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Should Twitter Charge the 1%?

Stocks in this article: FB

On the surface, charging Twitter's elite may sound like an argument intended to incite enthusiasts of the platform. In reality, the company will face big tradeoffs on what it is willing to do to generate revenue and eventually earnings to justify its valuation.

If Twitter isn't willing to charge any users for their handles, the company is likely to redouble efforts on promoted Tweets and data licensing both in the U.S. and internationally. Those platform costs are more likely to be borne by the masses.

Promoted Tweets are more targeted at the anonymous Twitter user than social media luminaries like Katy Perry.

"People are at the heart of Twitter. We have more than 230 million MAUs from around the world. People come to Twitter for many reasons, and we believe that two of the most significant are the breadth of Twitter content and our broad reach. Our users consume content and engage in conversations that interest them by discovering and following the people and organizations they find most compelling. Our broad reach allows our users to express themselves publicly to a large global audience, and participate in global conversations," the company states when defining its value proposition to users.

There is no doubt that Twitter is a pioneering and valuable platform for media, entertainment and news consumption. Even anonymous users benefit from the content that is put out on the platform and for access to compelling figures on the social network.

It is less clear, however, that Twitter allows the ordinary user to "express themselves publicly" or "participate in global conversations."

If Twitter shows signs of falling short on user growth or user engagement, it might signal to investors that the ordinary Twitter user or the median user account has lost interest or is not really that engaged.

Nowhere in Twitter's IPO documents do they disclose the engagement of the average account. How many followers do Jane and Joe Public have? How many retweets do they get? How many conversations do they truly participate in?

These seem to be the central issues that Twitter still has to prove, as the social network tries to take on larger competitors such as Facebook (FB).

Facebook may not need to charge user accounts because the average user still derives benefits from maintaining connections to their real-life networks of friends, co-workers and school-mates.

Twitter, however, markets itself as offering more to users. If the company shows signs it is falling short on those promises, it may want to reconsider who is benefitting from the service.

Clearly there is an opportunity for Twitter to drive revenue from its 1% or its 0.1% if the company finds itself hamstrung to prove its value to the 99%.

-- Written by Antoine Gara in New York

Follow @antoinegara

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