broadstuff

I picked up the point that Radiohead will not be delving again soon into the world of FreeConomics from two blogs I follow. Sadly the blogs misunderstand the game theory here. When Radiohead say that:

"I think it was a one-off response to a particular situation," Yorke said of the band's downloading policy for the album "In Rainbows."

"It was one of those things where we were in the position of everyone asking us what we were going to do," he said. "I don't think it would have the same significance now anyway, if we chose to give something away again. It was a moment in time."

...they are not saying that it worked wonders and the wondered why they shouldn't pursue FreeConomics from here on, as all the Web 2.0 orthodoxists would like. No, they are saying that it is a less economically advantageous outcome than flogging the stuff for cash, even with all the piracy. But my blogfriends somehow misinterpreted these signals:

Sarah Lacy:

Others are reporting today the news that Thom Yorke of Radiohead is (kinda) backtracking on the free release thing (vaguely). Here's a post on Mashable that says what artists should do. HINT: charge nothing or very little. I agree. I can't think of the last time I paid for music and yet -- magically! -- I have more of it at my fingertips than ever before.

But be forewarned, if we keep going down this free path, ads and product placements are going to increasingly dominate music and videos. Really-- wasn't that what Lip Gloss was all about anyway???

Mashable:

There’s a number of opinions on how bands should distribute (and profit from) their music; here’s mine. A band should:

a) charge very little or even nothing for the actual digital copies of their music, especially if it’s quality is lossy (MP3). Digital copies of music can be infinitely copied at zero cost, and therefore their actual value is inherently very small.

b) make sure to offer a variety of choices for purchasing their music, including some added value - CDs, LPs, limited editions, signatures, t-shirts, stickers, concert tickets, vouchers - for the more expensive versions.

c) cut out any middlemen which don’t really provide value to the customer.

No Web 2.0 devotee could disagree with Sarah. Except that economically it is cra.....won't work. As I wrote earlier today in my post on Lessignomics, there is a total contradiction in terms in the belief system of most Journo 2.0's when it comes to the actual economics of Web 2.0. How do you expect to have near-free music, and then NOT have your music and videos dominated by placement ads and so on?. Something (or someone) as they say, has gotta give. Money. Content creators in the real world find no-one is willing to give them a free lunch while you are eating theirs!

And Mashable's advice is very right-on and sensible to those living in Web 2-land, but those stupid musos by and large aren't buying it and aren't doing it - because it doesn't f*c...it is less beneficial than you may suppose unless you already have a large customer base to mitigate the inherent supply chain costs of shifting physical product....(maybe musicians should be advising bloggers to sell T shirts and limited edition collections of their finest posts to make up for the free content deficit )

This is not to say that the Labels are not evil money grubbing corporate capitalists etc etc - they are, they are - its their job after all. But Free means Free, so it also means the poor old Muso doesn't see the $1 or so per CD she currently makes.

(Update - now this is interesting - ASCAP looks like it has won an agreement of its own, without the Labels:

The United States District Court for the Southern District of New York today made public a decision in the proceeding to determine reasonable license fees to be paid to the American Society of Composers, Authors and Publishers (ASCAP) by AOL (Time Warner Inc., NYSE: TWX), RealNetworks Inc. (Nasdaq: RNWK) and Yahoo! Inc. (Nasdaq: YHOO) for their online performance of musical works.

ASCAP represents more than 320,000 songwriter, composer and music publisher members. It does not represent, and this decision has no relation to, the rights owned by record companies)

In fact the only blog comment I saw even vaguely "following the money" here on all this was from The Register:

Despite investing £20,000 in new servers to cope with the demand for the digital preview, Radiohead benefited from the "honesty box" release in several ways. There's the one I've mentioned: the bet that people would pay twice - once for the preview, and again for the physical release.

There was an instant cash-flow dividend, too. There was no waiting around for a royalty statement from the Accounting Department of the Mega Label. And best of all, the renewed interest from overseas - particularly the United States - gave the band far higher royalties than they'd gain from a physical release with a major label.

So although fewer fans put less money into the honesty box than many people claimed, it didn't really matter. Enough had done so to recoup the one-off costs - and the album was available as a sampler for weeks.

But one-offs, by definition, are not to be repeated. Neither Trent Reznor nor Coldplay have generated anything quite like the publicity that In Rainbows digital preview enjoyed.

Without the Freetards, the publicity coup could never have happened. Even the most inventive major label marketing genius with the biggest budget would have struggled to get such an indifferent "product" to the top of the charts on both sides of the Atlantic.

And the real money, you'll note, is in the CD, and getting fans to pay twice. Which looks a lot like the Old Business Model to me. ®

Now despite the Register's somewhat disrespectful tone (which we would never condone, of course), this analysis actually does explain fairly precisely why Radiohead will go back to the Olde Ways. Until they need to pump up da volume (of sales) again sometime

Ars Tech takes to task those scoundrels who would criticise St Lessig , but makes a very interesting point in the process:

....the Progress and Freedom Foundation is stirring dull roots with spring rain, unleashing a fresh attack on Lessig's four-year-old book Free Culture in a paper released Monday by senior fellow Thomas Sydnor. The argument itself is frankly bizarre: Sydnor brands Lessig's views on copyright as a species of "quasi-socialist utopianism," and he peppers his critique with breathless invocations of Soviet dictatorship and Orwellian panopticons. But the piece also provides potent testament to a fissure within the contemporary right, as Lessig's ideas find a friendly audience among some libertarian public intellectuals, leaving the content industry with a shrinking stable of credible defenders.

Its probably wise to avoid anything that has words like "panopticon

Actually, having read most of Lawrence Lessig's stuff, I think he is in the main correct and has done a tremendous job, though the accusation of a certain amount of Utopianism is not entirely unfair, he definitely has a viewpoint - but to Lessig's credit he does tend to examine every issue in great depth. Anyway, that's not the interesting bit - its the fissures referred to that is interesting, as they note at the end of their piece:

....the debates over intellectual property in the digital era are creating a second divide within the free-market camp, between corporate interests and the libertarian intellectuals and pundits who have so often provided the theoretical support for business-friendly policies. If libertarians, as Lessig puts it, "start to defect" from a strong-IP stance, copyright incumbents may be left with only their wholly-owned-subsidiaries as defenders.

This is quite insightful, and it implies a re-alignment of the Politico-Economic plates. And that in itself is interesting. In our workshops on Digital IP issues (one of Broadsight's team, Paul Lancefield, is an expert on IP and Patents) we do go into the history of IP, and one of the lessons from history is that IP typically follows the shifts in society - ie it lags reality. Thus I think this schism - and noting also the waves of DRM receding and the first stirrings of a review of the US Patents system - indicates that we are now possibly seeing the high watermark of the Draconian IP Lobby, and the Turning of the Tide.

However, in all seriousness, this is exactly when one needs to say to the other side, the "Free Societals" that its time to "hold on" - because pendulums tend to overshoot both ways, and I do think some of the proponents of Free IP are not exactly into IP freedom as a humanitarian exercise, but into Free (as in costs nothing) for their own self interest. Just as we are seeing a schism in the defenders of IP, its not clear to me that their opponents are all pursuing the same benign objectives as Mr Lessig.

The "Free IP" lobby do also need to have answers to issues their own viewpoints raise.

We need to consider our past experience - the Tragedy of the Commons is something that plagues humanity still in some arenas (most Green issues are Tragi-common issues), so its not a great idea to increase it.

In addition, abolishing nearly all IP protection will-he nill-he is akin to rescinding large amounts of helpful social capital we have built up, painfully, over the centuries - or in the vernacular, it would be akin to a giant looting spree (no doubt to lock up again into other closed receptacles, a la Google Books) unless managed quite carefully.

Thus I think we need to ask the Lessig activists (by that term I mean the "FreeTards", the more - um - enthusiastic? supporters) to answer the following question - "have you actually thought through the consequences if all created content is forever unprotected?".

And I don't want to see answers couched in psychobabble, Gift economics, New Economics 2.0 and other various politico-economic flavours whether libertarian, or discredited socialist / humanitarian ideals re-treaded. I want to see it discussed in terms of hard headed behavioural economics, in terms of what people really do, not what they say they will do. I want to see it in terms of business models where I can see the money flowing without the "and here a miracle occurs" phase in the flow, or the "3-pot-shuffle-it'll be-alright-on-the-night" assurances. I want to see the game theory that shows me why people will do what we think they will do.

Now, I am well aware that taking this line will make me seem like another capitalist lackey - thats not it, I just want to ensure the pendulum hits a happy medium - ie we design a damped rather than underdamped system. It strikes me that this is an issue that does need airing, rationally, because the future of content will be driven by its own basic economics, and most specifically, the risk and rewards - ie the opportunity cost - of creating it.

I want a future world with great content, and I don't mind paying (a fair price) for it. What I don't want is a world with completely free, Ad sponsored, crap content. I've seen commercial TV, and its not something to be proud of - but nor is just ripping it off and sticking it up on YouTube

(Update - I feel in a way that I treated Mr Lessig himself unfairly in this article - he after all is trying to do some very good things with the Creative Commons etc - which we use on Broadstuff - what I am more concerned about are some of the other interest groups riding on the coat-tails.

In fact, he wrote a short response to these articles over here, and I'd like to quote one of the comments as it adds nuance to my thoughts - from gurdonark:

Having read a number of critiques of Creative Commons and, now, Free Culture, from the left and the right,
I'm amused that what I view as a fundamentally moderate position draws such extreme invective.

One point is simple. There is nothing particularly radical about a voluntary movement by creators to donate work into a Creative Commons through use of liberal licensing within current copyright law. Those who choose not to so license are not affected by any disadvantage, except that arguable disadvantage that people who donate photos and music may depress the market for sellers of the same creative material.

Similarly, the injection of research and otherwise patentable ideas into the public domain is as old as academic research institutions. There is nothing particularly "Lessig" about this practice--all you've done, in collaboration with others, is point out its virtues in an analytical context as a "science commons".

The second point for which you advocate is only slightly more novel--the idea that extensions in protected terms and artificial extensions in what is protectible may, in the long run, be disadvantageous to all. This is a viewpoint not at all inspired by any Soviet, or, indeed, any utopian pastoral anarchy. What is the "payoff" as a rhetoric device in portraying your idea as a particularly "left" dialectic? Similarly, when Creative Commons comes under fire from the "open source" movement for being offering people to utilize licenses in the existing copyright regimes to ensure certain protections, it's hard to see you or CC as pawns of government exploitation of freedom of information.

I do not wish to overthrow all IP laws, as I think they can and do serve a valuable function. I'd like to see them reformed around the edges (e.g., an end to Mickey Mouse copyright term extensions and a different patent examination/re-examination process, as well as relief on fair use clarity). In the main, though, CC licenses is a way to achieve a "velvet revolution" in which a dedicated body of creators, scientists, and audience create a new set of publicly useful ideas in a liberalized version of "permission culture".

I get disappointed when I read extreme takes on your work, because there is a legitimate debate about the
proper boundaries of IP law to be had. I also get disappointed because there is a legitimate cultural movement to create this Creative Commons underway, and distortions advance neither the cause of the proponents nor the cause of the critics. One can argue that creators should not license CC--it's a perfectly reasonable argument to make. But that argument is centered in the real-world of daily life more than in the dream world of 1920s left/right polemic.

I think Mr Lessig's core issue is how to be a moderate revolutionary, a tough gig to pull off - ask Lenin .)

Sir Tim Berners-Lee quoted as saying the web is in its infancy and its impact is still to be felt.

Sir Tim predicted that the web's ability to engender collaboration could one day see the web being used to help manage the planet.

"What's exciting is that people are building new social systems, new systems of review, new systems of governance.

"My hope is that those will produce... new ways of working together effectively and fairly which we can use globally to manage ourselves as a planet."

If previous major tech revolutions are anything to go by, he is right - the "mass internet" - ie the Web - is only 15 years old.

A few years ago I did a study of the development of communications technologies, the "80-20" impact of the more modern ones is a 100 year game, the older ones - like printing - took even longer. In fact in my view the fastest technical development cycle was the move from wooden sailing ship to steel steaming ship - it was a mere 50 years to get from HMS Warrior to HMS Dreadnought. (Which drives another subplot, the role of conflict in technology development, and how VC money now fills that role - anyway, I digress on my digression). In that journey, the amount of experimentation was immense, and - given the fairly tight operating environment envelope - literally sink or swim - it was amazing what was tried out. How about this French beauty, the pre-dreadnought battleship Hoche?

.


Anyway, one last digression - if you were around pre-Web, you will recall Archie, Veronica, FTP and....Gopher.

...competing technologies, such as Gopher, which was developed at the University of Minnesota, were also offering a method of using hyperlinks to connect documents across computers on the internet.

"If we had put a price on it (Sir Tim's technology) like the University of Minnesota had done with Gopher then it would not have expanded into what it is now. "

Now that I did not know (that Gopher was a for-sale technology). Does that make me an early day Freetard

A whole raft of hard-to-value companies are given "interesting" valuations - see the list here on TechCrunch - by that nice Mr Blodget. Tut.

I'll focus on Facebook, which is top of the pile and theoretically worth $9bn, or c 25x a theoretical $350m 2008/9 revenue. Facebook, like all private companies, are a riddle within an enigma etc etc - or at least their numbers are.

Latest data I can get is from early April - an active user base of c 66m and c 65bn impressions per month, up from c 60m and c65bn impressions in Jan 2008 - or maybe only 20bn impressions?at the turn of the year (thats some jump in impressions/person, from c 400 to c 1,000 pa !)

Let us assume initially however that 64m users is correct, and the $350m is correct, and the 65bn impressions per month (780bn pa) are correct - that implies:

(i) an ARPU of 350/64 = c $5.40 per annum per user, at c 12,000 impressions per user per annum - assuming they visit nearly every day thats c 36 impressions per day (72 impressions per user day, as only 50% of the users visit daily). That's on the high side to believe, as this "mean" active usage will be far lower than the heavy users. However, Facebook is horrendously impression intensive, requiring about 3 impressions to do anything, so lets assume 24 "tasks" a day is not too onerous - though I recall the guidance range was $250 - 350m, I'd be far more inclined to go for the $250m end for 2008 revenues

(ii) a CPM rate of 350/780 = c $ 0.45, which is in the order of magnitude of Facebook partners (see here). Bebo was running at c $0.5 - 1.00), EBITDA is estimated at c $50m on $350m)

So, on to Valuation.

- Assuming the revenues are more like $250m, Google's 10x revenue values them at c $2.5bn - and I'd argue that even though it is no longer a growth stock, GOOG has huge "800lb Gorilla" premium and a very profitable model so its hard to see why Facebook would be much higher multiples

- Assuming the $350m is (just about ) possible, Google is valued at c 10x revenue, putting Facebook at c $3.5bn

- If one looks at Bebo as a guide, it went for c $20-40 per user (depending on how you counted users). Facebook at that rate is (with say 100m users at out-turn to be generous) between c $2-4bn therefore, £1.4 to £2.8bn if it starts to top out at the c 70m user mark

- At $9bn valuation, spread over say 100m users, that's an assumed value of $90/user, which at c $5.40 ARPU is a 17 year payback on revenue alone, something like a 121 year payback on Margin of (50/350 = 14%).

So, attaching a 25x valuation on a business where much of the revenue is probably pass through is thus - interesting? But then again, this is Mr Blodget and we have been here before

(Update - Phil Bradley noticed I had made a maths error giving Facebook an order of magnitude benefit on CPM, which made me think they were counting 3rd party revenue as pass-through. At these CPM's I think thats is unlikely. I have since adjusted my calculations, but the conclusion stands - serves me right for doing maths fast in my head )

I was reading Nic Brisbourne's post today on VRM, and I had this diagram at the back of my mind as I clicked through to Iain Henderson's note on hard-resetting the online marketing game:



As Iain notes, behind every "Free to User" service there usually lies a monetisation model that is something like this:

….give us your contact details and consent so we can market to you, and we’ll let you have a look at content ‘for free’ or we’ll give you a discount on something you may buy (both of which, by the way, we may cover the cost of and more by selling your contact details and related data to someone else).....

.....But….guess what….. despite all this trickery, selective interpretation and manipulation, it’s still not working. Opt Out rates continue to climb on internal and external suppression files……, at least until the next work-around or piece of marketing spin makes them dip for a few months, before the inexorable upwards march continues.....and response rates on many direct marketing activities are zero.

And so you dump it into your Digital Detritus (where it may still stay alive, using data you gave it and are perhaps unwittingly still giving it). But the industry now needs to tempt you afresh, and so:.

What’s the direct marketing industry response to this? It’s simple – find new direct channels (e,g, Google Adwords, Facebook) and/ or send more messages. After all, e-mail costs peanuts to send, and on ‘digital’ we can at least pretend we have permission to market’. So, I’m really looking forward to counting how many ‘twelve days of xmas’ e-mail campaigns I get targeted with this year (in fact I got my first this morning); which marketer can turn down the opportunity to send e-messages 12 days in a row?

But with each cycle, we become more resistant, we ratchet up our avoidance. And in the digital world, its an arms race that the marketeers will eventually lose - or at least the cost of winning will make the victory somewhat Pyrrhic - just look at what happened with Facebook Beacon.

And so, fast forward to the endgame, and start from there - make the individual want to give you the relevant data, in a fair exchange. Iain goes on to suggest 4 key principles in his VRM based system:

Cross-Media Suppression File - The first, and most fundamental, the hard re-set itself, is making available a blanket opt out of all direct marketing suppression file.

Persona/ Role Based Opt In Capability - Second - the capability for the individual to establish one or more ‘privacy profiles’ at persona/ role level. The ability to operate at persona level is key in that in different aspects of life an individual may wish to establish different communications preferences.

Articulation of Needs/ Wants (Intentions) in Usable Format - Next - when the blanket opt out is established as a point of principle, the end user then must be enabled to opt back in to specific communications – but on their own terms.

Message Management Capability - Lastly we need a message matching and management capability. The above capabilities, in combination, generate a file of ‘opted in, buying intentions requesting matching offers’. This must then be matched against a file of ‘people/ organisations that want to sell stuff/ provide requested offers or information.

The endgame is for suppliers to be able to reduce the costs of marketings (the 50% that doesn't work, for a start) as well as reduce the costs of the supply chain from uncertain demand - overbuilding/overstocking, stockouts, wrong designs etc - not inconsiderable costs. But to get these benefits they need to share the savings with the users who are prepared to disclose in such a way.

...is that it hasn't solved Enterprise 1.0's issue, i.e. a lopsided sales model. That anyway is the contention of Jeff Nolan, in a post in Sandhill.com (link from Tom Foremski)

Enterprise software suffers from a self-inflicted wound: an inherently unscalable sales model (if you aren’t one of the big bracket companies.)....

...I have often said, and written here, that customers have gotten better at buying software than we have at selling them software. It is only after questioning what to replace the broken software-sales system with that buyers fully understand that the current model benefits them and are thus reluctant to accepting change.

Maybe at the end of the day it’s less about a new sales model and more about wringing costs out of everything else in order to afford the cost of sales and still deliver a decent margin?

That sounds about right - the combination of Vendor Bidding "technology", long sales cycles, high operating costs, onerous terms of service and support, and relentless throat cutting (offshore) competition has made much of Enterprise IT a miserable business to be in for any but the largest players, hence:

(i) The consolidation within the industry (will Oracle and SAP buy it all at some point?)
(ii) The (grudging but widespread) acknowledgement that the bulk of innovation today is coming from the consumer side

And despite Open Source goodness, reduced cost Services-as-a-Service and so on, its still a long, hard - and expensive - sell, with high risks and (too often) low margins - and the High Risk, Low Reward box in the strategic 2x2 is not a sustainable place to be.

As Mr Nolan notes, Enterprise-heads are all waiting for VC's to once again discover that there is money to be made in enterprise software.

After all, if they are capable of funding the Nth me-too Social Network, they must be dum... I mean willing enough to fund the next Enterprise 2.0 SaaS/PaaS/SOA play - surely

However, I think the giveaway is at the end of Mr Foremski's article

I know when the next new thing will emerge…

It will emerge from this coming recession. The next new/big thing has always emerged from the bust cycles in SIlicon Valley.

It is my empirical observation that Enterprise software only really becomes sexy when the bright young consumer things have either exited the dance floor or collapsed.

Update - Nick Carr got to blog a McKinsey Survey before me, it says that the only real way out - apart from being big - is the "aaS" model with its differing economics. If only it were that easy, the Solution-aaS has to be very "point form" to sell easily - guys like Salesforce are struggling with long cycle times like any CRM player.

I was reading a post last night from Steven Poole (hat tip to Ian Betteridge for the link), essentially arguing that in terms of quality the book is mightier than the essay, which is again mightier than the blog post – because of the time put into it.

There are many blogs that I admire and read regularly, and they often provide brilliant demolitions of official narratives, or superior analysis to that offered by complacent and/or flat-out dishonest “professionals” in the corporate media, or just better jokes. That said, I would take everything I read in the blogosphere last year, load it onto a cheap thumbdrive, and happily swap it, in an instant, for a single copy of Denis Johnson’s mind-bendingly magnificent Tree of Smoke. For me, there’s just no contest.

Why should this be so? Is there any reason why some future Denis Johnson couldn’t publish a masterpiece serially on the internet? I think, actually, there might be. There are factors inherent to the different media that militate against such a possibility, even if they are not cast-iron reasons. It boils down to a combination of:

1 The technology of the medium,
2 The social structure of production in the medium, and
3 The perceived durability of the medium.

To be fair, its a very thoughtful article - but Steven notes...

Any facile comparison of “quality” across different media is asking for a kicking

...and who are we, but always obliging

The word "medium" got me thinking about the link between types of painting and types of writing.

To capture a picture I can use (say) 2 paint mediums - oil and watercolour. I will spend far more time on an oil painting of a scene than a watercolour sketch, but the sketch can contain a brevity of stroke and an immediacy, that captures the essence of a moment that an oil painting never will.

And so it is with Blog posts – they are sketches, they capture a point in time, and hopefully, in a few deft strokes, capture the essence of an argument. Also, short blog pieces are by far the best medium for the use of a bit of wit, to lighten the sometimes more serious (or more pompous) points being made.

So, when Steven says:

The very permanence of the physical book format has for centuries pushed writers to raise their game. The prospect today of blogging elbowing out other forms of writing is comparable to the prospect of an 18th century known to us only through its pamphlets, and none of the great long-form satires and novels. That would still keep a few houndstooth-jacketed academics in business, but would anyone else really care?

I know that he is in essence right, but I also know every so often an exhibition - a collation - of Gillray cartoons, or scandalous broadside ballads comes along to educate, entertain and amuse........and I am always reminded of the great sketch watercolourists of days gone by, that can still tell a compelling story.

Kara Swisher notes at a Washington DC wedding (that well known representation of all society ) she found a tiny % of people who knew about Twitter. She's wrong of course - what she found was that very few people admit to using Twitter in public.

Because of the name. It's just so totally naff !

Unless you live in Upper Geekville, you cannot, as a sane, functional adult, admit to "Tweeting" on "Twitter" fer chrissake

And how about taking a Business Case to the board of BigTelco Ltd to acquire.....Twitter? Snork. End of career.....can't we call it something neutral, or a 3LA, or something

We need a serious name to jump this chasm, something we're not ashamed to sing out when hanging out with Rugger Buggers, Beer Drinkers, Significant Others We Want to Have, and so on.

Update - ABC says Enterprises will be "tweeting" - this I want to see...serious suits saying they "tweet" each other.

An afternoon cup of coffee, a quick scan of Techmeme, and the spluttering sound of coffee in cup as yet another rebottling of old wine into Bottles 2.0 appears - Wired this time on Broadband 2.0:

two of the largest ISPs in the United States are hoping to kick off yet another broadband renaissance, this time with home connections that promise to reach 50-100 Mbps, enabling a slew of high-definition content, better-quality video-sharing sites and even 3-D video. Call it Broadband 2.0.

Experts say this increased bandwidth -- when it becomes widely available -- will have a profound effect on everything from our social interactions on the web to the way we consume media.

No Sh*t, Sherlock, I hear you say - now who would have guessed that?

OK, what this is really all about is that US Telcos (and, one presumes, European ones) are now starting to look at upgrading their broadband pipes to get to the 50 - 100 Mb/sec mark that those backward Far Easterners have taken for granted for years. It would surely be inconceivable to look at what they are doing Back East, and think about what therefore may be applicable here?

Clearly not, or not in the the Wired article anyway - not once is Korea or Japan mentioned! No, in this newest of New New things - Broadband 2.0 to wit - quote of the day goes to Ribbit:

"Basically, people are going to do a lot of the things they normally do today, but in a better, more satisfying, way," says Crick Waters, co-founder of Ribbit, a Silicon Valley company that sells an internet-based telephony platform.....

...... "Believe me, the minute someone puts the pipes out there, people will find a way to use them," Waters says.

Heck, one day they may even work out how to pay for them !!

It would appear Twitter is looking for more funding - about $ 10 - 20m apparently (Sarah Lacy reckons its getting the cash in now before the sh*t hits the Web 2.0 fan), even though there is as yet no real Business Model - apart from give free service to lots of people at the moment. Still, it has captured quite a few million people already in its social web.

I guess the bet of any VC today is to pop in the $ XX m to keep Twitter going until either (i) it finds a business model or (ii) someone buys it. I suspect case (ii) is far the more likely. Sadly, Google and eBay are probably out the frame as they have both bought things that could be Twitter competitors (Jaiku, Skype).

Its an interesting thought therefore, as to who may value it most and thus pony up for it. If I were to make an educated guess, apart from the usual suspects it would be a global mobile Telco or mobile Telco Wannabee - because Twitter, unlike so many of the other SocNet products it:

(i) Is simple enough to use on today's mobiles
(ii) Actually works on today's mobiles !

Not only that, but Twitter generates mobile and internet traffic (some of which is trans-country), and in nice, small (and relatively low cost) SMS size bits. It thus has fairly high synergies with mobile network providers who like applications that drive traffic.

It also captures users, who have social graphs that a moble service could integrate onto a 'phone and/or platform and add other forms of "value", based on user's proclivities - not to mention a useful development environment one could nurture in these Platform Service days. And its quite a sweet advertising service for an SMS style play.....

A veritable Beacon of new opportunities in fact

Microsoft, Yahoo or even Google could buy it, but they don't get those marvellous transport layer synergies that a Telco would - and a mobile Telco would get even more of it methinks.

And of course there is the cachet, as Ms Lacy puts it, of being Cool:

At any price, a stake in Twitter-- not to mention a chance to cozy up to a true Web visionary in Evan Williams-- is a steal.

(Disclosure of selfish interest - I would far rather people Twittered their banal lives to each other on trains and planes than talked on their mobile 'phones )