The big question that has hung around Twitter – like many other startups (and remember, the micro-blogging service is scarcely three years old) – is how will it make money?

The conventional approach has always been around advertising. The other big social networking names Myspace and Facebook have both based their business models around advertising – walking a narrow line between offering up their users on a silver platter to advertisers, and providing a useful and free service.

According to a report by Reuters  published yesterday, Twitter bosses have decided not to go down the advertising route – something that will rank, alongside the gamble to turn down supposed offers from both Facebook and Google for the company, as either the smartest or dumbest move yet.

Twitter co-founder Biz Stone told reporters that the company plans to release a series of paid add-ons and tools to enhance the performance for professionals using twitter. This is an interesting road to revenue, particularly given that there are various tools – both free and subscription-based – out there already which exploit the twitter API to give a more sophisticated user experience. 

Amongst the possibilites, it seems, are analytics programs, official vanity urls, and possible revenue-sharing with telecom networks used by twitterers.

There are plenty of heads being scratched out there already, as the hugely popular social network seems to lose out daily by not having any form of advertising on-site. Then again, there were plenty of people who suggested from the outset that a social network where you could only post 140 character messages would be doomed to failure.

Tags: online advertising, the future for twitter, twitter analytics, twitter api, twitter tools