Will low user retention cap Twitter's growth?

This is my century posting on this blog. It has been 9 months since i started this blog and i appreciate your patronage to my ideas, thoughts and feelings.

A study conducted by Nielsen reveals that 60% of Twitter users fail to return to the micro blogging site a month later. In other words the user retention rates of Twitter languish at 40%! Whats more worrying from Twitter's perepective is Nielsen's forecast that at 40% retention, Twitter wont grow its internet reach at more than 10% per annum. The retention- reach model that has been used is based upon regression analysis and the following is its pictorial depiction.

Although a high retention rate doesn’t guarantee a massive audience, but it is a prerequisite. There simply won’t be enough new users to make up for defecting ones after a certain point.

There are two arguements in favour of Twitter are:

1. The majority of Twitter use happens away from the site, on mobile phones and apps like Tweetdeck, and it’s theoretically possible to be an avid Twitterer but never visit Twitter.com after you sign up

2. A lot about Twitter is a huge amount of Media mouthing as well from Obama to Ashton Kutcher to Oprah Winfrey, Lance Armstrong and more.. In essence there is lot of hype and expectation bubble around Twiter, which otherwise left to itself is doing pretty decent.

However young, it may be, Twitter's illustrious record pits it against the behemoths: Facebook and My Space in terms of Internet traffic. But the, compared tpo the boom period of Facebook and My Space, Twitter still fails to score points on Reach and Retention.

The study clearly states that retention levels at social network behemoths was double of Twitter even in their early boom phase and that retention only went up, and both sit at nearly 70 percent today.

The chart below shows the retention rate comparison with early years of Facebook and Myspace.

The answer to this may lie in the perception and usage of Twitter and its user profile. Poor retention, in other words -- just like the characteristics Nielsen attributes to Twitter traffic.The consumer value of a social-status service like Twitter resembles the value of "news" as a service. It is incidentally important, but not always important, and never all important to any one person. The intervals between incidents that you or I might deem important defy any prediction. Hence, a Obama election may form a Twitter peak, but a economic overhaul simply may not. Is this a question on supply as well? (May be another Obama-esque Twitter centric campaign or a Hudson landing will create the refresh for Twitter. Will it? We will watch this space.