Last week, Twitter – the extremely popular in California but never really heard of on the east coast micro blogging platform – announced that it was placing new limits on its API restrictions. White listed (meaning hand approved by Twitter) services will have a new limit of 70,000 accesses per hour, while non white-listed accounts can only hit twitter 70 times per hour.
So what does this mean?
It means what I’ve been saying all along: Using somebody else’s API to improve the look and feel of their service is not a good business model. Eventually, they’re going to implement your features on their own and cut you off.
Many 3rd party Twitter applications are going to be realizing this, especially now that Twitter has just got a new capital infusion. It seems like every day I hear Scoble talking about a new iPhone app, website, or desktop app that’s nothing more than a prettier version of Twitter, so you can bet that Twitter will be using some of this money to take some of the ideas that other people have come up with. (seriously, I wonder how many twitter apps Scoble actually uses on a daily basis?) If they want to monetize to their full potential, they’re going to have to get those users back to using the main service and not all these Twitter API spinoffs.
It will be interesting to see what comes next out of Twitter and how they eventually monetize, but until then one thing is for sure: A business model that consists of just adding flare to somebody else’s API is doomed for failure – especially if the company you’re building on can’t even monetize their own product.