I take great pleasure in reading passionate pieces where the writer calls attention to faulty and widespread thinking. (I like to write such pieces myself but I give props to other thought leaders no prob.)
Writing on Valleywag, author and frequent conventional wisdom debunker Clay Shirky really has hit the mark with his column "A story too good to check."
The thesis of Clay's story is that both online and offline journalists have a tendency to quantify a product or service's number of users by sign-ups. The big omission, Clay feels, is not taking into account the number of users who try such a service once for the novelty affect and don't stick around.
That's not exactly the same thing as "churn," which can be tracked. The more likely scenario are those who download a product or service, complete the registration process, try it once or twice, and don't come back.
You know, like Skype. Skype says they have 136 million "registered users." But I know more than a few people who've registered, tried Skype a few times, and then went on. They never have revoked their registration, but the only evidence of the fact that they've even tried Skype is a desktop icon or maybe even just a random executable somewhere on their hard drive.
RealNetworks used to be "real" bad at this as well. As far back as 2001 they were saying they had "200 million downloads" of their RealPlayer. Although many of these downloads were "TryMe's by the same people merely installing an incremental upgrade for rare use, much of the press passed on the statisti I just mentioned as a citation that RealPlayer, had, in fact, "200 million users."
And what about those orphan executables sitting on our hard drives and cluttering them up? Orphan executables of online software and services that we tried once or twice but never actually bought once the trial period was over?
Paid or free, the counting of downloads or registrants as users is simply inaccurate. Clay Shirky calls the phenomenon the "TryMe Virus."
Clay uses Second Life for his example. He writes:
So here's my question -- how many return users are there? We know from the startup screen that the advertised churn of Second Life is over 60% (as I write this, it's 690,800 recent users to 1,901,173 signups, or 63%.) That's not stellar but it's not terrible either. However, their definition of "recently logged in" includes everyone in the last 60 days, even though the industry standard for reporting unique users is 30 days, so we don't actually know what the apples to apples churn rate is.
At a guess, Second Life churn measured in the ordinary way is in excess of 85%, with a surge of new users being driven in by the amount of press the service is getting. The wider the Recently Logged In reporting window is, the bigger the bulge of recently-arrived-but-never-to-return users that gets counted in the overall numbers.
I suspect Second Life is largely a "Try Me" virus, where reports of a strange and wonderful new thing draw the masses to log in and try it, but whose ability to retain anything but a fraction of those users is limited. The pattern of a Try Me virus is a rapid spread of first time users, most of whom drop out quickly, with most of the dropouts becoming immune to later use. Pointcast was a Try Me virus, as was LambdaMOO, the experiment that Second Life most closely resembles.
"TryMe Virus." Effen brilliant.