Pando Is Like a Cool Glass of Water in a Desert of Ad-Supported Social Networks

By Trevor Gilbert , written on August 6, 2012

From The News Desk is really strange. The experimental Twitter-competitor being created by Dalton Caldwell has gotten plenty of attention in the last month, something real seems to be going on. The excitement is palpable among the few hundred users that have been manually added to the service -- myself included -- and there seems to be a clear promise of a better social network moving forward.

The most refreshing part, though, is that is acting like the opposite of the stereotypical Silicon Valley startup. It’s charging users. It’s making it clear who owns the data. It’s being transparent in its interactions with developers.

As I said, it’s pretty refreshing.

Let’s start out with the plan of charging for a social network. Twitter, Facebook, Google+ and nearly every other social network has been free. People -- like myself -- weren’t convinced of Twitter’s inherent value, and likely wouldn’t have ever used the service if it had cost money. Ditto for nearly every other social network.

This has had a strange impact on the type of interaction that happens on social networks. Everyone was allowed on, which is great, but at the same time, *everyone* was allowed in. As PandoDaily contributor Francisco Dao told me recently, every open system degrades over time, due to the quality of the incoming participants. (He also used the word “cockroaches,” but that’s a different story.)

It’s not just the unwanted people, but the fact that being an open network with dubious revenue streams leads to confusion in the user-base. Who owns the data? Can I delete the data? Can I say whatever I want? Twitter may be the latest company to face this scrutiny, but it isn’t the first.

Another side effect is that complaints about signal-to-noise are not uncommon. People on Facebook post immaterial status updates. Twitter has problems with spam bots. MySpace was overloaded with flashy banners and awful HTML code. These problems are a result of being an open system.

The fact that is charging $50 for upfront backers is a complete reversal from the way the other major networks have gone. There are downsides, like limiting growth and the size of the userbase, but at the same time the upsides are a cleaner ecosystem with a better signal-to-noise ratio.

Charging for the service is also unique for the company in that the revenue stream is 100 percent transparent. The company can tell users up front that the service isn’t going to sell out users, and that it isn’t going to plaster the site with ads. Some companies can skip the revenue-stream process early on with the excuse that they’ll “figure it out later.” But with, people will either embrace it and it will grow, or it will fall flat on its face.

At the same time, charging people for a closed network is a test of people’s true desires. As Hunter Walk asked last week in reaction to the possibility that Twitter will shut off third-party applications, “instead of eliminating third-party clients, what about asking users to pay?” Would it succeed, or would it be a massive failure?

That question will be tested. As will the actual inherent value of a social network.

As yet another way that is bucking the common trends of social networks and startups, the company might not even have official clients according to Caldwell. When asked via email if would have official clients, or if it would rely entirely on third-party clients, Caldwell stated, “I can imagine, that if this succeeds, that at some point that could be the case. We built this website because it was clear from feedback that we had to demonstrate the "realness" and power of our API.”

Not only is that a departure from the way platform-centric companies have been acting in the last several years, but it also points to the fact that Caldwell and co. are really taking feedback from users.

There are 200 people on the alpha right now -- it really is an alpha, as it doesn’t even have a delete button yet -- but the communication is very clear. Anyone that has a question for Caldwell or the company can ask directly, and will likely receive a response within the hour. That direct line of communication is due in part to the size of the network right now. But the fact that the company is so aggressively going in the opposite direction from the rest of social networks seems to indicate that Caldwell truly does want to make a product users love.

Another side-effect of this apparent desire is evident on the bottom of every page. When a user scrolls to the bottom of an stream, there is a line of text that states “ has made a promise to its users and developers.” It’s non-binding, but the fact that the company would go out on a limb to state such a thing speaks volumes. It means that the service and company will be held to a higher level of accountability but also that all expectations and priorities are in line.

Moving forward, the theories supporting most social networks will be tested if reaches its funding goal. The idea that social networks can only be ad-supported, or that the users aren’t really the customers, will be blown up. The theories may hold to be true, or they might prove to be entirely false.

We’ll find out in seven days when reaches its funding goal, or when it becomes a footnote in the long-history of ad-supported social networks.