Top Media Execs Wonder How Twitter Will Make Money

Twitter CEO Evan Williams arrives for a morning session at the annual Allen & Co.'s media summit in Sun Valley, Idaho, Thursday, July 9, 2009.(AP Photo/Nati Harnik)

(AP)

It turns out the media elite aren't so different from a lot of less affluent folks: They think Twitter is a great communications tool, but can't figure out how the online messaging service is going to make money.

The recurring doubts about Twitter's moneymaking potential cropped up again Wednesday as an exclusive media summit hosted by investment banker Allen & Co. got under way at the posh Sun Valley resort.

One of the first sessions focused on how to capitalize on digital media. Twitter quickly became a focal point of the discussion because it has emerged as one of the Internet's fastest-growing services this year.

But Twitter hasn't attempted to profit from its popularity yet, leaving everyone guessing about how the 3-year-old startup intends to pay its bills after it exhausts its $55 million venture capital.

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The participants on the panel moderated by media writer Ken Auletta of The New Yorker magazine predicted Twitter Inc. will face major challenges when the San Francisco-based company finally tries to generate revenue. Reporters were barred from the session — like all other meetings at the media summit — but Auletta confirmed the tenor of the Twitter talk afterward.

Two of the panel participants, veteran media executive Barry Diller and cable television magnate John Malone, reiterated their skepticism about Twitter's moneymaking potential in separate interviews.

"I think it's a great service. I just don't think it's a natural advertising medium," said Diller, who heads online conglomerate InterActiveCorp.

Malone, chairman of Liberty Media Corp., also believes Twitter will be hard-pressed to sell advertising on its messaging service without alienating users. Twitter's best bet, Malone said, probably is to simply get people so addicted to the service that they might eventually pay fees.

It's an idea that YouTube, the Internet's leading video service, might want to try. Malone said billionaire investor Warren Buffett confided that he enjoys watching YouTube so much that he would be willing to pay a $5 monthly subscription for access. Although YouTube is more popular than ever, it still isn't making money nearly three years after Google Inc. bought it for $1.76 billion.