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However, analysts at Sanford Bernstein believe that potential acquirers for Twitter should think twice.
In a research note published late last week, the analysts argued that the Web 2.0 model of building a product and then figuring out how to monetize it has been largely debunked.
The analysts said that monetizing Twitter “would be difficult at best and likely unsuccessful.” People who sign up for free services tend to resent a company for trying to wring revenue from the business later. Subscription fees are out of the question, they said, and advertising-based revenues don’t seem to have yielded enough cash flow to make a Web 2.0 property viable.
Whoever buys Twitter, they wrote, “will likely have to operate it at a loss in perpetuity, or until the next cool Web 2.0 social networking concept comes along and Twitter tweets no more.”