As Google and Microsoft Vie, Twitter Could Turn Tweets into Dollars

Oct. 9, 2009— -- With Google and Microsoft both looking to ink a deal with Twitter for its real-time data, the microblogging company could have finally found a way to turn tweets into dollars.

At the same time, the titans of tech may have found a way to boost their real-time search efforts in the midst of their raging search war.

The intense rivals are in separate talks with the new online darling Twitter to set up their own data-mining deals , says a report from The Wall Street Journal 's AllThingsD Web site. The "advanced talks" are said to be over licensing deals that would allow them to integrate real-time Twitter feeds with their search engines, Google's search and Microsoft's Bing.

None of the three companies would respond to requests for information about the reported negotiations.

AllThingsD reported today that the individual deals could mean upfront payments worth several million dollars, or involve revenue-sharing plans.

"Ah, this could be a way for Twitter to make some money , and maybe more than just a little money," said Dan Olds, an analyst with The Gabriel Consulting Co.

"It finally means a business model for Twitter, or at least the beginnings of one. And, of course, it means real revenue, which is very important. Not just in licensing revenue from Google or Microsoft, but also in potentially getting a piece of the action on an ongoing basis. So there could be considerable upside here for Twitter," Olds said.

Industry watchers have been waiting not so patiently for Twitter to come up with a business plan and actually start making some real money.

Twitter co-founder Biz Stone has said for months that the company has wanted to focus on building features into the site before worrying about the business end of things.

If either, or both, of these deals go ahead, they would solve some big income issues for Twitter.

"The data is valuable," said Ezra Gottheil, an analyst at Technology Business Research Inc. "It allows the search engines to front-end Twitter. And it also clues them in to what people on the Web are talking about."

"What people are now twittering about is what people are now interested in...," Gottheil said. "So the engines could include tweets as indexed content, either through an option, a separate search page, or a search window."

Gottheil said he doubts that either Google or Microsoft would allow the other to have the only license with Twitter. If one deal goes through, the other would most likely follow, he said. In the ongoing battle for supremacy, neither company would want the other to gain a real-time search advantage.

"For Microsoft and Google, it's more ammunition they can use to beat the hell out of each other," said Olds. "It's probably more important for Microsoft to secure a deal than Google, but I would expect that there will be deals with both of them..."

"The hype around Twitter currently has it being considered to be one of the very best ways to gauge what people are talking about and what they're interested in. This is a direct benefit from Twitter becoming so large. It's the value of a huge user-footprint," Olds said.