Consumer Loyalty: Twitter vs. Pownce

Tired of hearing about Twitter? Apologies, but this post is based on the Twitter phenomenon. Issues of scalability, however, are thankfully not present. Instead, I want to examine Twitter as an anomaly in consumer loyalty and an example of the bizarre market dynamics emerging in the "consumer" web.

Consumer loyalty is traditionally connected to the numerous meanings of the word "value." Typically, the value of a product - say a vacuum cleaner - surrounds an exchange of currency to fill a void or fix a problem. A consumer paying $400 for Dyson expects more "value" than someone purchasing a Wal-Mart branded device. The extra money equals cleaner floors, better turning radius, cooler design, a futuristic feeling, etc. This is common sense lesson in Consumerism 1.0: functionality is directly connected to price.

Using the Dyson example, Twitter is not expected to deliver superior performance since no money is being exchanged. The staff seems to understand this dynamic as demonstrated by messages like "Yesterday pizza was sent to Twitter HQ by friendly twitterers and today it's a keg of beer from @Mister_Robotics THANKS!" Downtime is inconsequential when you have no financial obligations to customers. Looking at the graph below, Twitter has never been an extremely reliable service.

So why are Twitter followers so loyal? Why don't they jump ship? The answer partly lies in the forces governing the web economy: trust and attention. The Twitter machine does a fantastic job of garnering attention - countless news headlines and millions of tweets per day provide enough entertainment for all levels of usage. Trust is also present despite the complaints and the recent "Twit-Out." With fresh money (a rumored $15 million from Spark Capital), investors and consumer demand seem to be predicting longevity for an already rocky relationship.

There is a magic integer, however, present in both the Twitter's loyal following and the larger non-profitable web economy as a whole. Countless "me-too" services are dismissed daily, but when a behemoth like Twitter stumbles these ghosts remain in the ether. Look at the growth of Pownce vs. Twitter:

The message to struggling competitors from both investors and users seems to be "don't build a solid business." Quickly construct an attractive application, collect a massive network of data and forget about customer loyalty. Pownce is playing by the Consumerism 1.0 rules outlined in the Dyson example and struggling in traffic as a result. The company allows advertising for a flat $3.00 CPM and scaled the community by requiring invites during the first few months. Pownce also powered their platform on Python - a language used by companies of massive proportions like Google, Yahoo, and NASA.

Pownce users "pay" for product value through advertisements. Generating revenue was the price for superior products in the traditional consumer marketplace. Welcome to the "don't build a business" era.

This column was provided by Andy Angelos who is a young startup veteran critiquing the tech world from his home in Chicago, IL. Read more at www.webforchange.org.