Twitter took a big step toward claiming their territory (which, after all, they created) regarding what advertising will or will not appear in the Twitter stream. The short answer is that no third party ads will appear there so the Promoted Tweets program introduced by Twitter will be the sole provider of advertising.

This is potentially bad news for several companies including Ad.ly and Twad.ly whose models were built , at least in part, around the ability to advertise in the Twitter stream. TweetUp has responded that they never intended to advertise in stream anyway.

Here is information via the Twitter blog and TechCrunch regarding Twitter’s decision.

First, third party ad networks are not necessarily looking to preserve the unique user experience Twitter has created. They may optimize for either market share or short-term revenue at the expense of the long-term health of the Twitter platform. For example, a third party ad network may seek to maximize ad impressions and click through rates even if it leads to a net decrease in Twitter use due to user dissatisfaction.

Secondly, the basis for building a lasting advertising network that benefits users should be innovation, not near-term monetization. Twitter is uniquely dependent on and responsible for the long-term health and value of the platform. Accordingly, a necessary focus of Promoted Tweets is to explore ways to create value for our users. Third party ad networks may be optimized for near-term monetization at the expense of innovating or creating the best user experience. We believe it is our responsibility to encourage creative product development and to curb practices that compromise innovation.

It is important to keep in mind that Twitter bears all the costs of maintaining the network, protecting the Tweet stream against spam, supporting user requests, and scaling the service. Indeed, Twitter will bear many of the support costs associated with any third-party paid Tweets, as Twitter receives support emails related to anything a user sees in a tweet stream. The third-party bears few of these costs by comparison.

Essentially, Twitter doesn’t want to trust their network integrity to third parties. One has to think that this makes good sense. Also, when you get down to it Twitter isn’t interested in becoming a place for freeloaders. The costs of maintaining the Twitter stream are not shared so Twitter feels that they don’t need to be mopping up for others who will just create more work for Twitter but not add to the real stream of interest; the revenue stream.

Twitter has updated their Terms and Conditions and that can be seen here.

So the big news is that Twitter wants to make money for itself. Not exactly earth shattering. If there are companies that models get blown out of the water by Twitter’s insistence that they control their product then so be it. That is the risk that anyone runs when their business is dependent on another platform for its success or even more importantly, its entire existence. If there is any surprise when the rug gets pulled out from under them then it’s really their own fault.

Your thoughts?