I certainly don't have the answers either. But you bring up a good question:
So why doesn't Twitter just charge for API access? $X per K API calls? They charged for the 'firehose' (too much though, nobody seems to want to pay that much) but still.
Charging for API access (or the firehose) casts them in the role of a utility -- infrastructure. So too does their diminishing tolerance, such as it is, for "Twitter clients". One might imagine their investors prefer to envision the company's future not as a utility-style service upon which others build user-facing properties, but as a dominant entity in full control of all direct or derivative revenue streams, real or imagined. A utility-style valuation is not what they signed up for, so any lean in that direction is being corrected.
That is a credible argument. I wonder if they get trapped in the 'zero trillion dollar market' paradox. Tom Lyon introduced that one to me, basically it went like this, the market for one telephone is 0, the market for telephone services for everyone is a trillion dollars, but you can't get to the trillion dollars without first having a telephone for everyone. So its the tech equivalent of the chicken and the egg. What paralyzes people in those spaces is that they "see" the trillion dollar market, and they don't want anyone else to get their first, so any progress toward it from 'not them' is shut down. Sadly if they are in that mindset they are already dead, they just don't know it.
Another anecdote. I was trying to create a viable replacement for the newspaper briefly. E-readers were new, but had gotten past 'fringe.' There were some vendors who had good hardware but not great software, one of the vendors was Plastic Logic which had exclusive control over a process for making flexible e-ink screens that were very durable. At the time, (and to some extent today), that the screen needed a glass substrate meant large format e-readers weren't feasible. My iRex Illiad V2 had the largest screen at the time and folks complained bitterly when a coffee cup or some other modest 'event' cracked the screen. I decided that to blow the lid off this we needed to marry a big flexible screen with a core of open source software and a new UI so I talked with the guy at PL who helped the CEO define the overall company strategy (well that is what he said, hard to know etc etc). The key founders at PL were the scientists who had 'invented' this technology. They knew how huge it could be and dammit all that money was going to flow right into their pockets! E-readers were a zero trillion dollar market and they had showed a reader which had some really nice properties for shipping 'later that year'. The only problem was that nobody knew what a 'real' UI was for these things, nobody knew what the best price points were, they were only B&W and tablets were threatening (iPad hadn't been released yet) and I said "You can't possibly hope to out invest everyone else in making these things successful, especially Amazon who has a built in way to make money off these things in perpetuity. If you stay on this road you are already dead."
Obviously not what the guy was expecting to hear, after all they could do something nobody else could! Except that geeks and freaks like me were buying e-readers for exorbitant prices because we did that kind of thing but the real market was much lower in price, and a company trying to capitalize the creation of an entirely new fabrication process was going to amortize all those costs over their ability to deliver what was essentially a consumer electronic device? You can bet all your money on one number at the roulette wheel but its not a good business strategy.
Needless to say things played out exactly as I said they would, PL was always just about to release or finalize their specs when the next thing dropped and added new checklist items they needed to go back and implement, early results with the UI were poor and the price floor fell out with Amazon pushing things out at cost. Their reader that they thought they would get $1,000 for was going to under perform a $400 reader with a built in pipeline of content.
Compare that to making displays and selling them. Sure its the 'parts' business and your margins are a lot lower but you can start amortizing the cost of your manufacturing right away. And as things start falling out in the e-reader market you find niches that are under served and get folks to attack those markets with your parts. You watch you learn you profit on all the investment everyone else is doing. And then you step in with your own awesome solution.
It would do Twitter good to embrace the utility model, then while that was keeping the lights on, figure out what this thing was really doing, why did people value it, what did it do that couldn't be done elsewhere, and then move up the value chain. But if they remain afraid that "someone else" will get there like they have, they open the door for alternatives which will kill them anyway. Just like Plastic Logic who you never hear about any more and nobody had any big payday. Emerging markets are great, but they are fragile, and missteps are more costly. I hope they figure it out.
So why doesn't Twitter just charge for API access? $X per K API calls? They charged for the 'firehose' (too much though, nobody seems to want to pay that much) but still.
Charging for API access (or the firehose) casts them in the role of a utility -- infrastructure. So too does their diminishing tolerance, such as it is, for "Twitter clients". One might imagine their investors prefer to envision the company's future not as a utility-style service upon which others build user-facing properties, but as a dominant entity in full control of all direct or derivative revenue streams, real or imagined. A utility-style valuation is not what they signed up for, so any lean in that direction is being corrected.