitter has never been easier. It got to the point where the user has dozens of alternative to the official website to connect with its fellow twitterers, some of which are way more advanced than the original web interface or target specific aspects of the Twittersphere. Based on recent statistics, less than 75% of the users post their updates via the web client. The question is: is this a good thing?

From the point of view of the user, it is the best thing that could happen. Opening the API to developers worldwide means faster and better innovation. Twitter’s users are prosumers that don’t passively use the end product, but also develop it based on their needs. The peer pioneering behind Twitter lead to the creation of whole new services, like Twitpic, that integrates seamlessly to the main service via the open API. This means more alternative for the end user and, as a result, a better experience.

The conclusion is the same from the service’s point of view. By opening itself to the world, Twitter gains new features and users everyday, making it more useful and purposeful. Clients like Tweetdeck and Seesmic Desktop make it easy to reorganize and mash the data available on the Twittersphere, keeping only the parts that are relevant. You can easily find what is most discussed by visiting Twitscoop or automatically post with Twitterfeed. It is these services that make the Twitter service more than a 140 characters blog.

The problem is with Twitter Inc. All these API requests have to be managed by some central system, a system that happens to be owned and operated by Twitter Inc. Every request has to go through one of Twitter’s server, creating operation and maintenance costs that they have to pay to stay online. They could have tried to payoff their bills with ads like other Web 2.0 companies, but not only do they don’t display ads, but they soon may not even display any content at all. As I said before, less than 75% of the users use the official web interface. That means that more than 25% of the users don’t even bother going on the Twitter website and this number is growing. By decentralizing a system that, in is nature, is centralized, Twitter Inc is facing the risk of becoming a simple content provider for more advanced clients or at least, to lose potential profits to someone else. Even worse is the fact that its problem, the widespread availability of the content, is also its strength. Even identi.ca, a free and open source micro-blogging platform, seems to have a better business plan with its status.net initiative. So how can Twitter be worth $700 millions? Hype. But hype is not enough in the long run. With a loss of control over the distribution of its content, Twitter will have to find alternative way to start making money or it will become part of the past.

We plan to build Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.

About Twitter

I hope for them that this is not just a dream.

Let’s take some big Web 2.0 players such as YouTube or Facebook. If there is one thing that the last past years have proved about these applications, it is that profitability is hard to achieve. Internet Evolution published an article last week about how YouTube will lose more than $2 millions a day next year. Not to talk about Facebook which is still not profitable. So what do they have? What gives Twitter, an application that allows people to post message of less than 140 characters, the right to refuse a $500 millions offer from Facebook? The answer, I think, stands in one word: hype. Web 2.0 applications gets their value from the momentum they have, from the number of users they gather, but it is a good way to value a company?

Lets consider a good old Web 1.0 application, Google. There is no doubt that Google achieved success, but not only in the way Facebook or Twitter achieved success, it is now a really lucrative corporation. So what does Google have that Facebook doesn’t have? I think the main difference lays in the foundation of the Web 2.0 movement: the interaction with the user. Web 2.0 websites are often more service oriented than a classic web application. By that, I mean that the application and the company behind it offers a service to the user in which they usually takes little to no place. For example, YouTube’s user will upload content for other users to watch and he will watch content uploaded by other user. On the other hand, if we take a website like Gamespot or IGN, then the company, which we could call the publisher, takes part into the user experience by creating most the content by itself.

So what does this means? From a user’s point of view, that usually means a less interactive experience. Web 1.0 applications have limitations which don’t exist in Web 2.0. Less interaction usually means less hype, and a shorter attention span. People go to Google to go elsewhere, or go on Gamespot to read. Once this is done, there is no reason to stay on the website. This is a totally unilateral relation. Web 2.0 applications offer a bilateral relation, where the user gets updates more frequently and can interact with other dynamic beings. It is the AJAX of user interaction. A world where the user is at the center and everything branches from him.

However, this is also the weakness of Web 2.0 applications. When in the center, the user often lose interest of the outside world. Targeting someone with advertising on Facebook may not be hard, especially with all the informations available, but the user isn’t there to buy. He is there to interact with other Facebook entities, which, as of now, are largely noncommercial. However, someone that goes on CNET to read on audio devices, or on Google to search for cars, is much more likely to click on an ad. Even if the attention span and the engagement is less, the value of these applications is in the relevance of the content and its commerciality. What could Facebook sells? Friends? Relations? No. With a website that focus on user generated content or social relations, it is really hard to target users effectively, because what they come to your website for is not something you can easily monetize. Especially through ads.

So what is the future of Web 2.0? My guess is Web 2.5: a Web 2.0 with a valid business model that takes advantage of the commitment of the users in their products. When this will be achieved, it may stop the rise and fall of the fragile MySpace, Facebook and Twitter of this world and give the final blow to Web 1.0.