Twitter sees tools, not ads, for revenue

NEW YORK (Reuters) - Twitter is working on various ways to make money from its fast-growing microblogging service, but advertising is an option that is not currently being considered.

Twitter co-founder Biz Stone said on Monday that the company is developing various add-on tools and services for the businesses and professional users of Twitter, which could create a revenue stream for the company. He said Twitter plans to introduce some of these tools by year end.

But Stone dismissed the notion of selling advertisements on the popular service at this time, even though ad revenue is the main way most Web start-ups manage to stay in business while keeping their service free for consumers.

"There are a few reasons why we're not pursuing advertising -- one is it's just not quite as interesting to us," Stone told the Reuters Global Technology Summit in New York via videolink from San Francisco.

Stone said serving up ads alongside Twitter messages could also annoy users. And he said Twitter doesn't have, and isn't seeking to hire, the staff to create an advertising-based business.

"There are no people at Twitter who know anything about advertising or work in advertising. So we don't have anyone there to make or take those calls," said the executive, whose real name is Christopher Isaac Stone. He acquired the Biz title based on a childhood mispronunciation of his name.

DOUBLE STAFF BY END-2009

Twitter, a two-year-old, venture capital-backed company that lets people send 140-character messages, or Tweets, has enjoyed explosive growth in recent months. Visitors to Twitter jumped 83 percent in April from the previous month, to reach 17 million, according to comScore data.

Stone co-founded Twitter with Evan Williams, who is the chief executive, and Jack Dorsey. Venture capital backers include Spark Capital and Union Square Ventures.

Twitter is searching for ways to make money from its popularity. Stone said the San Francisco-based company now has more than 40 employees and plans to double its staff by the end of the year.

The company turned down a $500 million acquisition offer from privately-held social media firm Facebook last year, sources told Reuters earlier. According to media reports, Internet search giant Google Inc has also held talks with Twitter about a potential deal.

During Google's quarterly earnings results conference call last month, CEO Eric Schmidt said Google would be happy to pursue an advertising partnership with companies like Twitter.

Stone said on Monday that Twitter would remain free for consumers and businesses, and that the company's main focus at the moment is developing new features for commercial users, such as "lightweight analytics" and a directory of commercial accounts that would verify that businesses on Twitter are legitimate.

He also said the company has had talks with cell phone carriers to make sure that Twitter works on their text messaging networks, and said it was possible Twitter could strike revenue-sharing agreements with some of the carriers.

Twitter closed a round of financing earlier this year pegged at $35 million by media reports, and Stone said the company was not under any pressure by its investors to earn a profit in the near future. He also dismissed the notion of an initial public offering soon, saying the company was only two years old.

Stone would not disclose the rate at which Twitter is burning through its funds, but said its model allows it to continue operating in its current fashion for the next couple of years.

He acknowledged that Twitter's rapid growth cannot last forever.

"We were joking in the office that if this growth rate continues week over week, we'll run out of people on planet Earth to sign up to Twitter by the end of the year," Stone said.

(For summit blog: blogs.reuters.com/summits/)