Twitter Only Needs 35,000 Kim Kardashian Clones to Reach Profitability

Last Updated Jan 25, 2011 3:21 PM EST

Twitter would need 35,000 celebrity tweets grossing $10,000 per tweet -- like Kim Kardashian gets -- in order to begin paying back its investors if recent estimates of the microblogger's ad revenues are correct. This back-of-the-envelope math suggests Twitter is a long way from profitability, and that it needs to bolt on another ad-supported revenue stream in addition to celebrity endorsed tweeting in order to become a real business. Here are my numbers:
Therefore, if you assume that the top value of a sonsored tweet is "the Kardashian," or $10,000, Twitter would need to host 35,500 celebrity tweets at $10,000 each in order to even begin paying back its $355 million in sunk costs. Currently, at that same maximum price, it must only have racked up 4,500 tweets at $10,000 per tweet, or many more tweets at a lower rate.

This all assumes that the Kardashians forgo their cut of the tweet revenue entirely -- an obvious fiction -- and it forgets an estimated $100 million in server costs. If Kim, Khloe and the other one took 50 percent, Twitter would need 70,000 celebrity tweets annually.

There are certainly a lot of celebrities doing a lot of paid tweeting -- Lindsay Lohan made sponsored tweets on her way to jail -- but common sense suggests that only a handful can command The Kardashian. My numbers are merely assumptions and quite possibly wrong, but however you cut it, Twitter quickly runs into a "big numbers" problem: It either needs tens of thousands of celebrities making large sums per tweet or millions of microcelebrities making small sums.

Which leads me to the most bizarre conclusion I've ever reached when discussing corporate strategy: There may not be enough celebrities to sustain Twitter's business model.

Related: Image by Wikimedia, CC.

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