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But how exactly do they make money on developers using their API?

The way I see it, third party applications increase the value of using twitter, bringing more users to it. Twitter as a social sharing tool has very little value to me, personally, but as a chat tool, marketing tool, or customer support tool I think it has a lot of potential. Its presentation/UX is not very optimized for those experiences, though -- and that's why third party apps exist. If an open source project builds its chatroom on top of twitter, that's a huge value-add and would bring people to use twitter in order to efficiently communicate with the company, in the same way people use Slack because companies host their support on it.

By the way, I think their rate limiting is fine for most third party apps. There is a lot that can be done with intermediate caching and the Streaming API.

Brings value is not the same as brings money.

The same way everyone else does:

1) Ads via the in-line feeds [removing ads is a ToS violation, same way the real world ad networks now is basically a js/link configuration...can sell CPC this way]

2) Charge for API calls.

3) Charge for "premium membership" that unlocks the api at like $10/user/year

Who do you charge for the API calls?

Ideally the developer would be able to choose between paying themselves or letting users pay through micropayments.

With the amount of app piracy, this would make no sense, in my opinion. Developers would be actually robbed.

Aside from that, almost all apps are paid for once, not on a subscription basis.

Pretty sure your statement is a breakthrough.

I'd gladly pay for premium API access as a Twitter user which would then allow me to use third party apps.

2) Charge for API calls.

--- For in-house development and/or SaaS software that interfaces with Twitter. Even something like $.10 per 1,000 requests would add up pretty fast for large deployments.

Example? http://freshdesk.com/integrations/help-desk-ticketing-twitte...

These people could be milked by Twitter. Its a SaaS webapp so they can protect their API access.

3) Charge for "premium membership" that unlocks the api at like $10/user/year

--- app piracy isn't an issue if a user is paying to unlock the API for their account

Also, if app piracy is an issue because they can get ahold of your API keys, that just means you need to route it through your internal API and secure things properly. It isn't Twitters job to fix the fact you don't want to have any infrastructure.

Charge for less rate limiting?

As the app grows the usage grows and twitter makes more money.

Hell, is Twitter even turning a profit yet?

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