Twitter Keeps Flying But Magpie Makes The Money

magpie.jpgAs I was growing up in rural Colorado, we had plenty of opportunities to see magpies in their environment. They were usually standing over the latest roadkill. Basically they are scavengers. They get fed from nothing they have done on their own but finding the opportunity. I draw that picture to my own mind and drawing the metaphor of the name and bird over to thinking about the latest company and their attempt to monetize from the efforts of others. I am speaking from the recent launch of a advertising site that is asking people to use their Twitter stream for advertising purposes. I am speaking of Magpie. I had a chance to hear of this from my friend Lucretia Pruitt (@geekmommy) on Twitter itself.

I spoke about the idea of a third party monetizing Twitter earlier today. I think that Twitter needs to get on board with a private beta or an alpha or a something. I know they have been wrestling with this like most others on how they take something and make money at it. They throw ads on it and sit back and hope the sales guys can turn a profit. I’m not in the boardroom of Twitter and this is probably already a part of their behind the scenes workings. At least I hope so given their latest offer of $500 Million from Facebook. To turn down an amount like that you have to have your reasons. I know they say Facebook is overvalued but that is another blog post completely.

Frankly they may do well to have Magpie or another third party prove the ability to make it work and then just take some of the money they have and buy it up. I’m sure that they would not have a problem to make that happen unless of course the price tag of the company was too high and in that respect they merely block the company from the API and not allow them to use twitter for that purpose. The terms of service clearly allows for them to do what they feel is best for Twitter:

We reserve the right to alter these Terms of Use at any time.

Magpie spends the time the effort and energy to monetize the system, gets everyone used to the fact that Twitter now shows up with ads in the streams, or in the background and companies bring the ads and back the money truck up to the Twitter dock.
I have seen and read about the idea that the people on Twitter are calling the Magpie service the PayPerPost (Ted Murphy’s company that used bloggers and their blog content for advertising, now known as IZEA) of Twitter. People forget that PayPerPost was not real popular with the blogging elite or the purists, yet the investors and VC types have been writing checks to the group on a regular basis. I can foresee the same thing happening for the folks at Magpie. They are beginning to get some traction and according to TechCrunch people that use their service are bound to make some decent money.

[photo via Neil Phillips]

Comments

  1. My issue with Magpie was not so much the ads, after all I retweet info and post links all day long, but the lack of control I would have had over the ads posted.
    If I’d been able to approve ads and candidly tell my followers that I wouldn’t tweet any ads to products I didn’t endorse I think I would have stuck with Magpie.

  2. Lucretia Pruitt says:

    Actually? I have no issues with the monetization of Twitter.
    What I take issue with is that the Magpie model circumvents real Social Media Marketing in an attempt to ‘lazy man’ its way to a quick sale.

    Do I think there are productive ways of monetizing Twitter? Absolutely. Would I be happy to turn some ideas over to Ev, Biz & Jack just for the heck of it b/c I like their service that much? Sure.

    But the image you painted of Magpie is exactly on target. They will use bandwidth to create a profit for themselves while not creating much of one for their advertisers and none for Twitter and creating a huge amount of distrust between users.

    Now that their CEO has mentioned that he will be modifying the service to allow users to tweet under Magpie without the hashmarked #magpie that preceded their previous efforts, he has managed to turn every link suspect. Is that a genuinely relevant link my twitterpal is sending to the stream? or is it one that s/he has gotten paid for that they’ve never even seen?

    If Jan and his employees thought I was opposed before, they have no idea how much moreso I (and others like me, albeit perhaps less vocal) are now.

    I have no problem with monetizing Twitter. I’ve been asking for a year when it would happen. I just think it’s sad that the first major foray we see into it is such a poorly executed one.

  3. I’ve been VERY vocal over this subject on Twitter (and yes, I was very vocal when FB used Beacon to create fake WOM on my colleagues and friends and deleted my FB account last Dec).

    Magpie is a company–it is pushing the envelope and they obviously think enough ppl put $$ ahead of trust. Perhaps they are correct.

    But it is the worst model becuz it mixes advertising with conversation. And it is the most deplorable example that I, as a marketer–and as a person with very strong convictions–could set. I do not practice such models and I never advocate that my clients should. Rather, I encourage developing relationships, creating value and never, ever sabotaging trust.

    As I continue to say: I have done searches on summize and found ppl that hate the service…and THOSE are the ppl I’m following (ha, ha!). As a result, it has brought me new people that I respect greatly to follow–so here I thank magpie for giving me a way to find terrific new colleagues that disagree with their model, too.

    People say “but these are hard times, we need money!”. Yet it is in the hardest of times that we confirm our character and what we value most. For me? I value that people on Twitter engage in conversation, intelligent debate and share insights, their smarts and, mostly, their time with me. So, why, oh why, would I ever respond to that kindness with an ad that says “be a rockstar like me and join magpie!”

    (note: if I ever do respond with such an ad, Iรขโ‚ฌโ„ขve been abducted by aliens who are doing terrible things to me so please send help)

    Net net: there is a better way…after all, we’re an innovative bunch being that we’re early adopters and smart marketers.

    Nice to meet ya and great post.

    PS: Twitter has every right to monetize the gem they’ve built–I would even pay to be on Twitter (as I do on Typepad).

  4. CK I will be the first to call out the national guard on your behalf if I see a Magpie twitter with your name on it. I’m not against Twitter making a buck I’ll make that clear on here as well. Like I have told others, I would pay a premium to Twitter for the use!

  5. I too have no problem with twitter making some money -after all, despite some fail whales etc and that big follower drop when the changed servers – they’ve given us all a great little platform – isn’t it only natural that they should make some financial gain out of that.

    Like Lucretia Pruitt said -this just seems like the lazy man approach: “Oh look -lets serve ads though twitter, the heck with how people see it we’ll be the first to do it and make a truckload of money” Seems to me their whole viewpoint of how to make money through Social Media got somewhat skewed and corporatized ๐Ÿ˜‰

    I try my best to stay “Ad free in ’03” (Wait it’s 08 – oh well it rhymes ๐Ÿ™‚ – i use:
    http://lastweet.appspot.com to check in now and then – if any of my followers are on the magpie wagon -they’re not on mine ๐Ÿ™‚ I want ads -i’ll watch TV or pick up a newspaper – not twitter, not yet anyhow.

    Also – if you use Firefox (and why wouldn’t you?), get yourself a scarecrow: http://www.designmeme.com/scarecrow/ – a nice little greasemonkey script that block those pesky magpies from pecking at your tweets.

    Magpie? Not on My Watch! ๐Ÿ™‚

  6. I have come out against Magpie for a couple of reasons. First, they push the ads through and to your twitter stream. That bothers me. If there are going to be ads pushed to my own twitter followers, I want to have control when that happens. Second, I am not convinced yet we will have any control over how Magpie pushes the ads and what they will push.

    While I would agree, there will be ads on twitter someday. The folks at twitter are going to monetize it and we know they will. I just don’t think it will be quite so much in your face as Magpie appears to be.

    For me, I would rather pay a monthly premium for twitter then see it packed full of ads and other monetizing efforts.

    Thanks for your post. I am trying to keep an open mind on this subject. However it is hard. I feel like my space is being invaded by space aliens.

  7. Funny Grant that you and CK both used alien references here! I need to start worrying about Twitter being from area 51.

    I think Magpie is a trailblazer or on point with this, and we all know who gets shot first or steps on the mine. They are going to take quite a few hits and perhaps Twitter is watching intently on what is being said and getting free feedback. If not they need to be. We did a radio show last night and talked a lot about Twitter. You can download the archive of the show on the right sidebar if you wish. Thanks for your thoughts and for keeping an open mind.

  8. Great conversation and I enjoyed listening to the archive show. Again, sorry I was unable to participate on behalf of Twittad.

    Everyone here makes very good points about advertising and Twitter. Each individual user on Twitter is in effect advertising their blogs or maybe even products like Wine Library TV or Alltop does. However, it is their voice, not someone sending out their blogs or products in a advertisement. That is a huge difference, and in order for Twitter to realize the community that they have built, Magpie will not survive the simple economics of their business plan.

    On Twittad, what we have done is form a platform for advertisers to reach a passionate community through brand or product placement on a users background. There are some obvious flaws that many in the blog world have picked up on, however our model is one that can work with Twitter as they grow.

    If I can just explain a few points:

    1) Twitter backgrounds are not clickable: Correct. They are not. However, how can a website company with 3.6 million users be valued at 50+ million with no ad revenue and no way to track ad clicks or sales? The future as I see it, is a more interactive Twitter website, in HTML form for clickable ads. Engage users to visit the website, not just on handhelds, and bam! You have yourself a HUGE ad/revenue model. 140 characters can take you to the mainstream, and get users engaged..next is generating revenue. (see early facebook business model)

    2) People dont visit profile pages. Again, partly true in Twitters current business. We are seeing some positive results from advertisers, and will be posting some case studies in the next 2 days. But as I mention in #1, making pages more interactive increase web hits where the ads are served.

    3) The targeting of ads on Twitter will be even better than most people can imagine. Companies like Lotame, and others would absolutely love the data that comes from Twitter. The ability to match Twitter stream conversations with target ads will increase the effectiveness of advertising on Twitter.

    I built Twittad because I believe very much in Twitter. I am a passionate user on Twitter, and could have easily built a business model of pushing ads in Tweets. But to me that is not the answer.

    Regards,
    James Eliason
    Founder/CEO Twittad.com

  9. James I am continuing some of the discussion in the next show tomorrow night if you want to join I would love to have you. All of these points are great! With the announcement of Pownce being dead and buried, now is a time when I think we are about to see the emergence of a new age of micro publishing or micro media.

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