Twitter & Current TV: We Can Make Money (We Think)

Written by R. Scott Raynovich - Light Reading

Thursday, November 6. 2008 at 07:45 PM EST Post a comment

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SAN FRANCISCO -- Web 2.0 Summit -- There's something awkward about talking about the Web 2.0 market when the economy is imploding. That's because so many companies have dubious profit models. Twitter and Current TV addressed the issue head on, talking money in an interview here yesterday.

In an interview with New Yorker media writer Ken Auletta, Twitter founder Evan Williams said he wasn't "losing any sleep" about money, and he said his company is entering the stage of picking among several good business models to generate revenue.

Current TV, which is in a different position of already having several revenue streams but trying to develop profits, has "been profitable on an EBITDA basis" in the past and will work out more revenue models to become more profitable in the future, according to founder Joel Hyatt.

Current's Hyatt didn't have anything to say about Current's failure to make it to IPO (it filed a registration statement in early 2008 before the stock market collapsed), describing his company as a leader in the field of combining broadcast TV with Web-based, user-generated content.

"We're changing the paradigm of the media business by allowing media users influence and to create the content that's consumed," said Hyatt. "That's a very big deal."

Hyatt also didn't go into any detail about the elusive "profits" -- repeating claims he's made in the past that it has been cashflow positive on an EBITDA basis. As of the IPO registration -- the last publicly available information -- it certainly wasn't profitable in a traditional sense.

According to the registration in January of this year, the company reported $63.8 million in revenue in 2007, which was a 68 percent increase from the year before. But its operating expenses also increased. It said it had a net loss of $9.9 million in 2007, compared with a $7.6 million loss in 2006. As of December 31, 2007, it had an accumulated deficit of $31.9 million. The company paid Hyatt's partner, Al Gore, about $1.05 million in 2007 including salary and bonuses. Hyatt was paid about $1.04 million.

Hyatt pointed out that part of Current's business -- cable television -- is an established business model, whereby they collect fees from both content licensing and advertising. He said the company has been profitable in the past but did not say what the company's current profitability is.

On the Twitter side, Williams said that revenue hasn't been much of a concern, as he described the company as still young. "I don't think it's as big a dilemma as it will be for us. We haven't focused on it yet. We believe that Twitter creates a value as a new communications channel that has unique qualities."

Williams said that the successful business models are there -- it's just a matter of picking the one that makes the most sense.

"Our model isn't advertising per se," said Williams. "Advertising is more and more a difficult proposition. We're going to insert a message. Twitter's model is quite different. There is commercial information, but it is entirely opt-in. If they don't want it they won't receive it. We could put advertising in the content, but I don't think we're going to do that."

Auletta also took a shot at Twitter culture, questioning the social value. The exchange drew some laughs:

Auletta: There's an argument that some make about Twittering, saying you are going to the bathroom now, having dinner... They feel like it allows you to become familiar with what friends are doing but that they lose the intimacy.

Williams: Twitter is not a replacement for human contact.

Auletta: But can it become that?

Williams: I suppose it can for people who are dysfunctional anyway.

(Audience laughter)