This morning there was a post in BusinessWeek which discusses Twitter’s lacking monetization model and the possible ways the company could generate revenue. No matter which way you look at it, the most obvious way for Twitter to generate revenue is through some sort of advertising. Whether it’s banner advertising or in message advertising, advertising appears to be the quickest path to monetization.

So what type of advertising will be effective for Twitter? If you look at other social media destinations on the web, each service provides custom advertising solutions. For example, Facebook provides news feed advertisements (which typically have some sort of social relevance) that significantly contrast traditional banner advertisements. Meebo also provides an interesting solution and it’s one that I think Twitter should copy.

The advertisements are rich-media advertisements with the addition of user personalization. For example, Meebo’s advertising demo displays the Incredible Hulk advertisement. Users can easily switch their buddy icon to an Incredible Hulk branded icon as well as the site wallpaper. Users can also view video trailers and share those trailers with friends.

Meebo then reports back to the advertiser what sort of impact the advertisement had on conversations taking place across the service. Given that Twitter’s closest technology is chat, this form of advertising seems like a perfect solution. So far advertisers seem happy with Meebo’s offering so why wouldn’t they be happy with a similar offering on Twitter? They would!

The quickest path to monetization is to duplicate the monetization offerings of similar solutions. The only thing preventing Twitter from providing such a solution is the lack of a sales team. I’d be willing to bet that the company isn’t far from hiring one! Can you think of any other monetization solutions for Twitter?

Last night Twitter announced that they had turned off SMS notifications in countries outside of India, Canada and the United States. This means that when you update your Twitter status, not everybody will receive notifications via text. Personally, I turned of SMS notifications all together long ago. I learned my lesson after I ended up following someone who tweeted religiously resulting in hundreds of text messages a day.

ln other news, Russia appears to be expanding their presence in Georgia even though they called for a cease-fire. Now back to Twitter news. So why has Twitter shut down SMS abroad? Simple: it was getting too expensive. As Biz Stone explains:

When we launched our free SMS service to the world, we set the clock ticking. As the service grew in popularity, so too would the price.

Our challenge during this window of time was to establish relationships with mobile operators around the world such that our SMS services could become sustainable from a cost perspective. We achieved this goal in Canada, India, and the United States. We can provide full incoming and outgoing SMS service without passing along operator fees in these countries.

We took a risk hoping to bring more nations onboard and more mobile operators around to our way of thinking but we’ve arrived at a point where the responsible thing to do is slow our costs and take a different approach.

What does this mean? Well you simply won’t get text message alerts. While this was one of the core features of Twitter, if you actually began using the service regularly, I would guess that you ended up turning this off do to it being so annoying. Did you turn of SMS notifications? Have you been significantly impacted by this change?

Last night, it was revealed that Twitter was beginning to place restrictions on the number of users one could follow on Twitter. Apparently the limit was set at 2,000. Robert Scoble didn’t appear to have the same problem though and said that the limit may only be for new users. Another theory? Twitter is throttling the rate at which people add new followers.

While it’s cool to watch a continuous stream of tweets from more than 2,000 users, the real question is there is any use to following this many people. Based on what other people I’ve spoken to have said, following any more than 400 or 500 users is absolutely ridiculous because there is no way to track what is going on. Then again, placing restrictions on what users can do due to theoretical limits doesn’t make much sense either.

Who’s to say that there aren’t more than 2,000 people that I’d like to hear what they have to say? Facebook places a limit of 5,000 friends but even Facebook has suggested that this is due to technical limitations. When you develop a platform, the system should work at all sizes. While most people probably shouldn’t be following the 21,000 plus people that Robert Scoble is, it doesn’t mean you should be able to.

Do you think Twitter should be placing follower restrictions? Do you think these restrictions are a unacceptable as Apple’s iPhone application “off switch” which Steve Jobs confirmed yesterday?

Twitter has made the news official, they have acquired Summize and will be rolling it into Twitter (as pictured below). I had been skeptical of the news last week given that the sources were incredibly sketchy. Josh Chandler, a practically unknown blogger, somehow got the scoop on the story. It appears to be a freak instance that ended up turning out to be right.

Regardless, the acquisition of Summize makes a lot of sense and it will definitely be welcomed by Twitter users. I temporarily stopped using Twitter following all of their crashes and the API service not working but thanks to the new iPhone I have been using it again on a regular basis. For the time being Summize has immediately been shifted to search.twitter.com (makes a lot of sense).

If you haven’t used Summize before, you are in for a treat. This is the most user friendly search tool for Twitter out there. The search is real-time and when you enter a query, the page will automatically notify you when new search results are found. Acquisition of Summize was a no brainer for Twitter. While I may have been skeptical of the source last week, I still suggested it was a smart idea.

Looks like Twitter was listening to the community and decided to move forward with the acquisition. Great move for Twitter! It looks like things may be slowly starting to shape up for the company after a couple challenging months.

Over the past few months, Twitter has been plagued with downtime. They even went so far as to turn of their replies feature, turn off their API and turn off IM integration. The result was that some of the most vocal community members started running elsewhere. Whether it was Plurk, Identi.ca or FriendFeed, there was immediately conversations going on all over the place.

Last night new numbers came out showing that Twitter wasn’t on the decline though and instead it was actually rising in traffic. Those numbers were provided by Quantcast. I’m not so sure about Quantcast numbers though and will be waiting to see what the Compete stats show when they are released in the next couple days.

What is important here is that there appears to be a vocal community which is now active across a ton of sites. How do they maintain their activity? Well, managing their social media identities has become a full-time gig. There is no possible way to be active on all these sites and also have another full-time job. At this point I would say that the social media evangelists and thought leaders have over evangelized the products out there.

I have been evangelizing Plurk, but with FriendFeed and the multiple other sites, I no longer know how to maintain my micro-blogging livelihood. Will the evangelists kill Twitter by running to another site? Probably not. As MG Siegler puts it, “the only thing Twitter has to fear is Twitter itself.” I think sometimes we get a little too carried away with the next shiny object. If Twitter can manage to continue running and can get their act together, I think they’ll continue to be the leading micro-blogging service.

In the meantime, you can figure out if you want to follow the thought leaders off the cliff into micro-blogging bankruptcy. I took the jump. Will you?

Want a good way to build a popular blog? Make up a story! According to “the sources” of what appears to be a high school student, Summize is being acquired by Twitter. Mike Arrington’s verification model for this source? Why a FriendFeed post from Jason Calacanis of course! Mike Arrington has confirmation that the two companies were talking but no acquisition confirmation.

While it makes sense for Twitter to acquire Summize, I just don’t understand why a high school student that has three friends on Facebook and three feed readers would get this scoop. Does the acquisition of Summize by Twitter make sense? Sure but so does Facebook or LinkedIn eventually going public as well as a number of eventual certainties which have yet to be released.

In the blogging world, all you need is a hint of a rumor followed by a disconnected confirmation to ensure that the article is worth writing. Today, the article still sits toward the top of Techmeme and still has absolutely no confirmation. Do I have confirmation of the negative, that Twitter did not buy Summize? Not at all but this is the world of blogging and to confirm the negative is absolutely ludicrous!

Update
Apparently the unlikely source was in fact true. Om Malik has dug up a source to confirm the rumor. Apparently an announcement will come next week. Looks like Josh Chandler is on his way to becoming a journalist!

This morning I loaded up Twitter.com and received an error message telling me that the site was not responding. Not the good way to start the day for a billion dollar company. How did I come up with the company being worth $1 billion? I didn’t, my friend Nate Westheimer did. Nate wrote a piece suggesting that a mobile payment system would be Twitter’s ticket to becoming a billion dollar company in a short period of time.

Not a bad idea to be honest, and it is similar to the idea that Facebook has, which is preparing to launch a payment system for their platform. Want to send your friend $5 real quick for the beers they bought you last night? No problem, just text “p biznickman $5″. I hadn’t thought of this solution for Twitter previously, but this makes a lot of sense.

Micropayments are currently an area of rising importance. While I may not text my friends $0.50, I could easily see an API tying into Twitter to transfer small payments for a virtual gift or obtaining access to a premium blog post. While the concept is still foreign to many people, a text based way for transferring small amounts of money makes a ton of sense.

While Twitter doesn’t have a massive amount of market penetration, the site has become ubiquitous among early adopters and making the leap to the mainstream is not far away. So how will Twitter end up making money (if they can keep their site up)? Text based payments if they follow Nate’s advice. Do you agree that a Twitter based payment system would make a lot of sense?

Last night I was reading a post by Jason Preston about how his Twitter usage has declined drastically since the service hasn’t been working. I had noticed the same thing and after checking my details over at TweetStats it appears that my assumptions were confirmed.

If you take a look at other users on Twitter you will find a similar trend. While the top users may have throttled their Twitter usage due to Twitter downtime and general service interruptions, it appears that the site continues to attract new users. A look at Twitter’s Alexa chart confirms this. Whether or not their service is attracting new users, they seriously need to get things under control.

With yesterday’s news that the company has raised additional funding, there will soon be no excuses for the substantial amount of downtime. While I’ve decided to move elsewhere for my conversation for the most part and may not be the only one, not everybody is running for the exits. The people I’m following still appear to be active.

Unfortunately though I can rarely check my Twitter while on the go because the Twitter app on my Blackberry is now pretty much rendered useless thanks to Twitter’s limits on API calls. So where are your conversations going on? Are you still using Twitter or have you moved to other services like Plurk and FriendFeed?

My Twitter Usage

Twitter has announced the new investors that they have accepted funding from: Bijan Sabet of Spark Capital and Jeff Bezos of Bezos Expeditions (as well as CEO of Amazon). How much have they raised exactly? They haven’t said but Om Malik previously speculated that the amount was $15 million.

In their announcement blog post, Biz Stone suggests that they will soon have a sustainable business model for the company. No company has been able to figure out a way to monetize microblogging so far but apparently there is something in the works. With Jeff Bezos as an investor I’d imagine Amazon S3 ad EC2 handling some of the scaling issues for the company.

That’s one of the primary reasons Bezos invested in Animoto, a company which today announced they have now expanded their service offerings for businesses. It will be interesting to see if this team can pull off the impossible before everyone runs off to Plurk. Ok, maybe that won’t happen but the company definitely has a challenging road ahead. Congratulations to the Twitter team and good luck on building a more powerful product!

I gotta be honest. For the past couple weeks I’ve been using Plurk a ton. The initial reason was downtime from Twitter but it increasingly became about the much more active community. Then today I read about developers bailing on Twitter because of their unreliable API. That’s a big problem but then again not even Plurk has a functioning API.

The reality is that developing a micro-blogging platform is a lot more difficult then anyone anticipated as far as I can tell. Twitter has throttled API access, making it extremely difficult for any developer to build a reliable application on top of the service. A couple months ago, I launched an internal directory for this site but the Twitter API slowed down the service significantly.

While I’ve since figured out a workaround (which has yet to be implemented), having to develop a workaround due to an unreliable API just doesn’t seem like the right solution. Some seem to think that Twitter is going to die thanks to their failing API. While I’ve been using the service less frequently, many of my contacts are still using the service regularly to stay updated with what’s going on in the digital community.

Many more are confused with which service to use and have instead decided to use all of them by taking advantage of the Ping.fm service which updates your status across all your networks. Whatever the solution is, something has to give in the world of status updates and micro-blogging in general. For some reason I seriously doubt that this will mean the death of Twitter. Have you started using other services as well or are you still a faithful Twitter user?