First let me say this will be my last Twitter post of the summer.  I don’t care if a bunch of doctors somehow tweet their way to a  cure for cancer I will be taking the summer off.  There has been too much Twitter for Tom as of late. 

That said, I read this article from CNet’s Caroline McCarthy and it crystallized, for me, why Twitter has a bigger problem than being overhyped.   A quote…

But there's something nobody's really saying about Twitter throughout all this: Not everyone is going to use this service. Far from it, in fact. Its mainstream impact could very well have nothing to do with TweetDeck, hashtags, or even the name "Twitter" itself.

The Business Insider did a nice by-the-numbers of exactly what Twitter's explosion amounts to: 60 percent of users quit after a month, ten percent account for 90 percent of all "tweets," et cetera. All these numbers point to one fact: Twitter is high-maintenance. Even if you're only using it to read the latest updates from a few publications and some of your favorite bands, you're still reading about them in short bites that flow in a relatively inefficient manner. Parsing the noise takes effort; participating in it takes even more.

Compare that to Facebook: you can create a static profile, check in every few days, get an e-mail alert when a former high school classmate has added you as a friend, and you're all set.

Now I don’t have any problem with Twitter.  I understand why some people like it and I’m happy that they’re happy.  I simply think the theories of world domination are overblown. 

In that vein I think Twitter will always have a passionate user base of about 10 to 15 million people (when all is said and done).  It is the perfect tool for any niche where those belonging to the niche are obsessive (Celebrity Gossip, Tech Circles, et al)

But this is where I think Twitter has a huge revenue problem.

There’s no way for Twitter to make a large amount of money PER USER.  Pay services on the clients don’t work and pay services to businesses (which seems to be Twitter’s plan) simply won’t account for all that many accounts.

At the same time, Twitter is difficult to run (see here , here and here) and as anyone who has been around a networked PC environment knows “difficult” almost always equals “expensive”.  Especially when that network environment is getting regularly bombarded with traffic.  Again the service appeals to those who are obsessive in their use of it.

Basically it’s a service for people who hog resources like crazy which makes it expensive to run.

But wait, there’s one more problem.  On top of all those resource hogs Twitter has to have an infrastructure that’s prepared for massive influxes from outsiders.  99% of people aren’t interested in a celebrity’s twitter page.  But if that same celebrity finds themselves embroiled in a sex scandal you’re going to have everyone and their brother rushing to check out their Twitter page. 

So the service is prone to reader influxes and needs an infrastructure which supports that.

All that leaves you with a service that’s expensive to run and will never grow to the point where it’s able to support itself by skimming a little off the top of a huge user base.  That’s Twitter’s real problem.

Once the VC money dries up they’ll have to find a way to support themselves on a limited amount of regular users.  This is an angle almost no one is covering in the pundit class because they’re so drawn in by Twitter being “destined to conquer the world.”  For Twitter’s sake I hope those pundits are right.  Because if Twitter doesn’t manage the conquer the world they are royally screwed.