Is the Unique User an Endangered Species?

If I've learned anything in 10 years of covering entrepreneurs, it's that they love to cheat. If you ever play a game with one of them, be very clear about the rules. Here's why: To an entrepreneur, it's not just winning that's important—it's also outfoxing the game. Don't forget that many of the most famous startup guys—from Apple (AAPL) co-founder Steve Wozniak to Microsoft (MSFT) co-founder Bill Gates to Slide founder Max Levchin—began as hackers, breaking the rules mainly for sport.

This tendency isn't always a bad thing, at least not from a business point of view. Starting companies is a risky mix of luck and skill. The more an entrepreneur can take something normally left to luck and make it a test of skill, the more likely he is to win or otherwise overcome a challenge.

But lately Silicon Valley's system-gaming penchant has shown up in a frenzy to add social media friends and followers faster than everybody else. This is no mere popularity contest among bloggers with fragile egos. By using tricks to inflate the number of new people who click on a person's blog, profile page, or Web site, friend-adding and link-baiting schemes threaten to undermine the credibility of one of the few reliable yardsticks left for measuring a Web site's traffic: the unique user.

Taken in by Twply Evidence of the troubling fad can be seen seemingly everywhere with increasing frequency, as sites, bloggers, and individuals struggle to monetize their popularity. Remember the early Facebook apps that sent unauthorized "Zombie" invites to all your friends? The tactics became so heavy-handed that Facebook announced last May it would start penalizing spammy applications.

Now we're seeing it on the microblogging sensation Twitter. In December an application called Twply launched asking users for their Twitter user names and passwords. It used those logins to send out a Tweet pretending to be from each user that read: "Just started using to get my @replies via e-mail. Neat stuff!" The trend spread rapidly as A-list bloggers and techies, including Michael Arrington of TechCrunch, not only tried it but appeared to give it their blessing. Soon, people saw that either all their friends suddenly began saying "neat stuff!" or they'd been had. A backlash started, but it hardly mattered. Twply sold itself—and all the user login data—on for $1,200 just hours after it launched.

That's not so different from link-baiting, the cozy tendency among bloggers to agree to link to one another to drive up the number of unique visitors.

Seduced by Slide Many entrepreneurs herald this kind of behavior as an effective, even brilliant, form of viral marketing, causing their apps, brand, or message to spread faster than ever. They use a high number of friends, followers, links back to their blogs, and other metrics as evidence to investors and advertisers of how much people love their content.

Why take the risk that people like your application or content enough to spread the word themselves when you can, in effect, do it yourself? Take Slide, a maker of applications that sends a message from you to all your social network friends, inviting them to add the app, too. At the company's last funding round, Slide boasted the fifth-largest reach on the Web, just after (AMZN).

But there's a fine line between watching metrics as an indicator of content quality and sacrificing content in the name of shamelessly goosing metrics. And some feel Web 2.0 companies are crossing the line, ironically destroying the value of the very gauge they are hoping to use to boost revenue and profit: the unique user. "The virality of Web 2.0 has had one very negative side effect: the devaluation of unique users as a metric for selling advertising," says Roger McNamee, managing director and co-founder of private equity firm Elevation Partners and an adviser to several new-Web companies. "Web 2.0 startups have figured out how to leverage each other's uniques, which makes all uniques less valuable."

PayPal Started It All For many advertisers, the unique visitor is one of the last Web-usage metrics that means anything. Advertisers have long since stopped counting "hits," the number of times a graphic or another piece of content is clicked on a given page. They also no longer put much stock in page views, a metric that can also be gamed and in some cases undervalue traffic to sites that use such tools as drop-down menus.

Artificial virality traces its roots to PayPal, the online payment system co-founded by Levchin, Peter Thiel, and other entrepreneurs that's now owned by eBay, according to McNamee. Remember when the company offered to pay users $20 for each new user they referred? Sounds pretty lavish now, but when compared with the hundreds of millions of dollars dot-bomb companies used to spend on advertising, PayPal's method was a bargain. Various iterations of that approach have worked their way into companies later founded and funded by PayPal's founders and early executives, Levchin's Slide among them.

In the name of building brand, market influence, or just egos, early adopters have started a gold rush for more Twitter followers, Facebook friends, and MySpace pals. Never mind that there's little evidence that the 40,000 followers you got because you offered them a free Macbook Air, or because you added them first and they felt obligated to add you back, gets you anything more in terms of links or market clout than you get from 2,000 dedicated followers who sought you out without being prodded or tricked.

The Lowdown on Tweets founder Kevin Rose, boasting the second-highest following on Twitter, is a master of personal branding. He recently penned a piece for TechCrunch called "10 Ways to Increase Your Twitter Followers." Not a word of the post went to explain why these 10 tips would be a better use of your time than, say, focusing on building a better application if you're a developer or writing a better blog post if you're a blogger—or just being more interesting if you strive to be a thought leader.

After the post appeared, I got into an instant-messaging debate with Rose about the value of followers for the sake of followers. He said it was the equivalent of having a banner ad—but for free. What's wrong with that? But with a banner ad, people realize they're being sold something. On Twitter, people want to connect with friends or seek out news and information. "For some it's a game, some it's a utility, some it's a mixture," Rose said in an IM.

A bold example of the first category was seen earlier this month. A guy named Ryan Wade posted a video that promised to tell people how to make $4,000 by sending one Tweet. The only catch: You have to enter your Twitter user name and password to get the "secret." What was the secret? No clue. I don't give out user names and passwords, particularly for a tool that I use to personally connect with friends and readers.

And I'm happy to have plenty of Facebook friends, Twitter followers, and readers of my blog and column. But I'd rather they come because they find something of value—not because I gamed the system to get them there.

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