Paid Social-Networking Model Doesn't Pack Much Of A Punch

from the more-of-a-tap-really dept

Tue, Sep 26th 2006 10:04am — Carlo Longino

Social-networking sites seem by now cyclical by nature -- everybody's on one, then they lose interest, or something better comes along, leaving the previous one to be taken over by Brazilian drug dealers. So if the tales of sites like Friendster are anything to go by, the likes of MySpace and Facebook will eventually falter -- and plenty of companies are lining up to knock them off. While many of the new sites they create are little more than me-too knockoffs, some are based on different ideas and business models, such as Wallop, which is getting a fair bit of attention this week. Wallop has all the usual stuff you'd expect in a social-networking site, but instead of trying to subsist on advertising, its model is to sell users stuff to put on their personal pages, like games and videos and backgrounds, with the company justifying the approach by saying it's like kids buying ringtones to express themselves. On one hand, the imploding ringtone market may not be the best thing to aspire to. On the other, people pay for ringtones to broadcast that they're cool, or that they fit in, but Wallop is basically asking users to pay to entertain other people -- making it more akin to ringback tones, which haven't been received particularly warmly outside South Korea. And while Wallop may not be a MySpace copycat, it's pretty similar to -- but at first glance, looks a lot less cool -- some other social-networking sites that sell users content for their online space, like CyWorld, which is immensely popular in South Korea (sense a pattern here?), and recently launched in the US. But Wallop, CyWorld and other sites using similar business models face a significant challenge in getting users to pay for something other sites are happy to provide for free. They're asking users, essentially, to pay to entertain other people, without appearing to add in a whole lot of additional value over free sites. This may fly in South Korea, or other cultures, but it's an idea that seems awfully out of place in the US.

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16 Comments

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PhysicsGuy, 26 Sep 2006 @ 10:06am

Who did what where?
leaving the previous one to be taken over by Brazilian drug dealers

did i miss a story somewhere along the line? o.O
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Anonymous Coward, 26 Sep 2006 @ 10:42am

This is the Achilles Heel of all social networking sites (and probably most websites in general). If consumers aren't willing to pay a dime for your service/product and you are forced to survive solely on advertising revenue, you are a.) never going to be that profitable, if ever b.) never going to maintain your customer base.

Sadly, this was all learned during the bubble and seemingly forgotten about two days after the bubble burst.

Facebook will be the biggest of these implosions because it based itself on exclusivity which it cannot maintain. College kids are abandoning it completely and Facebook never had a chance to build a larger consumer market so it will never make it a liquidity event or its price will just keep dropping until someone picks it up cheap.
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MCeeP, 26 Sep 2006 @ 11:14am

brazillion drug dealers
I believe Carlo is referring to the ongoing issues with orkut
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Nombre, 26 Sep 2006 @ 11:49am

To Anon;

I would say that is NOT the Achilles Heel of most websites in general. Consumers in general never pay a dime for Google, nor for Google Maps (and its competitors), nor for Google Desktop, so on and so fourth.

Google is both profitable, while at the same time, consumers need not pay a dime for it. Needless to say, they have maintained their customer base quite well.

As for Facebook imploding, that has not happened (yet). They faltered regarding privacy, but have rushed to make amends. We'll have to wait and see if a large stumble occurs with their removal of the "College-only" entry-qualification.
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jsnbase, 26 Sep 2006 @ 11:58am

Paid social networking site?
We used to call those 'brothels.'
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u no, 26 Sep 2006 @ 12:47pm

Social Networks??
I feel that all of the social networks are mostly stupid. I regretfully opened a Myspace account only to never return to it. It is not that hard to make a ligitimate website. Front page express is free and allows even non technical users to create a decent page. Granted it will probably never be quite as complex as some other pages, but it is out there and you have the freedom to do what you want, mostly. Many places on the net allow you to post that page for free or maybe a small fee. I always seem to forget that most people want to be just like everyone else and do the same things everyone else does.
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Betaflame, 26 Sep 2006 @ 1:15pm

Re: Who did what where?
LOL i was just thinking the same thing.
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Steve E, 26 Sep 2006 @ 1:23pm

Whenever I join a social network site to see if it has anything different to offer me I'm disappointed. They are all great if you just want to send annoying 'add me' messages to random strangers but beyond that I don't find any use in them.

Seems to me they need another hook to keep people signed up. I'd really like to know the proportion of the user figures being touted that sign up, kick it about for a few weeks and then never return!
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Anonymous Coward, 26 Sep 2006 @ 1:31pm

You obviously don't use Facebook.
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Anonymous Coward, 26 Sep 2006 @ 2:10pm

Re: Re: Who did what where?
google: orkut brazil drug
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Mark Hertel, 26 Sep 2006 @ 4:01pm

Paid Social Network Site
Not a very intelligent story written here. Obviously, the writer shops at the 99 cent store and believes in the philosophy that everyone wants to represent themselves for free like they do on myspace. Instead, what the author lacks to discuss is that in the real world people represent themselves by purchasing products that equate to trillions of dollars. not millions or billions but trillions. This trend is moving to the online world and other digital products such as ringtones and entertainment content are exploding, not imploding. Will an image conscious man or woman want to represent themselves by cutting and pasting code while hosting their personal image site on a myspace type of website or will they spend $4 to completely separate themselves from the 14 year-old myspace user being chased down by a pedifile?

Wake up and do a little more research before writing such a ridiculous story. Just look at the projections for digital entertainment alone over the next three years. From what I understand Wallop will allow users to bling out their websites while saving hours of trying to figure out how to cut and paste html code to make your personal pages look like it was created in 1997.
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Jessica, 26 Sep 2006 @ 4:43pm

Need an incentive to pay
And what better incentive then boobs? Check out what MyFreeImplants.com is doing with social networking. They've figured out how to monotize social networking.... make it sexual! duh. After all, the Internet IS for porn (and if you sign up look for me, and send me a message so i can get my implants ;)
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Eric, 26 Sep 2006 @ 10:36pm

Re: Paid Social Network Site
I'd love to see actual statistics or reasearch or any kind of reference but the vague idea in your head of this "trillions" of dollars on "image".

And I don't know about what you've seen by you, but the guy that has the Ferrari parked in the 4 story mansion down the street doesn't have an "digital" image that I know of...

Paying for a look of sophistication by individuals is not a trend that will follow into the digital space for a long while.
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voidmind, 27 Sep 2006 @ 5:58am

kids who buy rinftones
The only reasons why people buy ringtones is either the 1- they don't know how to create / upload their own or 2 - The carrier has locked the feature in they're cell phone's firmware.

If people get a service for free they won't change to another that charges.
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myspace proxy, 27 Sep 2006 @ 8:42am

2 things
to me 2 things can cause the switch from one old service to ne servcie

1) the new service is specially made for his location/interest etc
2) some thing new is wht is some thing better
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dudester, 27 Sep 2006 @ 12:31pm

#11 is on crack
Instead, what the author lacks to discuss is that in the real world people represent themselves by purchasing products that equate to trillions of dollars. not millions or billions but trillions.

#####

Let me guess, you work at Cyworld and are Korean. Ohhh, let me buy flash furniture to decorate my digital corner and that'll reflect how awesome I am.

LMFAO!!!!
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