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Twitter's Business Model Search Could Be In Vain

Twitter is starting to show signs of a business model, BusinessWeek reports. In April, the microblogging service added a big banner ad to its Japanese home page. On Aug. 7, Twitter initiated another change, limiting the number of people its users could follow to about 2,000. Seven days later, Twitter pulled the plug on outbound message delivery to mobile phones via SMS in all countries except the U.S., Canada and India.

While these may be signs that Twitter is trying to squeeze out a business model, the BusinessWeek article basically says, "don't hold your breath." Metcalfe's Law, for example, doesn't apply here. His famous observation that communication networks tend to expand exponentially with each addition drove many of the sky-high valuations of Web companies in the late 1990s.

But not all of these connections are created equal, the article says, citing research by a pair of linguists named Zipf and Dunbar. They found that each subsequent thing in any series (like your Twitter contacts) has predictable diminishing value. Hence, your spouse is your most important contact, followed by your best friend, your boss, colleagues and the legions of casual friends who follow you. "Inside the 2.3 million-strong Twitter network, not all connections are equal, and some will never be used at all."

Read the whole story at BusinessWeek »

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