Twitter spent most of 2009 reiterating the fact that it was not focused
on monetization. And its current monetization strategy is proof of that fact. Throughout its explosive growth last year, Twitter allowed swarms of developers to release products that built on Twitter’s existing features. Now Twitter wants to be the one profiting from its popularity. And those developers are out in the cold. 

The company today announced that it will shortly ban all third party ad platforms from Twitter. If developers weren’t already fleeing from the service, they’ll go running now.

In conjunction with its ad platform Promoted Tweets that launched last month, Twitter warned developers that it would be creating more services in house. First to be hurt were cellphone client creators. But this new announcement is more sweeping.

Today Twitter’s COO Dick Costolo announced in a blog post that third part ads will no longer be permitted in the Twitter stream. According to the post, the decision is all about quality control:

“It is critical that the core experience of real-time introductions and
information is protected for the user and with an eye toward long-term
success for all advertisers, users and the Twitter ecosystem. For this
reason, aside from Promoted Tweets, we will not allow any third party
to inject paid tweets into a timeline on any service that leverages the
Twitter API.”

It makes sense that Twitter would want to start getting a cut of the ads appearing in its stream. But Costolo argues that it’s all for the user experience:

“Third party ad networks may be optimized for near-term monetization at
the expense of innovating or creating the best user experience. We
believe it is our responsibility to encourage creative product
development and to curb practices that compromise innovation.”

This sort of thing is exactly what developers had feared. However, Twitter is hoping that clarifying its strategy will thwart a backlash.

To that end, Costolo clarified Twitter’s guidelines for what it will and won’t do in the future:

1. We don’t seek to control what users tweet. And users own their own tweets.

2. We believe there are opportunities to sell ads, build vertical
applications, provide breakthrough analytics, and more. Companies are
selling real-time display ads or other kinds of mobile ads around the
timelines on many Twitter clients, and we derive no explicit value from
those ads. That’s fine. We imagine there will be all sorts of other
third-party monetization engines that crop up in the vicinity of the
timeline.

3. We don’t believe we always need to participate in the myriad ways in which other companies monetize the network.

But the main problem is that developers don’t know when and where Twitter may choose to put them out of business. As Costolo notes, that was one of the biggest issues that came up during Twitter’s developer conference in April:

“We heard loud and clear at our Chirp Developer Conference last month
that developers desire clarity—clarity about what we believe Twitter
must provide, what Twitter looks to the ecosystem to provide, and where
the lines, if any, are drawn.”

The new policy doesn’t make it explicitly clear where Twitter will step in in the future, just that it won’t always step in. For developers, that is not a vote of confidence. As Peter Kafka points out, “It’s an open invitation to them to search for other partners. Like, um, Google.”

With this new policy, Twitter will still allow anyone to serve ads around Twitter content. Mostly because it would be futile (and bad strategy) to prevent people from sharing tweets around the web.

But all ads served within the Twitter stream will send revenue to Twitter. It makes sense that Twitter would want that control (and earnings). But it proves that the company is taking a backwards approach to monetization. 

The company missed an opportunity by letting so many others develop in spaces where it could have taken control. It’s grabbing control back now. And chances are it will come up with a profitable revenue strategy this way. But acting like an open network and then stepping on people once you have a strategy is not a good precedent to develop. 

Image: Gizmodo