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Joi Ito: Twitter makes money in Japan

The US/Europe-based Twitter craze has plenty of users, but no apparent revenue streams

For those not aware, Twitter is the most successful micro-blogging/presence product in the world of Web 2.0. By allowing message postings of only up to 160 characters and delivering messages over SMS systems, Twitter has gained an influential user base created huge amounts of buzz in the tech world. The problem, however, is how to pay for the cost of all those SMS messages. (For now, it appears to be paid for by the largesse of Venture Capitalists.)

In Japan, however, revenue is built into the model from day one

Entrepreneur Joi Ito of Digital Garage explains how - in sharp contrast to Twitter in the USA - he launched Twitter in Japan with a revenue stream from advertising.

Commercial messages must be opted-in, short and engaging

Toyota is the first advertiser and they have a small square banner on the homepage telling Twitter-ers about the Toyota Twitterstream. The idea is to get companies to run a Twitterfeed encouraging their fans can follow. Fans get to see what is happening at the company and the companies can see who their fans are and offer them special events and offers. The key for companies is to have a Twitterfeed that remains interesting enough to keep customers involved.

To have advertising, it must be included from the start of the service

Since Twitter in Japan had advertisements from the beginning, people could not object to a breaking of the social contract, Joi said. “Usually it is just a small number of very vocal people who speak against a move such as this,” Joi said. “We had a few grumbles from people who had used the US-version, but nothing significant.”

Social media CAN support advertising

If you look at last.fm - a company which Joi said he has been involved - the stream of music sent over to like-minded listeners can be seen as passive advertising for the groups whose music is shared. Similar to a broadcast radio, last.fm allows musicians to advertise to you, but they are doing so via a social media system. “The last.fm system becomes a kind of automated word of mouth from one friend to another.” Another example of social media successfully incorporating advertising is Blyk, the British-based mobile phone company that gives away free minutes in exchange for users interacting with advertising. One of the most frequent requests on Blyk’s help line is people requesting more interaction with the advertisements.

But advertisers (and musicians) need to socialize their messages

The difficulty is that Toyota - and any other advertiser using Twitter - will be forced to produce material that actually interests users. The level of tolerance for old-style push advertising will be very low among the Twitterati - and they will not hide their views. A good example how to do it right was a GM blog run by a vice chairman - perhaps called fast lane (anyone know?) - that came across as a social gathering of people chatting around a fireside with the man making the product they adored. The key is striking the right conversational tone.

Could Wikipedia take ads?

If Wikipedia took ads, much of the fundraising for infrastructure would be unnecessary. It is, however, extremely difficult to convince a community to alter the social contract. The Wikia commmunity, on the other hand, accepts ads relevant to their narrow topics. If you are the Buick club, you are happy to have GM ads on your site. It feels like sponsorship, like a racecar driver with ads on his jacket. Advertising within social media needs to thought of in terms of team sponsorship-style approach.Note: Apologies for the background noise in the video. It was friends at Martin Varsavsky’s Techtalk Menorca playing the WiiFit.

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Technorati Tags: digital garage, Japan, joi ito, techtalkmenorca2008, twitter

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