A free competitor that doesn't charge might get the business of lots of businesses. So now you -- J Random User -- have: (1) Twitter, where all your friends are, and (2) Fritter, where lots of online marketers are. Which are you going to use? Hmmmmmm, difficult decision.
And then all the businesses on Fritter notice that no one is reading their freets (frites?), and either give up or go back to Twitter and pay the twax.
Doesn't really sound like that promising a business plan, to me.
Not necessarily. But I don't think a startup has a chance of beating Twitter by offering free accounts to businesses. A startup might beat Twitter while happening to offer free accounts to businesses, but that's a different matter.
There has to be a very compelling reason to switch. Laconi.ca/Identi.ca might end up being somewhat successful, assuming it can survive it's growth. The win there is that businesses can start their own federated Laconi.ca instance to talk to other Laconi.cas out there.
But, there's still the problem of Twitter. There are so many Twitter based apps out there, that spread their brand which means there's about 6 gazillion sites other than blogs, and now news sources like CNN, that actually promote the use of Twitter. Twitter is big.
Twitter has a lot of mindshare (I can't believe how much I see it mentioned on TV or mainstream newspapers). However, in terms of user base they are still pretty small (6 million?). There will be more competitors, especially since making your app work with Twitter is relatively easy.
I think that the reason it's only 6 million is that everyone else is just using facebook. I use twitter/identi.ca to have conversations, ask questions, "microblog" but when my posts get pushed to facebook, my friends have no idea what I'm doing.
In other words, maybe the best way for someone to take down twitter is to create a compelling reason to not use facebook's status feature, and instead use the next new thing.
And then all the businesses on Fritter notice that no one is reading their freets (frites?), and either give up or go back to Twitter and pay the twax.
Doesn't really sound like that promising a business plan, to me.