Twitternomics, the Twitter currency, and the monetization of Twitter

In my previous post, I argued that the ReTweet (RT) is the currency of Twitter. The rationale goes: When you RT, you extend or donate some of your reputation to the Twitter user who originally tweeted, and you should earn something for it, say some RT credits or possibly even some hard dollars. The service ReTweetRank, which ranks people according to how much their tweets are re-tweeted seems to follow the same line of thought:

Retweets are great indication of the originator’s topical influence and the audience’s interest.

There is a major issue with my argument though:  it’s not because I donate something to you, that it necessarily has value to you. It only does if you acknowledge so. We can assume it does since you are following the person, but that’s a quite rough estimate.

So, things are a little more complex and we have to dig a little deeper. It’s good to start with some Twitter economics or Twitternomics:

When you tweet (or re-tweet), you essentially donate to your audience a piece of information that you think has value to them. But only when your audience acknowledges your tweet’s value, you should earn something from them.

What are these acknowledgments:

• The simplest form of acknowledgment is to spend the time to read the Tweet, but unfortunately that’s not trackable. The closest thing is to know which unique Tweets in the authenticated user’s friend timeline has been retrieved from Twitter, which is not easily trackable across all Twitter clients (except by Twitter themselves).
• The next form of acknowledgment is to click on the link provided in the Tweet, if any. Normally these clicks would be hard to track, but since most Twitter users use URL shortening services like Tr.im, the URL indirection provides a point of tracking how many did visit the URL. One problem is that it is difficult to track who actually clicked, but this could be easily resolved if Twitter or a Twitter intermediary was rewriting all the URLs to include the username of the authenticated user.
• The next form of acknowledgment is the ReTweet.
• The ultimate acknowledge is to make the Tweet a favorite. I put this one at the top because it is a persistent acknowledgment, not a transient acknowledgment like the RT or the URL click. But my guess is that it is also not as used as a RT simply because they don’t drive as much traffic (who tracks your favorite Tweets? not many people).

To come back to when you earn or when you spend Twitter credits or Tweetbucks or RT$:

• you earn a credit when someone acknowledges your Tweet. Say, 1 Twitter cent for a view, 3 Twitter cents for a click, 5 Twitter cents for a RT and 8 Twitter cents for a fave. This isn’t too far from what I mentioned in last year post How to measure someone’s Whuffie.
• conversely, you pay 1 Twitter cent for a view, 3 Twitter cents for a click, 5 Twitter cents for a RT and 8 Twitter cents for a fave. In other words, it costs you to be nice to others (giving attention or clicking buttons and writing things takes some of your valuable time indeed).
• The ReTweet is a special case. If @a retweets @b (“RT @b check out this link http://tr.im/3kbs”), it would make sense that any click on the link or further RT (“RT @a RT @b …”) should earn both @a and @b something. @a acts as a distribution channel and should take a share of the credits earned, say 50%.

So far, this is a zero sum game with funny money and no-one loses anything.

Just like RetweetRank, a list of the richest (in Twitter $) Twitter users could be compiled and people may start to compete for a better rank.

A simple business model might consist in providing a foreign exchange mechanism between Twitter $ and real U.S. dollars. Twitter users with positive balances would be able to offer their Twitter $ for sale, and Twitter users with negative balances would be able to offer to buy in U.S. dollars. Twitter would simply take a commission on the fee.

Of course, this isn’t incompatible with Twitter offering the possibility for users to pay for RTs rather than charge for them, as a way to provide additional incentives for users to RT.