Twitter is the latest big thing in social media and the digerati are all trying to figure out how to turn some of this popularity into money.  Well - I can see the shape of it - if not the exact mechanics.   But let’s level set first.

Twitter is a platform.  It’s provides a way to transmit itty-bitty posts (<140 characters).   That minimalist aspect is an important part of its character.  But I think it’s the publish/subscribe model that’s really interesting.  Basically you register, then tell them a bit about yourself.  They you go looking for people that you care to follow.  You can look for friends or you can look for people with interesting characteristics or common interests.  You subscribe to (”follow”) them and maybe they follow you back.  Then you er…. talk about stuff.

So far so good?

Okay.  Now one more thing before we get to economics…  All these ways of finding out who to follow and have them follow you - assume some kind of latent context. In other words - you have to know something about who you want to connect to before you connect to them.  I can search for my pal Harry, or I can import all my contacts, or I can go looking for people that write about personal finance.

Now, here’s the good part.  There’s also a convention called hashtags.  This simply means ‘tagging’ your post with a code prefixed with a #.   So I could create a tweet like, “brrr, sure is cold on this flight - wish the attendant would turn up the heat  on flight #ac905″.   Anyone can subscribe to a hashtag.  So if, for instance, the flight crew were monitoring #ac905 - then they’d be able to fix the heat, or make an announcement, or ignore it.  Here’s a whole database of tags.

So how to make money?  I think of it as situational arbitrage.  (Yeah, that’ll catch on…).   Think of a situation where you want to exchange something of micro-value - but it’s just too inconvenient or socially awkward to actually do anything about it.  I’ve talked about these situations before… you’re leaving a parking lot with 2 hours left on your ticket, or you’re getting tired at the driving range with half a jumbo bucket, or you’re at a supermarket with an unused coupon, or you want to get rid of an extra two tickets.  What if everybody subscribed to twitter (and soon everyone will be walking around with devices able to), and there was a known convention around hashtags.   So, when you go to the supermarket - you scan #Loblaw27 and see whose needs coupons, or #parkinglot3456 to see who needs an unexpired ticket.

There’s stuff to be filled in for sure…

• It’d be great if there was a micro-exchange function built into twitter so we could easily transfer a few bucks between tweeters.
• We need good way to make the context known.  Short of just knowing that #flight number is the convention for airlines, how would we communicate that?  I suppose the host location could put up big signs (This is #LOBLAW27 - but what’s in it for them?).   What about a GPS mashup?  What if we could simply open up a channel to anyone within a few hundred feet?

If you could figure these aspects out (and a way to skim a small value-add surcharge for the service) you’d have the thing licked.