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Bill George

Harvard Business School Professor, former Medtronic CEO

$10 Twitter?

Social media can’t stay free forever. I may be new to the Twitter/Facebook arena but that much, from a pure business standpoint, I know.

It’s one of the most basic tenets of capitalism and free markets: at some point, you’ve got to charge for your services.  And your customers have to pay.  With no hard exchange of value, the entire operation is a mirage. 

PCWorld’s Phil Shapiro hopes Twitter takes that lesson to heart.

Mr. Shapiro’s article Time for Twitter to Charge Tolls, published in BusinessWeek this morning, argues that Twitter should adopt a modest $10/month membership fee:

In the case of Twitter, the service has proved its worth many times over to countless users. And now is the right time for Twitter to start charging a fee—a modest annual fee of $10, say—for every account. People would be given two months to register their existing Twitter account with a credit card or debit card. All Twitter accounts that remain unregistered after two months would be deleted. If you don’t think Twitter provides you $10 per year of value, you probably should not be using the service.

Mr. Shapiro asserts that a charge-for-membership model would affect two changes to drastically improve an already remarkable service.  First, it would allow Twitter to expand its employee base to accommodate a rapidly expanding clientele.  As Shapiro asserts, “No way can 60 employees respond to all the genuine needs of Twitter users and the Twitter ecosystem of hardware, software, and people”

Second, in theory it would weed out the spammers (and certainly would remove most disinterested Tweeters) thus enhancing the level of conversation.

Time for Twitter makes sense both from a user’s standpoint and a business management standpoint. 

From a user’s standpoint, the network shut-downs and spam messages are minor annoyances, but their respective removal would raise my satisfaction with Twitter significantly; certainly enough to warrant a modest monthly fee (I would likely pay that now, without those improvements).

From a business standpoint, it also just makes good, hard economic sense to charge customers for a service like Twitter.  It is a service that customers already know they enjoy – and many feel that they need

Social media companies are on thin ice if their economic model hinges on providing free services indefinitely, and only generating profits based on speculative, “some day” capitalization on popularity.  Companies like Twitter need to find a way to root themselves in traditional supply-and-demand, fee-for-service rules of economics if they intend to have staying power. 

It’s simple: Provide a service.  Make money.  Improve and expand the service.  Keep customers happy. Grow the economy.