Breakout

Here’s How Twitter Will Make Money: Henry Blodget

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Twitter (TWTR) is a media company, it makes its money through advertising. It sells little advertisements that look just like tweets that companies can buy and they can fix in your twitter stream, and they sit there and you can interact with them the way you interact with other tweets.

And Twitter charges a lot of money for these adds; the company should generate about $600 million in revenue this year, so ultimately Wall Street thinks that Twitter will be a very, very, profitable company.

One of the big differences between Twitter now and when Facebook (FB) went public is that Facebook was already very profitable. Twitter, if things go well, should go though a period where suddenly it turns profitable, and it gets more and more profitable every quarter, surprising the skeptics who are crying the company can’t make money.

Related: A Peak Behind the Curtain of IPOs Like Twitter’s

Another question is whether Twitter might get into other revenue streams in addition to advertising. The answer is they’re probably not going to start charging users, i.e., you, for a subscription.

It’s possible that Twitter could get into the data selling business to other companies. Television companies, for example - we’ve all gotten into the habit of tweeting when watching TV shows - that data could be very valuable to TV companies. It would be very valuable for advertising companies, so it’s possible Twitter could get into the business of selling that data to other companies.

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