Twitter becomes profitable
Much talk has been made about Twitter’s ability or inability to make money on its endeavor, which now has more than 58 million users. According to a Bloomberg.com report, Twitter will make about $25 million from search deals with Google Inc. and Microsoft Corp., which is enough to make the company slightly profitable for the first time.
The agreement between Twitter and Google will generate about $15 million, and the deal with Microsoft’s Bing will generate about $10 million. The deals make Twitter’s messages searchable on both search engines. Twitter’s operating costs are estimated to be between $20 million and $25 million a year.
Twitter also was able to reduce expenses by using its popularity to renegotiate for cheaper deals with telecommunications companies that distribute its tweets over wireless networks. That was the company’s single largest expense, but now the payroll for its approximately 105 employees is Twitter’s largest expense.
Twitter began in 2006 and has raised $155 million in venture capital. In September the company was valued at $1 billion, which some experts claimed was reminiscent of the dot-com era because Twitter still lacked a revenue plan.
But the company has a revenue plan now, and as part of that, Twitter hopes to integrate advertising next year without disrupting the way the service works. It will also begin charging for commercial Twitter accounts, which would let businesses analyze tweet traffic.
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