Should Twitter Follow YouTube — or Craigslist?

I’m already getting a little tired of writing about Twitter, but it remains a fascinating phenomenon. One blogger asks today, has Twitter already peaked? That’s based on an alleged flattening of searches on “Twitter.”

I don’t agree that it has peaked; it’s just getting started in many ways.

But what direction(s) will it go; and (when) will it be acquired and by whom? First, I’ve written a great deal already about potential directions it could go — including into local as a form of “social DA.” In October, 2007 I wrote about Mosio, an early version of the model being pursued by more recent entrant Vark. Twitter could emulate some version of this Q&A, social DA strategy — some are already using it this way to get local recommendations.

Along those lines, eLocal Listing’s Steve Espinosa has written the provocatively titled “How Twitter Will Win Local Search.” I don’t agree that Twitter will “win,” but it could become a very effective marketing tool for local businesses (already has for some). And, as I’ve said above, it could also evolve into an effective “local search” tool: Q&A, social search, social DA — whatever name you want to use.

Daily there are articles like this one in the NY Times speculating about Twitter’s revenue model and whether it will be acquired and by whom.

There are only about 30 employees at Twitter. What if the site chose not to follow Google’s model or Facebook’s but instead Craigslist? Craigslist is a private company that has many millions in annual revenues (which have been estimated by Classified Intelligence at $80+ million). Facebook’s revenues for 2008 were predicted to be about $300 million or so.

Twitter is a more effective potential marketing vehicle than Facebook in many respects and certainly a broader marketing vehicle than Craigslist. So let’s say for argument that the site could generate $100 million annually through a combination of sponsorships, paid corporate accounts, paid search monetization and display advertising. If eventually Twitter could fully monetize like that it might well be able to hit $100 million in annual revenue. That would mean about $3.3 million a Twitter employee. Not too shabby.

But Twitter’s “patient investors,” as co-founder Biz Stone described them earlier this month on The Colbert Report, would be unlikely to allow Twitter to monetize and sail along as a private company. Their billion-dollar payday would be lost.

Twitter is likely looking to reach certain internal milestones and valuation figures before agreeing to be acquired. A much more unlikely scenario is a public offering. However rather than modeling itself after Google (or more analogously YouTube) or similar Internet bellwether, I think Craigslist is a much more interesting and potentially constructive model.

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Related: Oprah blesses Twitter: suburbanites get ready to Tweet.