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One of the defining characteristics of a number of young, Web 2.0 companies is a lack of business plan. Twitter, a microblogging service in which people subscribe to short updates from friends, is a perfect example. The goal of its founders and funders has been to build a strong base of users, postponing the pesky task of making money.

A recent post from TechCrunch, however, hints that Twitter may be toying with the idea of inserting ads into users’ tweet stream.

Twitter was down tonight, nothing really unusual for the San Francisco based startup (to be fair though downtime has improved since they dumped Joyent), but what was different is some reports of users spotting ads in their Twitter stream during the service difficulties. There were no ads evident when I visited Twitter, which may indicate testing only in preparation for a broad-scale rollout.

It wouldn’t be surprising if Twitter took this approach, or if it offered a subscription-based version without ads. It’s a service that has real value for a subset of its users, many of whom use it for crowdsourcing: ask a question on Twitter, and those who follow you respond with an answer.

I recently had a conversation with Loic Le Meur, Twitterer and founder of Seesmic, a video analogue to Twitter, regarding the subject of microblogging business models. Le Meur believes that a service must have a large number of users and dominate the market before it can reasonably start to make money. “When it is the default application, and it has mass adoption, then you can start monetizing it,” Le Meur says. He adds that he personally finds enough value in Twitter to pay for it.

But people have had more than two years to grow accustomed to a free and uncluttered Twitter. And there is always the possibility that they might leave the service for any number of competitors, such as Pownce and Jaiku. Indeed, there’s some anecdotal evidence that this could happen. Twitterific, desktop software that allows a person to receive updates and publish tweets, was one of the most popular Twitter downloads, but it’s losing traction among competitors. Recently, Twitterific began to insert ads into people’s tweet stream, which, says Le Meur, could be playing a part in the rising popularity of his recently acquired, ad-free software, called Twhirl.

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Tagged: Business, Twitter, advertising

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