Twitter's secret business model and its implications

I started playing with Twitter last week during MAX. It's really quite addictive, I've found. For those of us who spend the majority of our days (and nights) in front of computer screens, Twitter is a very cool way to stay in touch with others.

Twitter rejected a decent offer from Facebook and says their "secret business model" might be worth well more than the Facebook offer. That made me wonder what the secret model was, and I got to thinking about it. Here's what I came up with:

1. They want to sell ads on Twitter traffic. Bingo. It's a very interesting model because individual users with lots of followers would provide much larger revenue streams than people with fewer followers. Does anyone know if any celebrities are on Twitter? Just wait until tweens all get Twitter mobile clients and the next Miley Cyrus-esque Disney star comes along. Which leads to two interesting questions-
could celebrities with lots of followers demand royalties from Twitter for their daily chatter?  And even more weirdly, could a celebrity make a living just being on Twitter? Could there be people whose entire lives and fortunes revolve around their success on Twitter? 

 2. They might mine the data from Twitter for psychographics and deliver ads to them based on that rather than on pure popularity- or perhaps through a blended methodology of some sort.

Whatever their actual plan, it seems like too fat a target for them to resist the opportuntity. That traffic could be worth more than Google. I wonder, are the brains at Google secretly working on a competitor to Twitter? They must be, they would be foolish not to have seen this coming. The big IM client players - Skype, MSN, Yahoo, and AOL could morph their platforms into something like Twitter, and if they can maintain the open compatibility that they have now, they could creae a huge Twitter-like ecosystem overnight. All the IM client players would benefit through ad revenues as messages were delivered from followers on one network to the people they were following on another network.

 Who knows if it will happen, but it certainly looks like there could be a big shift in ad revenues from services like search to what I see as the second coming of push services. This time they might actually work.