The discussion of PG's decision to use closures for web development seems off topic. That doesn't directly affect the popularity of the language; it's quite possible to do things in Arc without using closures for state on the web.

I played around with Arc quite a bit and the biggest problem was that it did not have a standard library with enough stuff in it. In contrast (and talking about a totally different type of language) one of the reasons Go has been successful is the excellent set of standard packages.

If you start your language with sufficient standard library kindling then others can build on that and write more and more libraries. But start with insufficient libraries and it's hard to take off.

So, the initial releases of Arc were constrained by things that PG had already written. If you wanted to do the same then it was just fine.

As as concrete example I wanted on my old UseTheSource site (which was in Arc) to go grab a URL from a third-party site inside the code. There wasn't an easy way to do that so I wrote an external script in Perl and did the following in Arc:

  (def hn-valid (user)
    (if (uvar user hn)
          t
          (let v (system (+ "perl check-hn.pl " user))
                  (if v (= ((profile user) 'hn) t))
                  v)))

The Perl script grabbed a page on Hacker News, did some light parsing and returned either 0 or 1. That really put me off making any extra effort to use Arc (and I like Lispy languages) because I was either going to shell out to something else, or have to write everything from the ground up.

A similar thing happened with UseTheSource's Twitter integration where I could use Perl's Net::Twitter::Lite to trivially integrate.