There are a few digital signage companies out there offering “free” digital signage software. The goal, it is assumed, is to grab a huge market share comprised of people who value mission critical software at zero and then convert them to premium products for a fee. Good luck with that. The model for monetizing a free service is Google, who made themselves the top search engine with a great tool, and monetized it with ad dollars and applications. The difference, of course, is that Google positioned itself as a premium offering against other free services, and had a better product. They also faced off against a bigger market.

Yesterday, the increasingly omnipresent Twitter, a non-revenue company, achieved an implied valuation of $1 billion when two venture capital firms agreed to provide $100 million in cash for what my math skills compute to be 10% of the company. Reactions varied from a scoffing reply from Dr. Evil to a hilarious “so there” press release from 37 signals. More serious people observed that the VCs are betting that there will be a liquidity event, most likely an IPO, which would value Twitter far in excess of $1 billion. But first they will have to win the bet that Twitter can monetize their groundbreaking micro-blogging platform. Here is one man’s roadmap to monetization:

1. Interstitial advertising in free accounts: Twitter could sell ad tweets that are placed on the home page of non-premium users. They would have to figure out what a reasonably frequency of ad tweets would be without upsetting free members, but still providing value to advertisers. Their ability to micro-target users based on keywords, locations and frequency of use would drive ad rates higher. Maybe 5 bucks a year buys you out of ads. If Twitter reaches a 100 million accounts, I bet they’d love 5 dollars from 10% of that base! Twitter founder Biz Stone has already gone on record as saying there will be no ads this year, but it is already October.

2. Develop a premium product that users will pay a nominal annual fee for: Here are some services that might be worth 25 bucks a year to me:

  • Real spam filtering: The spammers may actually pay to gain access to all users, so Twitter will need to take a more serious approach to identifying and purging spammers from the premium twittersphere. If they were getting paid to do it, they would likely be more diligent than they are today.
  • Search result filtering: I have “digital signage” as a saved search term that allows me to monitor all tweets with that phrase in them. You would be amazed at the drek that shows up along with some terrific insights and news. The ability to tag users as useful (show me their relevant tweets) and useless (never, ever show me their tweets) would be a nice feature. It would also be nice to never see tweets in search results from people you have blocked.
  • No ads: (see above)
  • Voice mail tweets to other premium users: The ability to send a short audio tweet to a phone might be very useful. It is also consistent with the roots of Twitter as a cell phone-centric tool.
  • Upgraded Twitter home pages and page view tracking: Provide premium users with enhanced home page features and let them monitor how often the page is visited, and by whom.
  • Longer message lengths: I know, tweets are limited to 140 characters to accommodate cell phone constraints, but many users compose and view all their tweets on computer screens. Maybe letting premium members have 180 characters to spew their thoughts would be of value. Cell users and non-premium members would see truncated tweets or perhaps a link to a web interface for viewing the full tweet.

3. Develop a premium RSS feed service: Twitter feeds are emerging as a new source of user-generated content on digital signage networks. Others are using dedicated Twitter accounts to transmit information to a network. The ability to filter, preview or edit RSS feeds, and a new, custom interface to provide more features to business users might be something businesses would pay for.

4. Develop and sell TwitterChips: We have already seen how people are developing hacks using Twitter to make devices report on their status. Why not develop Twitter-ready chips that could be embedded in smart devices and appliances that would have dedicated accounts and the ability to tweet vital data to owner or monitor accounts. Think about cars tweeting their maintenance needs and operating parameters to owners (and dealers)… office printers tweeting when toner levels are low… TiVos tweeting when there are programming changes, recording conflicts or special events… swimming pools and hot tubs tweeting when water chemistry is not optimal. The possibilities are endless, and Twitter could easily partner to make this effective and inexpensive enough to be everywhere.
5. App Store and applications: It seems that Twitter already missed the boat on the opportunity to build the first app store for its platform. oneforty.com was unveiled his week (I was made aware by a tweet from @manolo_almagro), sporting access to over 1,300 free and not-so-free applications and tools for Twitter. Even in beta, is already creating a community and gathering a fan base. Look for Twitter to buy or mimic this Guy Kawasaki-advised start-up. Twitter could also start building add-on applications itself.

With a rapidly expanding user base of over 15 million in place world wide, and the ability to move markets, governments and businesses, Twitter is in a good place. Now they have to build a good business. Some users will be put off by attempts to monetize the Twittersphere, but if it is done right, better features will appear for all users. I doubt that any of these ideas are original (isn’t it said that there has only been one original idea, ever?), but it seems certain that something has to happen to justify the huge implied value. Stand by, and think up the other features you might pay for, because you can bet its coming. As for the free digital signage guys pulling something like this off… not so much.