How will twitter monetize its service

The first twitter was sent almost 3 years, in march 2006. Since that date, twitter has been rocketing, reaching in april 1009 17million users.
Despite its size and growth, twitter is not big enough to generate revenue only with ads. And unlike facebook, they have, until now, always avoided to monetize profiles with ads.
But this will have to change because it needs a business model.

Many rumors have been circulating in the last 2 years, but nothing has been unveiled yet. I feel that either one of the following directions could be considered.

Twitter Affiliation and Ad track

Considering the revenues made by companies like Dell with its outlet tweets, one of the direction could be to open special accounts for monetizing, including affiliates type of contracts to allow for brands to get premium and, could be, targeted visibility (upon opt it, not to fail onto facebook’s traps) or allow companies to create coupons, creating a purchasing platform or dealing with a service like paypal to get revenue refund.
The « leak » made by one ot twitter’s investor this week – immediately denied by the founder, gives some credibility to this option. Twitter is not willing to raise another round of funding and therefore really needs to start making money.
Considering the « emotional » reactions on similar facebook’s initiative, I am really not suprised how fast Evan williams clarified the position. Badly or uncompletly announced, such a news could act as a « bomb » and really harm twitter in its communication.

Twitter value added service track

I would clearly however favour the second option. I mentioned in a reply to a post that I believed in the possibility of raising more clever value and services that just ads usual. I indeed believe in twitter’s value for marketers, brands, communities and companies. Less in the couponing direction which would be the « first track » I described above, with direct (ads /affiliation) revenue generation. I believe in services that would allow us to improve our conversation on the quality side :

• Understanding better our brand perception for instance with « tweetanalytics »
• Go in the direction of tweeteffect which analyzes the impact of each tweets (but this should be improved) and therefore help understand what works or not
• Help us handle our tribes like the service Twibes
• What they did with wefollow, responded very well in the twitosphère. The service is clean, brilliant, simple. Creating a directory allowing to find themes, people of interest, could also end up in a value added service at some point

I trust more the second option, especially since I read this article from Nial Kennedy mentioning that twitter has two records in the state of California (see below extract from Nial Kennedy weblog).

Technically there are two Twitters on record with the state of California: Twitter Inc. and Twitter Services Inc. The difference may be a remnant from Twitter’s beginning in incubator Obvious Corp. or it could be a sign of the company’s plans to operate its services business separate from the blogging platform.

Those services would be of value not only to large companies making big spendings but to many of us, including just individuals willing to improve their conversations. Only future will tell but I believe we are not far away of a solution now, especially with the crisis pressure and money fundings issues. And you, what is your guess ?