The Twitter goldmine
How on earth can you make money out of social networking - and in particular from Twitter? A question I've wrestled with but suddenly I'm a little clearer.
The answer is in mining the vast flood of data now produced by hundreds of millions of people sharing information over theses networks and it is the reason, some say, that Google is now getting very nervous about the likes of Twitter and Facebook.
At least that was my conclusion after a chat with Nick Halstead, founder of Tweetmeme, one of the few British web businesses to be making waves in Silicon Valley.
Tweetmeme is one of the many small fish which swim along with the great whale that is Twitter. Its main claim to fame is that it invented the button, a simple web accessory that appears on millions of sites, allowing users to share a link to an article on Twitter.
Nick Halstead claims that the Tweetmeme button has been vital in making Twitter a place where people share information by posting links.
"When we started a couple of years back, 100,000 links were being shared a day - now that's risen to more than 12m a day, and we're largely responsible for that."
Yesterday Twitter unveiled its own share button which looked at first like curtains for Tweetmeme. But at the same time the San Francisco company announced a partnership deal with Nick Halstead's tiny business.
It will help roll out the new button and more importantly will get continued access to the torrent of data emerging from the zillions of tweets now produced every day.
That's what Tweetmeme's business depends on - it acts as a kind of supercharged social search engine for clients who pay for a customised Twitter feed. So, for instance, it has produced a small business channel for one customer eager to know what's being said about and by small firms.
Another client is eager to find out what's being said about the search engine optimisation industry on Twitter, and then there's an American Christian group looking for references to religion.
A simple Twitter search won't do the trick, it will be difficult to filter out the noise and get what you want. What you need is direct access to what Nick Halstead calls Twitter's firehose, and sophisticated tools to mine its data.
Giant firms like Microsoft and Facebook are now paying millions to Twitter for access to this data so a tiny business like Tweetmeme, with its 14 London based staff, is grateful for the chance to swim in the same pool.
It explains why the boss of a tiny cash-strapped UK start-up has made dozens of trips to Silicon Valley over the last two years, determined to build a close relationship with the business on which its whole future depends.
And Nick Halstead thinks this new social data business model has big implications for the undisputed king of the search world:
"The world is changing from one where you 'spider' the web - what Google does - to one where you look at what everybody is sharing on social networks. That's why Google is so scared."
I'm just back from a holiday in California, where I dropped into Twitter's San Francisco headquarters, and found row after row of empty desks. The company made it clear that they would soon be filled as its workforce continues to expand at a jaw-dropping rate. I wondered just how their salaries would be paid, but now I'm a little clearer.
Google became hugely rich and powerful after it discovered that search results can be turned into gold. Now Twitter, and companies like Tweetmeme, are realising that vast quantities of social data, with their clues as to what the world is talking about and what consumers want, can also be a goldmine.
The battle between the old and new models of search is going to be one of the biggest business stories of the next decade.