E-commerce and other internet companies can take cues from industries like retail and commercial aviation to build loyalty businesses
Alex Danco : Tweets: @jasonfried , @nikillinit , and @simoncarless Tweets: Jason Fried / @jasonfried : When Google puts 4 paid ads ahead of the first organic result for your own brand name, you're forced to pay up if you want to be found. It's a shakedown. It's ransom. But at least we can have fun with it. Search for Basecamp and you may see this attached ad. https://twitter.com/... Nikhil Krishnan / @nikillinit : This @Alex_Danco piece about positional scarcity is a new favorite of mine - a great framework in how to think about the intersection of curation, prestige, and access https://alexdanco.com/... https://twitter.com/... Simon Carless / @simoncarless : Great @Alex_Danco overview of what he's calling ‘the loyalty business’, as part of a piece addressing ‘positional scarcity’ - music curation, better Google search placement, etc: https://alexdanco.com/... https://twitter.com/...
Context & Ripple Effects
Alex Danco's piece, amplified by his own framework of positional scarcity — curation, prestige, and access — lands on a live irritant: Jason Fried's complaint that Google places paid ads above the first organic result for Basecamp's own brand name, forcing the company to bid on itself. Nikhil Krishnan's endorsement frames the piece as the go-to lens for why internet businesses feel squeezed at the point of discovery.
The argument arrives against a backdrop this coverage has been building: Benedict Evans' case that software has eaten the world and faded into the background, leaving conventional differentiation concerns in charge, and Stratechery's earlier argument that dysfunctional ad markets are the root of media's woes. Danco's prescription — borrow loyalty economics from retail and commercial aviation — is the constructive counter to both.
First-order effects
- Brands whose discovery runs through Google's auction — Basecamp being the named example — must pay rent on their own brand-name traffic whenever Google inserts paid slots above the first organic result.
Second-order effects
- Platforms and merchants respond by building owned demand rather than rented distribution: Stratechery's Shopify argument — that Shopify should supply substitute advertising functionality and build its own network once Meta was handicapped by Apple's ATT — is exactly the loyalty-and-owned-audience move Danco's framework predicts.
Third-order effects
- If software differentiation keeps commoditizing as Evans argues, the durable asset for internet businesses becomes the customer relationship itself — frequent-flyer-style loyalty mechanics rather than product features — and the bargaining power shifts toward whoever owns that relationship instead of the auction.
The trend: Internet businesses are shifting from renting distribution through search and social ad auctions to owning loyalty and direct customer relationships, with brand-name ad auctions as the forcing function.