Is the Unique User an Endangered Species?

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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

Digg.com 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.

Lacy has been a business reporter for 10 years, most recently coverhas been a business reporter for 10 years and is currently writing a book on global entrepreneurship. Her first book, Once You're Lucky, Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0, was published by Gotham Books in May 2008. She also blogs for TechCrunch.