Viewers are not the customer of the TV networks—advertisers are.
For a long time, those two groups had similar goals, though. Advertisers wanted lots of viewers and viewers wanted shows that lots of them wanted to watch. So the TV networks used ratings as a proxy for advertiser happiness and there wasn't much of a problem.
The same thing was true for newspapers. More local readers meant local advertisers were happy.
Both newspapers and TV networks suffer when mass starts to disappear. Viewers seek out what they want to watch, as opposed to what the masses want, and advertisers are left to scramble for eyeballs.
HBO turns this upside down. The viewers ARE the customer. HBO can program with confidence, because there's no question about who they are working for.
Search engine advertising works because the search engine knows the searcher is going to leave the site no matter what. They don't care if you leave to click on an organic link or a paid one, as long as you come back often. And the advertiser is paying by the click, so he cares about having the right people click, not everyone. Fairly aligned goals among all three parties.
Which leads to the conundrum faced by Twitter as they try to monetize sufficiently to justify the expectations of their investors.
If they relentlessly sell the attention of their users, they will have a misalignment as they maximize profit. The advertisers will want ever more attention, and the users will want to avoid those interruptions the advertisers are paying for. Tension will keep rising as users feel trapped by a medium with few substitutes that begins to charge an ever higher tax in the form of attention wasted.
My suggestion: Twitter has the opportunity to become extraordinarily aligned with their best users. Offer the top users the opportunity to pay $10 a month. For that fee, they can get an ever-growing list of features, including analytics, verification, 160 characters, who knows…
10,000,000 users choosing to pay $10 a month means that the service turns a profit (!) of more than a billion dollars a year. And because the company is in alignment with their most powerful and evangelical users, that number grows over time. Every decision proposed will have to answer just one question: what makes our users happier?
Free is a great idea, until free leads to a conflict between those contributing attention and those contributing cash.