London, Twitter

Stop Whining UK; Twitter Is Building a Business

In case you don't start your day with a way-too-early alarm, way-too-strong coffee, way-too-much on-camera makeup, interspersed with a quick doses of TechMeme, let me fill you in that the talk of the tech blogosphere today is that people in the UK can no longer send receive Twitters over mobile phones using SMS. After reading Biz Stone's post, I was going to write a quick one myself about how Twitter -- the much loved company that can't always communicate things well-- really nailed its messaging this time. It was out front with the bad news, not hiding it. It was apologetic, but also practical: We've been paying for this, it would cost us at a minimum $1,000 a user to continue, no UK carrier will do a deal with us, so we're working on it. Sounds rational to me.

Yet, somehow there are torches and pitchforks. HUH?

I get that you love Twitter, UK. I love hearing from my UK pals like Robert Loch and Paul Carr via Twitter. Guess what? That means there's market demand and eventually a deal to be worked out with a carrier. In the meantime, there are smart phone apps that skirt SMS and the browser to tide you over.

Could Twitter have charged users as an alternative? Sure. And some would have paid it. But that would start a bad precedent. In order for Twitter to get the SMS deals it needs (and has in the US, Canada and India) to make its business viable, scalable and one day figure out how to make it profitable, it can not be beholden to carriers. Setting the precedent of just passing it onto the users would have put Twitter at a negotiating disadvantage with future deals. They needed to prove they'd walk away, even if it meant shutting down a country partially for a while. This was a smart business move.

Second point: I'm exhausted with the whining over free Web products that are making changes because-- SURPRISE!-- they need to find a way to make money. It's the same as the Facebook Beacon outcry. Um, who really thought they weren't going to leverage everything they know about your likes and dislikes to build a better ad engine? If you truly love the service, you should want them to do this. Otherwise it will go away. The alternative is what I call the Pets.com model. Pets.com was great for pet owners. You got free bags of dog food or cat food shipped to you at no cost on a day's notice. Guess what? It lasted less than a year and they went belly up having spent some $100 million in funding. This is one thing I've always loved about Ning's business model: You can pay us a monthly fee, or you're getting ads. There's no consume-now-we'll-find-a-way-to-charge-you-later mentality or the ensuing user outcry.

Third point: VentureBeat gets the story right and points to the real culprit we should all be mad at: SMS. Until arcane pay-per-text-like attributes of the cell phone market are brutally torn down -- along with all that fragmentation and regulation-- we'll never see this great new renaissance of mobile so many people in the Valley are predicting these days.

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A little bit more caffein in the morning might bring you enough attention to see that it is not just the UK but everywhere except the US / Canada and India. The second sip would have brought you the thought to think about if 'similar' deals are even possible in markets where customers do not pay for receiving SMS at all, thus making a deal like this unlikely. And the third sip might have brought you the insight that - surprise - people from early on have told twitter that they are willing to pay a certain amount of money because it was easy to see that this was neither sustainable nor that that they would be able to find something with normale phone providers elsewhere to make a deal.

But then again, that was probably too early in the morning for you.

Hello Sarah,

I have read the bad news via an email sent by Twitter. The TechCrunch post says"In the UK you’ll still be able to send Twitter an SMS to update your status, but you won’t be receiving them.". And you say the opposite "...that people in the UK can no longer send Twitters over mobile phones using SMS". So who should I believe then? Guillaume

nicole: you need coffee. you're cranky in the morning. also i have no idea what you're trying to say in your second sentence. of course there is a deal to be worked out. maybe not the same- no - mobile is different in different countries but i applaud twitter-- a tiny startup afterall-- for arranging deals in three pretty huge ones. and yeah, i get people say they want to pay twitter. but that's a small fraction and twitter is the one running the business. they need to determine underlying costs in order to keep it a mostly free product if that's what THEY deem the bulk of their users want. so thanks, for the "sip" recommendations but i'm fully caffeinated after all.

guillaume: TC is right, not me. you can send just not receive. but because it's such a two way medium my sense was that wasn't much comfort to people affected. right?

Could this move have been any more foreseeable? Probably not.

Twitter's free SMS updates belong to an era ~8 years back where web-to-sms gateways were free and plentiful. They had absolutely no business model either and have gone the way of all stuff. Coincidence?

People are obviously annoyed - if someone gives you free stuff for a while, it's human nature to be upset when they stop. The positive attitude is to say "Hey, that was fun while it lasted, let's do something else now". Which is probably what will happen to a sizeable chunk of Twitter's UK userbase.

There will still be those that are willing to faff with email/blackberry/iphone/tin-cans-and-string twitter integrations to keep it going. There will be others who use it as glue in mashups who will continue to use it as well. I suspect for casual users who liked being able to get friends' updates it's a dead duck though.

On the topic of deals with mobile operators I was under the impression that a lot of carriers in the US charge the recipient for receiving SMS messages, so the carriers would welcome Twitter. Is that not the case?

Also, you misquote (against the current version at any rate) that it would cost a MINIMUM of $1000/user/year to continue the service, when in reality that represents the cost of a user who hits his weekly limit of 250 SMSs every single week. I know /I/ don't want a text-tweet every 30 minutes of my waking life. The actual article says "Even with a limit of 250 messages received per week, it COULD cost Twitter ABOUT $1,000 per user, per year" (my emphasis)

EC

And we love to hear from you too, dear.

The thing that we hicks in the old country don't understand is why Twitter don't just give us the freaking option to cover their SMS costs with a monthly subscription bundle. I'm yet to hear anyone who would't pay it.

Annoying early adopters and power users by showing preparedness 'to walk away' is never a smart business strategy. We can walk away too.

Already European tech entrepreneurs (it's not just the UK, not by a long chalk) are building Twitter-with-SMS alternatives.

Twitter don't have any formal presence here in the UK. If they did, then maybe they'd have thought a bit harder about an alternative before pulling the plug. They sure as hell would have done had it been the US operators playing hard ball.

SMS was invented in Europe - don't make us come over there and take it back.

Mike Butcher at TCUK wasn't "whining over free Web products", in fact he was advocating that they should have offered a premium model in the first place.

I'd argue that Twitter has fallen foul of the 'Web 2.0 syndrome', which says that you can't charge for something that you once offered for free. Shame, but that's the consumer culture that the web has created.

http://blogs.zdnet.com/social/?p=567

paul (and others):

you are missing the entire point of my post! Twitter HAS to think about more than just power users who want to pay, if it wants to build something for the long term. and the reason i said UK is because that's where all the whining seems to be coming from today. (THAT was a joke! calm down, whole continent!)

i don't pretend to know the ins and outs of twitter's negotiations with carriers. but the point is YOU DON'T EITHER. i'm quite certain pissing off international power users wasn't part of their plan. also concocting a billing system isn't exactly something you wave a magic wand and suddenly have. it's a bit trickier. i have a feeling just as many people would be angry if the alternative was Europe et all HAVING to pay when no one else does. this was a no win situation for twitter that it did not ask for and it had to think about what's best for its business LONG TERM. (can we give them some credit for better reliability of late? they have a few pretty crucial things on their plate other than this) none of us know what that is. we are not in house. but i can see the logic (clearly) that this was a smart move, given the options. i'm sure it's not a permanent situation.

Sarah, if you read all the TechCrunch comments you would have seen that some of us UK bods made the same points as you ;-)

If I had an objection, its that it was so sudden - there was no lead in to allow people to make plans / come up with alternatives.

Anyway, my blog post on the subject here:

http://broadstuff.com/archives/1152-Twitter-starts-move-to-economic-rationality-will-rest-of-Web-2.0.html

Other people have mentioned this, but I can't resist. Are you really want to be one of those Americans who think the rest of the world consists of the UK and errr that country where the Olympics are being held?

I genuinely want to know, why does your title and article single out UK users?

Au contraire, Sarah (yeah - that was French - calm down, whole United States!). I understood perfectly - but as many people have said, it's just not that hard to set up a premium SMS offering in Europe.

Why not have that in place before dropping free SMS? That way the power users - who are going to be the most vocal, not least because they include the journalists and bloggers as well as all the other people who have become most pissed recently by the ubiquitous Fail Whale - don't feel like they've been left high and dry. And Twitter can still make their point to the mobile operators.

Oh, and they can make some revenue in the meantime. Revenue! And in Pounds and Euro too. None of your silly Dollars.

Px

@Robin W - to be fair, I think Sarah singled out the UK because she was referring primarily to a post on TC UK/Eire, written by a Brit.

As Americans go, Sarah's pretty well travelled. Which is to say, she *is* travelled.

Why are my posts coming up as being from 'Sarah Lacy'? That's just freaky!

@paul carr: i don't know why it's showing up as sarah lacy! but i appreciate you taking over my blog as i edit video. Also, I am enjoying watching me argue with myself...please carry on!

i've decided to tell a different country to "stop whining" every day. drives traffic! ;)

My first time reading your blog and I'm coming back for more. I don't have a blog so I have been silently screaming about these "pet.com" business models for years now. A business has to make money! There are too many internet start-ups out there that have users, sure, but no sustainability, because they have no revenue model. All these free services, due to fail eventually, make it harder for those of us who actually would like to create a web service that creates revenue.

Hi Sarah:

As a Brit who's losing what has been a really useful feature of Twitter: I wonder if your position would have been as relaxed and measured, if tables had been turned, and it was US users who were losing the SMS feature?

(ps. Your headline to this post: 'Stop Whining UK; Twitter Is Building a Business', is great in terms of confrontational writing technique, but irritatingly predictable and misleading. Twitter 'building a business?' Yeah right. Don't think so. More like a great idea that'll be taught in Business School 101 for years to come. Lecture title: FAIL WHALE.

Come now Sarah - we both know if an American decided to name a new country every day, the fun would only last for a weekend. Disneyland isn't a country; it's a principality.

@Mike Coulter. The lecture title will in fact be "The Long Fail".

Quite a patronizing headline Sarah, I have to say, and predictable. Still my frustration is not only at twitter but also at the carriers that are probably not cutting a deal. Does anyone know which carriers have been approached by twitter? I don't think twitter has reached mainstream in the UK yet so why shut it down like that? Particularly when the UK is quite a competitive mobile market and I'm sure SMS pricing is better that elsewhere

Hi Sarah, I read your post this morning and was surprised that really your not questioning the position Twitter have found themselves in; how could they get to this point, be out of pocket, and have to pack up an enormous element of their service and leave Europe with no options.

I thought about it, the why rather than the 'oh don't pout, look how well they've done' stance that many seem to be currently taking. You might enjoy my post: http://4lfie.com/?p=685 - it's just questioning.

Hi Sarah - as an American who moved to the UK a year ago, I do understand the frustration when something gets taken away from your country, but not other big ones (like the US). I know that there are reasons, but when people feel an emotional connection to a technology their reaction to bad news like this is generally emotional, not rational. I felt equally upset when we had Pandora taken away earlier in the year (which also still operates free and clear in the US). Given the trend, it's probably not the individual companies that we should be disappointed in, but whatever it is about the UK that makes it so hard for small businesses to offer great, free services here.

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