Twitter is about to become a business.
Kara Swisher says the company is in talks with both Microsoft AND Google about licensing its tweet-stream so the companies can include “real-time search” in their search engines. The deal could include payments of “millions of dollars” from both companies and/or a revenue share on the results.
Several aspects of this are very smart from Twitter’s perspective.
- The tweet-stream data is valuable, and Twitter might as well cash in on it. Twitter also, coincidentally, needs a business, and this is a good, non-intrusive place to start.
- It’s far smarter to licence the data to Google and Microsoft (and Yahoo) than try to build a broader competing search engine. Licensing the stream will allow Twitter to keep doing what it has been doing–maintaining an open platform–and focus on what it does best.
- Google and Microsoft will do a far better job of monetizing the search stream than Twitter could have. As Google demonstrates every day, scale matters in the search business.
- By cutting deals with BOTH Google and Microsoft, Twitter makes itself more ubiquitous, thus increasing the value of its feed.
- The value of the feed will increase massively in a couple of years as tweeting becomes more popular and if Twitter becomes the industry standard. (It’s almost there now.)
If Facebook wants to continue to try to compete with Twitter in this particular business, it will have to cut similar deals quickly.
[A]ccording to sources familiar with the situation–Twitter is in advanced talks with Microsoft and Google separately about striking data-mining deals, in which the companies would licence a full feed from the microblogging service that could then be integrated into the results of their competing search engines.
Sources said a number of scenarios are being discussed to compensate Twitter for its huge and potentially valuable trove of real-time and content-sharing information, generated from the data stream of billions of tweets of its 54 million monthly users.
That includes a number of structures, including a payment of several million dollars to Twitter, along with various revenue-sharing proposals that would give Twitter a piece of the revenue made from search results.
The deals, stressed sources close to the situation, are non-exclusive, especially because Twitter’s management is keen to remain independent and also non-partisan in the growing search battle between Google (GOOG) and Microsoft (MSFT).
That means Yahoo (YHOO)–which recently struck a search technology and online advertising partnership with Microsoft–could also licence Twitter’s feed to make its search results even more robust, although Boomtown could not determine if the company was in talks with the San Francisco start-up.