Nielsen Online announced today that their research shows that 60% of Twitter users stop using it the following month. That is, Twitter’s “audience retention rate” is 40%, considerably less than Facebook or MySpace’s rates were at similar stages in their life cycle.

Source: Nielsen Online
Based on historical patterns for other social networking sites, this implies, says Nielsen, that Twitter’s reach will ultimately be limited to only 10% of consumers online:
To be clear, a high retention rate doesn’t guarantee a massive audience, but it is a prerequisite. There simply aren’t enough new users to make up for defecting ones after a certain point.
Needless to say, the debate rages on at Nielsen’s blog, at AdAge and other places frequented by marketers and media professionals. Some of the comments are quite emotional, particularly those submitted by Twitter enthusiasts.
Some people question Nielsen’s stats, saying they under-represent people who use Twitter via Tweetdeck, Tweetie or other third-party tweeting tools. Nielsen counter-argues that as long as those people visit Twitter.com at least once a month, they’re included in Twitter’s user base stats. (Speaking for myself, I happily use Tweetie — but do in fact visit Twitter.com at least once a week.)
Pretty much everyone agrees: the issue is not the platform, but how compelling the content is to people who exchange tweets or follow “broadcast tweets” by celebrities or those with huge numbers of followers.
The other key success factor is whether or not the conversation is stimulating or relevant for you personally, the people you follow and those who follow you. (This is why I argue you need a critical mass of like-minded people to make Twitter’s service compelling.)
For me the jury is still out…