Facebook fends off attack of the clones

Saturday, August 2nd, 2008 - No Comments »

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In its bid to go global, Facebook is facing off against itself.

Clones of the wunderkind social-networking Web site — some of which resemble Facebook right down to color, font and layout — have popped up in local languages around the world. These competitor sites offer identical core services, letting users post pictures, make groups and choose their friends.

All are complicating Facebook Inc.’s global campaign, which began in February and has since rolled out 18 foreign-language editions, including Norwegian and Czech, with plans for 54 more.

Facebook’s international challenges illustrate just some of the ways global expansion can bedevil major U.S. Web companies as they seek swarms of users and advertising dollars in new markets.

Facebook’s particular problem is winning over people who are already hooked on local-language sites hocking similar services with a similar look.

In Russia, for example, where Facebook launched last month, the entrenched social-networking engine online is Vkontakte, a Russian-language Facebook clone that boasts more than 14 million users.

Facebook officials predict they will eventually triumph, partly because they can spend more resources on improving their site than upstarts can. Facebook also has a strong network of outside programmers who write Web applications for the site, and the company said last week it would extend its translation tools to those developers, to make Facebook even more compelling for overseas markets.

Plus, its users can connect with friends from other countries, something local sites can’t offer.

“They can gain traction in individual countries but they are not going to be able to compete on a global scale,” Facebook spokeswoman Jaime Schopflin said.

But social-networking sites mirror real life, and many Russians dread moving to a neighborhood where they have no friends.

“All of my Russian friends are on Vkontakte,” said Moscow resident Galina Ryazanova, 21, a recent college graduate who uses both Web sites. “I don’t think they’ll switch to Facebook because everyone is already established on Vkontakte.”

Ryazanova visits Facebook about once a month to keep up with her non-Russian friends, she said, but uses Vkontakte three or four times a week. She criticized Facebook for adding too many distracting applications, and for allowing users to translate part of the site — producing what she called poor-quality Russian.

Facebook dominates the social-networking market in many English-language countries and is growing quickly elsewhere. It is the most popular social-networking site in Britain and one of the top three in France, tracking company comScore reported.

But in countries like Germany and Russia, where competitor sites have taken root, Facebook seems to be gaining ground more slowly. According to comScore, Germany’s StudiVZ and Russia’s Vkontakte are widely outdrawing Facebook.

Facebook software engineer Alex Moskalyuk said his company has no direct strategy to attract users from competitor sites.

“You can spend your time worrying about the competitors or you can spend your time innovating your product,” he said. “We chose to do the latter and not the former.”

That strategy apparently changed this month, when Facebook filed an intellectual-property lawsuit against German clone StudiVZ in a federal court in California.

Though Facebook claims StudiVZ unfairly copied its content, StudiVZ says Facebook is trying to stifle the competition as it pursues the global market. The faceoff has fueled speculation that a string of lawsuits against clone sites could begin.

The stakes are high. Microsoft snared 1.6 percent of Facebook for $240 million in 2007, valuing Facebook at roughly $15 billion. Investors poured $430 million this year into the parent company behind China’s Facebook-like Xiaonei. Der Spiegel reported that a publishing company bought StudiVZ for $132 million in 2007.

In Russia, Vkontakte dominates the market along with one other site, which is geared more toward adults.

“Vkontakte has already become like a habit,” Nikita Glushik, 19, said as he checked the site at a Moscow Internet cafe. He said he had never heard of Facebook.

With the sites looking so similar, Russia’s renewed sense of national pride might be enough to give Vkontakte an edge.

“Facebook is American and Vkontakte is Russian — that’s the main difference,” Ryazanova said. “It’s going to be tough for Facebook to displace Vkontakte.”

Social networkers heavy consumers of content

Saturday, August 2nd, 2008 - No Comments »

Social network users are much heavier consumers of digital content including SMS, mobile email, photos, music, games and mobile TV than mobile phone service subscribers.

The revelation comes from recent research published by industry analyst ABI Research which canvassed 1,000 mobile subscribers and just over 500 social network mobile subscribers in the US.

Three quarters of the latter group were aged between 18 and 30, and were twice as likely to own a smartphone as their non-networked equivalents.

“The fact that online social networkers consume more mobile content and media than mobile subscribers who are not into online networking may not be really surprising,” said principal analyst Nick Holland.

“However, what we have long suspected is confirmed by the numbers: for most kinds of mobile content, online social networkers consume about twice as much as their non-networked peers.”

The driving force behind online social networkers’ consumption of mobile media is that they are on average younger and more tech-savvy.

Also, many social networks are organised around a specific media-related interest such as photography or music.

“Advertising on social networks is not working particularly well, so promotion of mobile content on online social network sites should be a high priority for mobile operators, content distributors, media companies and advertisers,” said Holland.

Location-Based Mobile Social Networking: A $3.3 Billion Market In 5 Years?

Saturday, August 2nd, 2008 - No Comments »

Location-based mobile social networking is just getting started in the U.S., and there’s a lot of hype surrounding it. But will that hype turn into dollars?Research firm ABI Research predicts the nascent industry will turn into a $3.3 billion market worldwide by 2013. Where will that money come from? Location-based mobile advertising “holds a lot of promise,” notes ABI analyst Dominique Bonte, in a statement. But “the current reality” suggests licensing and subscription revenue-sharing — like Loopt’s recent deal with Verizon Wireless — the most likely near-term revenue streams.

It’s hard to put much weight in pie-in-the-sky predictions like this: It’s one thing to take an existing market and plot out a growth chart. Bit right now the industry is a goose egg, give or take a couple million. We’d hold off before predicting a huge boom.

More interesting to us: Whether today’s location-based mobile social networks — like Loopt, Whrrl, etc. — will be able to outlast more established social networks like Facebook, MySpace, Twitter, and maybe LinkedIn, once location becomes a feature on those platforms.

When you already have several hundred friends on a social network, it’s a lot easier to add a feature like location than it is to add several hundred friends on a network whose main attraction is location.

Social network Facebook to go Web wide

Sunday, July 27th, 2008 - No Comments »

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The leader of a youth movement that swept the world this past year by encouraging Web users to share bits of their lives with selected friends spoke on Wednesday of spreading his service across the Web, even while apologizing for past excesses.

Mark Zuckerberg, 24, told an audience of 1,000 industry executives, software makers, media — and his mother and father — at Facebook’s annual conference of how the company’s features will run on affiliated sites outside its own.

“Facebook Connect” will transform the social network from a private site where activity occurs entirely within a “walled garden” to a Web-wide phenomenon where software makers, with user permission, can tap member data for use on their sites.

“Facebook Connect is our version of Facebook for the rest of the Web,” Zuckerberg told the second annual F8 conference.

Facebook, begun in 2004 as a socializing site for students at Harvard University, has seen its growth zoom to 90 million members from 24 million a little over a year ago, overtaking rival MySpace to become the world’s largest social network.

It has lured 400,000 developers to build programs for it since opening up its site in May 2007. Now Facebook is letting designers build software on affiliated sites, for mobile phones or as services that tap desktop applications like Microsoft’s Outlook e-mail system. It said that in coming months it would let designers building software for Facebook simultaneously create versions for Apple Inc’s (AAPL.O: Quote, Profile, Research) iPhone.

“As time goes on, less of this movement is going to be about Facebook and the platform we have created and more about the applications other people have built,” Zuckerberg said. “This year, we are going to push for parity between applications on and off Facebook.”

At Social Site, Only the Businesslike Need Apply

Tuesday, June 17th, 2008 - No Comments »

For a Web site, it could hardly look less exciting. Its pages are heavy with text, much of it a flat blue, and there are few photos and absolutely no videos.


But LinkedIn, the social network for professionals, is dull by design. Unlike Facebook and MySpace, the site is aimed at career-minded, white-collar workers, people who join more for the networking than the social.

 

Now, in the midst of Silicon Valley’s recession-proof enthusiasm for community-oriented Web sites, the most boring of the social networks is finally grabbing the spotlight.

On Wednesday, LinkedIn will announce that it has raised $53 million in capital, primarily from Bain Capital Ventures, a Boston-based private equity firm. The new financing round values the company at $1 billion. That heady valuation is more than the $580 million that the News Corporation paid for MySpace in 2005, but less than the $15 billion value assigned to Facebook last year when Microsoft bought a minority stake.

LinkedIn’s investment round delays a rumored initial public offering, which would have finally tested the public market’s interest in social networking.

“What we didn’t want is to have the distraction of being public and to be worried by quarterly performance,” said Dan Nye, the buttoned-down chief executive of LinkedIn, who would not be caught dead in the Birkenstocks and rumpled T-shirts favored by MySpace and Facebook employees.

LinkedIn, which says it is already profitable, will use the investment to make acquisitions and expand its overseas operations.

“We want to create a broad and critical business tool that is used by tens of millions of business professionals every day to make them better at what they do,” Mr. Nye said.

The average age of a LinkedIn user is 41, the point in life where people are less likely to build their digital identities around dates, parties and photos of revelry.

LinkedIn gives professionals, even the most hopeless wallflower, a painless way to follow the advice of every career counselor: build a network. Users maintain online résumés, establish links with colleagues and business acquaintances and then expand their networks to the contacts of their contacts. The service also helps them search for experts who can help them solve daily business problems.

The four-year-old site is decidedly antisocial: only last fall, after what executives describe as a year of intense debate, did the company ask members to add photos to their profiles.

That business-only-please strategy appears to be paying off. The number of people using LinkedIn, based in Mountain View, Calif., tripled in May over the previous year, according to Nielsen Online. At 23 million members, LinkedIn remains far smaller than Facebook and MySpace, each with 115 million members, but it is growing considerably faster.

LinkedIn also has a more diversified approach to making money than its entertainment-oriented rivals, which are struggling to bring in ad dollars and keep up with inflated expectations for increased revenue.

LinkedIn will get only a quarter of its projected $100 million in revenue this year from ads. (It places ads from companies like Microsoft and Southwest Airlines on profile pages.) Other moneymakers include premium subscriptions, which let users directly contact any user on the site instead of requiring an introduction from another member.

A third source of revenue is recruitment tools that companies can use to find people who may not even be actively looking for new jobs. Companies pay to search for candidates with specific skills, and each day, they get new prospects as people who fit their criteria join LinkedIn.

LinkedIn is set to undergo a radical shift in strategy to find other sources of revenue. Instead of catering primarily to individual white-collar workers, the site will soon introduce new services aimed at companies. It is a risky move that could alienate members who prefer to use the networking site to network — without their bosses peering over their shoulders.

One new product, Company Groups, automatically gathers all the employees from a company who use LinkedIn into a single, private Web forum. Employees can pose questions to each other, and share and discuss news articles about their industry.

Soon, LinkedIn plans to add additional features, like a group calendar, and let independent developers contribute their own programs that will allow employees to collaborate on projects.

The idea is to let firms exploit their employees’ social connections, institutional memories and special skills — knowledge that large, geographically dispersed companies often have a difficult time obtaining.

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