Facebook, Twitter, Orkut, hi5, Friendster, MySpace…I am sure there must be very few of us who would not be having an account at the moment in any of these. The minority of you who don’t would surely feel embarrassed to say that in front of people. Its not a crime which you guys have done. But it’s just that “social networking sites” have become the buzzword today. Kids as young as in 6th and 7th std have started using them frequently. So did you ever wonder what are they how did they start?
Social networks have become very famous especially over the last few years across the world because of their affordances and reach. They focus on building a social relationship among people who share interests and activities. A social network generally consists of a profile of the user, his/her social links and different kinds of additional services.
According to a recent survey, among the people who join a social network, more than 74% of them use it to message friends. A very high percentage of people also use social networks to upload photos as well listen to music. Uploading videos, installing applications, blogging, dating are some of the other activities which people engage in on social networking sites.
The first social network “SixDegrees.com” was launched in 1997. It allowed the users to create their own profiles, create their friend lists and subsequently surf the friend lists. These features existed separately much before in dating sites and other community sites like Classmates.com. AIM and ICQ support buddy lists of friends which were otherwise not visible to others. But SixDegrees.com was the first one to combine all these features into one.
SixDegrees.com attracted millions of users but it failed to be sustainable as a business.The problems which were identified with it included the fact that it was well ahead of its time and also that many users were uninterested in meeting strangers.
From 1997 to 2001, a number of community tools began supporting various combinations of profiles and friends. AsianAvenue, BlackPlanet, and MiGente allowed users to create personal, professional, and dating profiles.
The next wave of social networks began when Ryze was started in 2001 to help people leverage their business networks. The people behind Ryze, Tribe.net, LinkedIn, and Friendster were intertwined professionally and personally. In the end, only LinkedIn among them went on to become a very powerful business service. Friendster became one of the biggest disappointments in the Internet history. Orkut, Facebook, Ning, YouTube, Twitter and almost 20 other social networks were launched during the period from 2003-06.
Some facts about different social networking sites:
My Space was bought by News Corporation for US $500mn in July 2005. The 100th millionth account was opened in 2006. A deal of US $900mn struck with Google Ads has helped it a long way in generating $2.17 per member per year from advertising that is spotlight ads and banners.
Tech Crunch is a group – edited blog of technology start – ups that is particularly the Web 2.0 sector. Its image advertisements generate US $12,000 per month while the job listings, sponsorships and advertising help bring in US $200,000. Tech Crunch is valued at US $100mn.
LinkedIn is the most famous professional networking site in the world and is valued at about US $1bn. Its revenue for 2008 was US $100mn. 1/4th of its revenue comes from advertisements while rest comes from the freemium tiered model.
Flickr was bought by Yahoo for US 40mn in 2005. Most of its revenue comes from its freemium tiered model as well as revenue share for user – generated content. It is a site wherein users can share, exchange and put their photographs.
Facebook is the most visited social networking site in the world. It was started in 2004 by Mark Zuckerberg. Its projected revenue for 2009 is US $550mn which includes earnings from brand ads, Facebook’s ad deal with Microsoft, sale of virtual goods, self-service ads and also the different apps created by developers on Facebook.
Twitter is one of the world’s fastest growing social networking sites. In 2009, it had a monthly growth rate of 1382%. It is a combined social network and micro-blogging service that enables users to send and receive messages known as tweets and due to this it is often called the “SMS of the Internet”. Twitter has received a funding of about US $62mn till now.
The most famous social networking sites in India are surprisingly Orkut (84%), Ibibo (25%), Fropper (22%) Bigadda (Reliance owned 20%), Facebook (18%), Bharat Student (15%) and Linkedin (10%) in that order. This shows that even though Facebook and Twitter are the most famous across the world in terms of the number of members and monthly views, Orkut and other local networks hold sway in the country. This comes down to the basic point of how well they have been able to connect to the local audience.
The most important issue which the different social networking sites are facing today is the monetization of their businesses. The greatest revenue earner for them is advertising but its not yielding as much revenue as they would like to have. Therefore other methods like subscription, the freemium tiered model; virtual goods (like Facebook) and even affiliate model are used. The revenue of Facebook for 2009 is expected to be US$ 500 million but its valuation is in billions. Therefore Mark Zuckerberg has to sooner rather than later take measures to make Facebook realize this.
Most of the social networking sites such as Twitter, Orkut, Facebook, Flickr, YouTube etc are just a few years old. Their initial strategy has been to build a very large database of people which they have been very successful in doing. At present, they are in the phase of devising different strategies to increase their revenue. The way they are going I am sure they wouldn’t have a problem in making this a reality.