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天蝎座的
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作者：天蝎座的 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
The MySpace Wannabes
Could the social networking bubble be ripe for a picking?
April 17, 2006 Issue
It’s a little before 9:15 a.m. when the phone rings at XuQa’s new headquarters in San Francisco. Murtaza Hussain, an affable 20-year-old, explains the background noise: a couple of the engineers are scuffling. The reason things are so lively this early in the morning, he says, is that most of the team hasn’t slept yet.
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Last year, Mr. Hussain dropped out of prestigious Williams College to found XuQa, a racy college-oriented online social network. Heavy on sex and alcohol, XuQa bills itself as “the world’s largest and most happening online party.”
It’s one of a growing legion of sites that look and feel a lot like market leader MySpace, and are finding startling levels of interest from teenagers and college students. Though it’s clear that business models are a work in progress, the hubbub has brought venture capitalists back to a sector thought to be dead as little as a year ago.
BV Capital's Tom Gieselmann also called Mr. Hussain and his two co-founders at 9 a.m. once. It was about a year ago; they were still in school in Massachusetts, and had just gone to bed. After happening on another of their web sites and checking out its traffic history on Alexa, Mr. Gieselmann says he flew the three out to California to offer them some seed money.
Just a month ago, after moving from Massachusetts to San Francisco, XuQa closed a first round of $1 million from Mr. Gieselmann’s firm. The company—whose name plays on “hookah”—is a strange fit for venture capital, even in laid-back Silicon Valley. Mr. Gieselmann, who says he has never signed up for a social network himself, remembers meeting “three super smart, very aggressive young guys” who’d won lots of traffic with minimal resources.
The Murdoch Model
If all goes extremely well, they might exit on a grand scale—and pick up a pile of MySpace proportions. The memory of NewsCorp buying the social networking phenom last year for $580 million still burns very bright.
Last July, people laughed at Rupert Murdoch’s pricey attempt to “get” the Internet. Today, NewsCorp crows about the site’s 67 million members (90 percent in the United States), and the quarter-million new ones that are added every day. Ad impressions are up 80 percent since September; February drew 23.6 billion page views in the U.S. alone, second only to Yahoo. Home page ads reportedly sell for $750,000 a day. MySpace, by all accounts, dominates the U.S.; it’s now trying to increase its stake abroad.
It turns out to be incredibly cheap and easy to make a social networking site. Bebo—which is bootstrapped and profitable and piled high with 23 registered million users since launching last July—has a single engineer. That’s CEO Michael Birch—who was an advisor to XuQa before their projects became too similar.
The would-be “MySpace killers” brag about features—like Bebo’s themed profile templates, or myYearbook’s silly yearbook-style with its “most likely…” awards—and bitch about the “neon green text on black background” atrocities that emerge from MySpace’s customizable user profiles. Each runs testimonials declaring it better than MySpace. Every CEO can recite last month’s comScore numbers on average minutes spent per visitor—sector-specific data that is said to measure “engagement” and prove that visitors don’t just sign up and disappear.
But it’s pretty superficial. “To be honest, to an end user they pretty much look the same,” Mr. Hussain concedes.
The business side isn’t much different. “If you took 10 social networks and you put them in 10 rooms and told them to come up with a business plan, they’d all come out with the same thing,” says Evan Rifkin, president of TagWorld. The magic bullet is online advertising: $15.6 billion this year, and set to nearly double by 2010, according to eMarketer.
Some older sites are starting to turn a profit. hi5, which started as a South Asian dating service, abandoned its subscription model in favor of opening up the site and making a play for advertising in 2003; starting with $250,000 in funding, it’s been profitable since 2004. Content to leave social relations to others, Palo Alto, California-based LinkedIn decided to focus on business connections and recently became profitable by charging a tiny percent of its users $60 to $2,000 per month for the ability to contact people who are not direct acquaintances. LinkedIn Vice President of Marketing Konstantin Guericke says his company neatly avoids consumer hesitance to spend money online—he guesses over 90 percent of premium accounts are expensed.
Outside the U.S., where the ad dollars don’t flow as freely, social networking business models are more creative. Some networks charge for premium services such as text messages or virtual goods; one, Cyworld, has at least a third of the South Korean population signed up.
Taboo to Turned On
Not so long ago, social networking sites were taboo in Silicon Valley. Slow-loading web pages and limits on what users could say turned people off San Francisco-based Friendster, which was once synonymous with online social networks. Today, with nearly 90 percent of its 9 million visitors from outside the U.S., the site has fallen off the radar. Tiny startups joke that their acquisition budget could easily include Friendster. Early investor Kleiner Perkins recently added additional funding to restructure the company’s finances in an attempt to get it back on track.
Even by year-end 2005, Tagged CEO Greg Tseng had to choose his words carefully to get meetings on Sand Hill Road. Mr. Tseng’s project was essentially a safer version of MySpace. “When we were talking to VCs,” he says, “we called ourselves ‘online media 2.0 for teens.’”
He quoted liberally from reports by Teenage Research Unlimited and Morgan Stanley. U.S. Teenagers account for $400 billion in spending, says one Tagged PowerPoint slide, and advertisers don’t spend money commensurate with the amount of time teens spend online. But after closing a $7-million second round in December (from the Mayfield Fund), Mr. Tseng rebranded his company as “a social networking portal for teens.” With a spate of similar-sized deals announced in the first quarter of 2006—Tagged, TagWorld (no relation), WisdomArk—it was clear the curse had lifted.
Social networking growth has eclipsed all reasonable expectations. In November 2005, when MySpace had 34 million registered users, JupiterResearch estimated there were 150 million people on social networking sites around the world, with 60 percent in the U.S. and 15 percent in Europe. The firm’s determination that the U.S. market was “nearing saturation” last fall seems silly now; MySpace alone doubled its numbers only four months later.
To give the analysts credit, though, it’s hard to wrap your mind around the seemingly unending interest kids have on these sites. Mr. Rifkin’s TagWorld, which only launched in November, seemed too late and too derivative. Why would people want to type in their favorite movies, upload their pictures, and invite all their friends again? But as of the beginning of April, the Santa Monica, California-based startup had registered nearly 1.3 million users, and taken $7.5 million from Draper Fisher Jurvetson. While originally intended to be an over-18 site, the majority of users are now teens and young adults, says Mr. Rifkin.
Despite the flock of barely differentiated sites, the companies aren’t really fighting over users in the traditional sense. Kids maintain profiles on many sites. Tagged did a study of users who mention MySpace in their profiles, and found that they are significantly more “engaged.” The competition, at this point, is over which site can grab whole high schools. The evidence shows that once a network takes off in a school, it will frequently sign up 80 to 90 percent of the student population.
Facebook, a project of three Harvard University students now located in Palo Alto, raised $12.7 million from Accel. With its staff of 100, it has the college market pretty much sewn up: 100 percent penetration of U.S. four-year schools, and something like 72 percent of fulltime American college students on its network. Though it officially rebuts rumors, Facebook has reportedly turned down a $750-million offer while it holds out for billions.
High schools are a different battlefield, with Sconex taking 94 percent of New York City’s highly selective Stuyvesant High School, and Bebo being big in Texas, for example. Growth often seems to be a matter of dumb luck, with Google’s underemphasized social networking effort, Orkut, becoming the Brazilian network of choice for no apparent reason. As of early April, 73 percent of Orkut users were Brazilian.
Engaging, but Lucrative?
So what do these kids do on the sites? They maintain their own pages, leave comments on friends’ pages, surf around other profiles. And that’s good for “engagement” numbers but bad for traditional pay-per-click advertising. JupiterResearch analyst Nate Elliott is a vocal naysayer. “Just because a handful of kids live and breathe on these things doesn’t mean it’s a big business,” he says.
“Advertisers don’t want their ads shown to a single user a thousand times a month.”
His figures show that 18 percent of users return weekly and 53 percent never go back to a site after signing up. Forrester Research analyst Charlene Li is more forgiving. “I think, frankly, advertising on the social networks will have to change,” she says.
The networks, for their part, are eager to capitalize on the way people use their sites, weaving advertising into networks themselves. Santa Monica, California-based MySpace has the usual expensive banner ads on its home page, but it also charges advertisers for integrated advertising. A cartoon promoting Wendy’s restaurant, for example, has its own MySpace page where it “posts” daily one-liners. Strangely enough, the Wendy’s character has attracted nearly 100,000 “friends.”
“At first glance it’s a campaign for a hamburger restaurant,” admits Colin Digiaro, who heads up MySpace sales. But he contends that other kinds of advertising are lost on MySpace users. “The Internet has been around 14 years now,” he says. “This generation has grown up on instant messaging and cell phones, so their consumption of media as a whole is very different.”
Mr. Digiaro’s department takes old-school advertisers and translates them to the new pop culture, he says—for example, prompting Wendy’s to bring the character to the site and promoting it among featured profiles. The MySpace wannabes are figuring it out too. “For Yahoo it’s one-to-one, AOL it’s one-to-one, on television it’s mass advertising,” says Jim Scheinman, vice president of business development and sales at Bebo. He talks about targeting groups within Bebo and using member connections to spread a message. “You can only do this on social networking sites,” he says.
MySpace has its weak spots, and the competition is eager to capitalize on them. Its resistance to impose itself on its users has lead to real-world privacy and security threats, and parents and educators are less than happy. Tagged has set itself up as a safe alternative, allowing only U.S. teens to join and certifying their birthdates and addresses. Facebook and other college sites limit signups to those with .edu email addresses. A new company, Industrious Kid, is going after the kids who have to lie to get through MySpace’s age requirement: eight- to 14-year-olds. Its private network, which will charge parents for subscriptions, has raised $6 million from individuals.
XuQa investor Tom Gieselmann, asked if he sees a bubble in the MySpace space, answers unequivocally: “Oh, absolutely—the market will consolidate.”
The question is, as with all things teen, is this just a fad? At the moment, it’s hard to rule out that possibility. Even the founders of social networks cross-pollinate and shift around; Friendster employees are scattered throughout the Valley trying to do it right the second time around. Bebo’s Mr. Scheinman, for example, was looking into new business opportunities at the fading Friendster when he saw Bebo and jumped ship.
They’re hoping the kids won’t be quite as fickle—which is a bit like wishing pigs could fly.
MySpace's Children
Starting a youth-oriented social network has become almost as much of a fad as the social networks themselves.
Name
Description
Launch date
Registered users (worldwide)
Signups per day
Page views per month (U.S., February)
Unique visitors per month (U.S., February)
Bebo
Popular in the U.K. and Ireland
Jul-05
23 million
35,000
230 million
1.2 million
Facebook
Lock-grip on the U.S. college market
Feb-04
7 million
Declined to report
5.5 billion
10.5 million
MySpace
Far and away U.S. market leader
Jan-04
67 million
250,000
23.6 billion
37 million
myYearbook
Started by two high school kids
Apr-05
600,000
4,500-6000
55 million
2.7 million
Sconex
Targeting high school students
Jan-05
500,000
4,000-5,000
1.1 billion
439,000
Tagged
Allows only U.S. teens
Oct-04
2.5 million
10,000
354 million
1.7 million
TagWorld
Late to the scene, but impressive design
Nov-05
1.3 million
15,000-20,000
14 million
3.2 million
Xuqa
A rowdy site for rowdy college kids
Sep-05
550,000
5,000
Not measured
Not measured
Source:
Red Herring
Company
Company
Company
comScore Media Metrix
comScore Media Metrix
Name
Average minutes per visitor (U.S., week ending 3/25/06)
Location
Employees
Funding
Bebo
21.5 minutes
San Francisco
9
Bootstrapped, no institutional funding
Facebook
15 minutes
Palo Alto, California
100
$12.7 million from Accel Partners
MySpace
29.5 minutes
Santa Monica, California
280
Parent Intermix bought by NewsCorp for $580 million in July 2005
myYearbook
10 minutes
Skillman, New Jersey
3
$1.5 million from angels
Sconex
27 minutes
Cambridge, Massachusetts
12
Bought for $8.7 million by Alloy in March 2006
Tagged
25 minutes
San Francisco
35
$8.5 million from Mayfield, angels
TagWorld
17 minutes
Santa Monica, California, with development in Moscow
60
$7.5 million from Draper Fisher Jurvetson
Xuqa
5 minutes
San Francisco
19
$1.3 million from Bessemer Venture Partners, angels
Source:
Hitwise
Company
Company
Company
作者：天蝎座的 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 [转帖] The MySpace Wannabes (frm Red Herring) -- 天蝎座的 - (14867 Byte) 2006-4-21 周五, 07:32 (849 reads)
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