One of my first blog posts mentioned Cyworld, the social network from Korea with an interesting freemium business model. The Financial Times (via Joshua Mack’s blog) has a follow-up on their US introduction.
Here are some excerpts from the article:
“At seven years old, Cyworld is a veritable veteran in the world of social networking. A dominant force in South Korea, where up to 90 per cent of under 20s are believed to be Cyworld members, the website is now looking for eyeballs in other parts of the world. Top on the list of new targets is the US, the world’s biggest media market. But the US market is already dominated by a younger rival, MySpace, which Rupert Murdoch’s News Corporation bought last year. It turns three years old next month and is by far the world’s biggest social networking site, with 140m members.”
“At first Cyworld was not sure if it could attract a US audience in light of MySpace’s dominance. Research showed that many people have two to four social networking sites, says Michael Streefland, director of marketing for Cyworld. “There is a site for the real you, a rite of passage site that you would join during a particular phase of your life, and the fun, hot, new trend site,” Mr Streefland says.””Cyworld is betting that it will appeal to the “real you”, making it part of people’s lives for many years. Facebook, the second biggest social networking site in the US, fits in the second category. Mr Streefland believes that MySpace falls into the latter segment, meaning that people will stop using it after a few months as they get bored or exhausted of the effort of having to maintain “cool” personas.”
“One of the biggest threats to the popularity of all three sites are technological glitches. Already, News Corp’s internet executives scrutinise a weekly report that shows how long it takes for MySpace users to access new pages. Indeed, Mr Streefland attributes the success of Cyworld, owned by SK Telecom,and MySpace to the fact that both have corporate parents with expertise and deep pockets. “”Another is the risk of driving users away with over-commercialisation. To this end, most sites are limiting the amount of advertising, and other sources of revenue such as deals with mobile phone operators or e-commerce – 80 per cent of Cyworld’s income in South Korea – are being pursued.”
What it means: I’m still fascinated by Cyworld’s business model, i.e. micro-transactions of “acorns” (the Cyworld currency) to decorate your mini-room and avatar. There are also major opportunities for brand sponsorships. What I don’t understand though is Michael Streefland’s positioning statement. I don’t know if Cyworld is really this site for the “real you” or a rite of passage one like MySpace. I believe Reid Hoffman is trying to make LinkedIn the social networking site for the real you. And I think he might be right for anyone over 30.
By the way, we’ve created a basic avatar and mini-room at http://us.cyworld.com/Praized . Feel free to add us as a friend!