Twitter to Developers: Time to 'Move Up the Value Chain'

Site's Photo-Sharing Apps Will Get a New Competitor: Twitter Itself

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A key part of Twitter's explosive growth was that , from the start, it allowed any developer to build applications to access the service, creating a vibrant ecosystem of "built on Twitter" startups.

But now CEO Dick Costolo is replacing the anything-goes ethos with some marching orders: "move up the value chain," or, in other words, stop creating apps that simply access Twitter and start creating the products brands on Twitter are looking for -- for example, analytics, filters and other tools to understand and add value to the ecosystem, such as Klout and Radian6.

Twitter has signaled in the past the kind of businesses it would and would not pursue, to give developers some direction on what kinds of businesses they should build. But with more than 600,000 developers to date having downloaded the tools for anything from Twitter applications to Twitter buttons on websites, stepping on toes becomes inevitable.

"Anything we do is going to overlap with something that some of them are doing," Mr. Costolo said at the AllThingsD conference in Rancho Palos Verdes, Calif.

Twitter has acquired two third-party software makers so far, Tweetie and Tweetdeck, which will be developed as a professional version for consumers. Today it also unveiled photo and video sharing, which will allow users to upload media directly to Twitter rather than use a third-party app such as Twitpic or Yfrog. Mr. Costolo stressed that those businesses adding value beyond simply accessing Twitter are the ones that have a future. He said he also doesn't see Twitter's new photo capability as being competitive with Facebook.

"I think they are completely different use cases," he said. "Twitter photos are taken and shared in the moment. Facebook is an archive of past moments."

Mr. Costolo said Twitter's user base is growing fast, but said it still hasn't found a third party that can accurately measure it. A Pew Research Center survey found 13% of U.S. adults say they use Twitter, up from 8% six months ago. Mr. Costolo called that figure low, and said that "what we see internally is we are growing much faster than that ." But because so many use third-party apps use SMS to access the service, it has been very difficult to get a firm number.

For example, Mr. Costolo said 95% of tweets coming out of earthquake-ravaged Haiti are via SMS texts from mobile phones.

He did say there are 13 billion requests for the API each day, but that includes every search by every app, of which there could be many for each user. A billion tweets are sent every six days.

Mr. Costolo also declined to divulge whether Twitter is profitable and when it would file for an IPO. He said the company has had 650 advertisers, and that 80% return for new ad campaigns, but Twitter is under no pressure to load up on ads to reach profitability. He said there are more important things to do first.

"More and more people are flocking to it because it is shrinking our world," Mr. Costolo said. "When you are shrinking the world for people this has profound economic, political and social implications. It is critical we get all this right before we optimize for near-term revenue."

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