Lets do a quick exercise is common sense. Pretend for a second that you are a smart person, this shouldn’t be too much of a stretch for STc readers. Now imagine that you combine your knowledge of media technology and your common sense and you invent a revolutionary tool that allows humans to conversate in real-time from all over world in 140 characters or less. Your invention is simple, sweet, and widely popular. Now imagine that companies, entrepreneurs, and everyone under the sun begins using your tool to make money. This is all great news except for one problem: you don’t make a penny. This all leads one to question the first part of this exercise, can the person in this scenario really be that smart if he is the only one NOT making money off his own invention?

Well, meet Twitter. To date, there are no ads, no charges, and no premium level accounts for this widely popular, free social media staple. If there is one thing I have learned in life, nothing stays free for long.

Twitter started during a brainstorm meeting in 2006 at a podcasting company called Odeo. In less than a year, it was being used at South by Southwest festival and the rest is history. To date, Twitter subscribers have used it to fuel revolutions, inform others of major events in real-time, and most recently assist relief efforts during the Haiti earthquake. But Twitter’s business model was late being born and as far as anyone can tell, its income simply involves investment funds from venture capitalists.

Did you hear that? Venture capitalists.

Venture capitalists, by definition, don’t venture into anything unless they know they will capitalize down the road. The only conclusion can be that the brass behind Twitter plans to sell out, as any smart person would.

So we know from reasonable deduction, that Twitter will soon have to make its money from somewhere. Where will this income come from? Here are a few ideas:

Subscribers
Thats right, you and me. It might not be long before a simple $10 per month fee is passed on to us to keep and/or upgrade our accounts. Another rumor is some sort of pay-per-follower system is put in place. If this happens, Twitter stands to make a lot of money but also lose a lot of subscribers and third-party developers. This would probably be the easiest model, but not the most beneficial and definitely not the most popular.

Advertisers
This is also known as going the way of the Facebook. Sure, your third-party Twitter app on your phone features ads, but Twitter doesn’t get paid for those at all. It is quite possible that Twitter will start putting ads inside of your tweets. Think about it, most people don’t use Twitter.com to post updates anymore, adspace there would be almost useless. Instead, you may be limited to 110 characters, leaving 30 characters for sponsors space. This option will probably make more money for Twitter and be much more popular with users, but will require a hefty backend.

Google
This is what I would do if I were in charge, sell out and walk away. Who would buy such a thing? Well, Google of course. The search engine giant has already said they want to take over the world and Twitter represents a market they have yet to tap effectively: personal SMS. If this happens, either one or a combination of both of the above options may be put in place.

It is just a matter of time before Twitter as we know it goes away. But there is no reason to panic, I am sure the next big social networking and micro-blogging tool is already being invented by some smart MIT grad student and we will have a few years of using his tool for free before he gets smart too.