It occurs to me, as I sit down to write another post about Twitter, that I’ve been awful hard on the startup. That springs to mind, of course, because I’m about to write another post that’s going to sound harsh. I feel like I owe Twitter an explanation here (particularly since I hear back through the grapevine that they do read my harshly critical blog posts still), so let me start with a message to the folks at Twitter:

I’m a jerk because I love your service. I’ve minced no words in the past talking about your company’s service, which I haven’t always had great love for. I’ve said things like “tone-deaf” and “no business sense” and “self-destructive.” I stand by the thoughts expressed in my previous posts, but the reason why I take the time to say them is that I believe you guys get no shortage of fawning, lovey dovey posts around the blogosphere, and you need to hear the truth once in a while from someone who cares.

All that said, here’s some more painful truth. Dick Costolo this morning, with one short blog post, destroyed hundreds of millions of dollars of startups this morning with a few taps on his keyboard, in between sips of coffee.

The announcement was made that going forward, they were going to be a lot clearer about what they wanted in their Terms of Service, and there will be no more advertising in the Twitterstream via the API unless Twitter puts it there themselves.

Just to get some perspective, this decision completely destroys the business models of Magpie, Ad.ly, TwitAds, Sponsored Tweets, MyLikes, and many other lesser known smaller companies. To put that in dollars and cents, that’s around $18 million in disclosed funding for these organizations that is now up in smoke, and given that most of these startups were profitable, it also destroys an incalculable amount of revenue going to these startups and their users.

As a basis of comparison, I receive probably a few thousand dollars each year in Twitter sponsor dollars (a measurable percentage of my income). I only have several thousand followers. It’s not uncommon for those with tens to hundreds of thousands of followers to get what I make yearly for a single tweet.

Needless to say, this income and micro-economy will be missed by many, all so Twitter can cut their users out of the equation and take 100% of the revenue instead of sharing it with the community.