CoTweet Charging for Services Creates Opportunity

There is a common theme amongst many internet start-ups.  And it’s not new – Microsoft used it to launch DOS and Windows back in the day.

Here’s how it worked back then.

We’ve got a piece of software (now website) and nobody knows about it.  So how do we spread the word and get people to use it and get their feedback?

Well, some smart guys like Rowland Hansen, the guy who actually came up with the name for Windows, said, “All we have to do is figure out who the influential people in the community are, get our software into their hands, and get them to use it.”

So Rowland started attending local computer user groups, they were meet-ups where people would show off hardware that they built, applications that they wrote and trade software – also known as warez.  Those were the good ‘ol days.

While Rowland was the the meetings, he’d observe the attendees and figure out who the “influencers” were.

He’d then start a conversation with them and tell them about this new software coming out and he’d explain what it’d do for them and how it worked.

He’d then give them a copy of it and make them swear not to share it with anyone.  They were to be the “exclusive user” of the program and the only one to use it.

But Rowland knew something.  He knew that the following week, when everyone got together, this user would demo the software to the group.  And he knew after the demo, EVERYONE would want a copy.

And that’s the how Windows beta was originally launched.

Today we have the same model, but it’s on the Internet and it comes in the form of being part of a “Free Beta Test Group”, or a “Free Trial”.

All the while, people start using the applications and in exchange, the developers hopefully learn from watching how people use it and start making decisions, striking strategic relationships and developing improvements based on the markets feedback.

But then something happens – and it tends to piss off a lot of the early adopters of the application.

The Free Ride ends – and those who were using it are left with the option to stop using it, or pay.

At times, these companies do what they can to soften the blow and offer the exclusive beta testers a deeply discounted rate for a duration of time for their help and loyalty.  At other times, they don’t for several reasons.

• They have sunk a ton of cash into development and service and they simply can’t afford to “give-it-away” anymore
• They don’t want to devalue the brand or application
• They discover that the application is worth far more than it was originally thought to be and well, they just don’t want to devalue the brand.

Now, I’m sure I’m leaving several reasons out here – but you get the idea.

But something great happens for everyone when a company starts charging money for what they do…They become a real company.

And real companies are able to grow, change, adapt to new markets and actually support their clients.

Another thing happens as well, and CoTweet is an example of this.   If CoTweet is able to successfully charge for their services, they:

• Are able to pay back investors
• Can hire more staff
• Provide even a wider array of services at a level not before possible.

And when investors get paid, investors look at things differently…And this is good for anyone who is developing applications based on Twitter’s platform.

You see, developing on top of Twtter is very risky. Twitter itself being a free service can pretty much do anything.

They could stop the service for no reason at all – and yes, I’d agree with you that this is unlikely, would be foolish, etc. but people are irrational beings.

Someone could acquire them, roll-up their users and migrate them to a similar but different platform, a platform with a walled garden more accustom to Facebook.

And the list goes on.

So back to my point though, when investors get paid, they feel more comfortable investing in other like-type ventures.  And as a guy who has company that is developing apps for Twitter, I think it’s great.  (Our latest start-up is called Tweetmatix and it is a sophisticated but easy to use Twitter connection building tool for Location Based Small Buinesses.  Check it out.

It gives all of us piece of mind that others, other than those who spam the heck out of Twitter can create something that can grow.

So don’t be bummed that Twitter apps are costing money – because if you are using them to make money, it’s only right that you support those who are providing the tools which are helping you find your success.

Best Regards
John

* UPDATE: Another factor that I forgot to mention is that this is CoTweet’s first public “for pay” offer.  It is very likely that after acquiring the commitments from the larger brands that are using them, that they will offer with a myriad of options or levels of service at different prices.  Possibly even continuing the free version.

Tagged as: Business, CoTweet, DOS, Microsft, Twitter