How Twitter's New Ad Tax Will End Auto-Payola for Lazy Celebrities

(MoneyWatch)  Lazy celebrities like Kim Kardashian who get paid by advertisers for doing virtually nothing will be the biggest -- or at least most prominent -- victims of Twitter's decision to ban sponsored Tweets from third-party companies. Twitter's new rules prevent anyone from signing up with a service like Ad.ly that inserts sponsored tweets into the Twitter stream of their post. Kardashian reportedly commands $10,000 a tweet for branded access to her stream.

There's some confusion as to exactly what Twitter has banned, in part because Twitter COO Dick Costolo is confused as to exactly what he's trying to prevent.

Plenty of celebrities are take advertising payola to allow brands to put ads into their streams. Here's the top 10 currently being whored out offered for sale by Ad.ly, ranked by the number of their followers:

1. Kim Kardashian 3.6 million
2. Soulja Boy 2.1 million
3. Pete Wentz 2 million
4. Mandy Moore 1.9 million
5. Dr. Drew 1.9 million
6. Giuliana Rancic 1.7 million
7. Nick Cannon 1.7 million
8. Paula Abdul 1.6 million
9. Levar Burton 1.6 million
10. Jim Jones 1.5 million

Ad Age reports that Ad.ly is currently in the midst of an internal meltdown* over Twitter's move, as its entire business model was based on Twitter allowing it to insert sponsored tweets for free:

... an Ad.ly exec said the company was still trying to assess the impact of Twitter's new policy on their business, and had called an all-company meeting to assess their options.

However, all is not lost if your business model depends on Kim Kardashian and Paula Abdul tweeting about you. (Although if that is your business model, God help you.) It turns out that Twitter's move is all about banning automated third-party companies from accessing streams; it doesn't actually ban paying one of the Kardashians to say something about your diet pills or hamburgers. As long as the celeb -- or, more likely, their pr handler or manager -- hand-types the endorsement into Twitter, no Twitter-tax is required.

*UPDATE: Mark Suster of GRP Partners, an investor in Ad.ly, contests Ad Age's report. "The company never 'huddled,'" he said. "Now that we have a feel for what Twitter is after (controlling quality, spam and high-volumes of unsolicited Tweets) we can work toward making sure that we stay in their good graces." See the comments section for more of his reaction.

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