News Corp, the owner of online networking leader MySpace, is presently trying to squeeze profit from its vastly popular social networking site. There is much to be said about approaches to this (and I’ve said a fair bit in other posts) but another area where MySpace is desperately needing savvy management, and where MySpace is about to face stiff competition, is design.
MySpace emerged with high popularity among very young audience. Although the site quickly matured to attract more varied, older audiences, its basic appearance has not evolved at all. Compared to typical websites, blogs, and competing online networks, MySpace is simply hideous. The page layouts, colour schemes, icons and tools—everything about MySpace looks as though it were designed by a pre-teen, pre-internet creative team.
Enter CyWorld. With visual design reflecting its youth market, CyWorld’s original Korean incarnation also embraces creative quality and style. That style does not however reflect the tastes of a western audience; for the launch of CyWorld’s English-language site its creators have discarded many trademark visual elements, including an excess of cutes-y icons and avatars, tailoring their product for foreign tastes. And where the Korean main page has a dizzying, Yahoo-style overabundance of content, ads and offers, the US site is pared down to an attractive set of basics.
Although banner ads are used at CyWorld, their use is well integrated to the appearance of the site, especially at the US version. Where banner ads contribute to the cheap side-show appearance MySpace, CyWorld’s integration of ads resembles a tasteful news portal.
Like many popular blog hosting sites, CyWorld makes it easy for users to create personalised online spaces (“Minihomes”) that are attractive and contemporary in visual design.
More than MySpace
Offering networking tools linking other users and club spaces where groups gather around interest areas, CyWorld is poised to compete head-to-head with MySpace. But with its range of Minihome features, CyWorld Korea is also taking-on the top competitors in Web 2.0 networking:
Music CyWorld users can buy music that will play to other users who visit their Minihome. CyWorld Korea currently sells 6 million songs per month, placing it among the top online music retailers.
Photos The photos section of a Minihome allows users to upload, categorise, store and share images; the most popular aspects of photo-specific networks such as Flickr. The Minihome Sketchbook goes a step further for creative users, providing a space to create and share drawings and sketches.
Video In the photos tabs users can post videos a’la YouTube. The resolution and formats are even more limited than YouTube’s already low standard, but for a youth audience whose chosen input device is the mobile phone, this may prove adequate for now.
Designing profits
CyWorld’s innovation does not stop at creative visuals and features. The CyWorld approach to revenue also avoids MySpace staleness, and their profits smell good as a result.
CyWorld’s revenue model relies upon the sale of graphical elements seen in individuals’ online spaces; the Minihome is furnished with backgrounds, themes, images, icons and music that users buy online as they personalise their CyWorld presence. Elements are purchased (and often sent to other users as gifts) and, while the per-item cost is only a few cents, the sheer volume of items that the community downloads underpins CyWorld revenues.
For this model to work internationally demands a shift in online consumer behaviour. Users in the US and elsewhere are not in the habit of paying for digital bling and, unless the target audience really starts to embrace CyWorld and the kitsch factor of a well-assembled Minihome, selling online design elements to western users might not work. If nothing else, the Korean success is a heads-up to MySpace and others who think banners and paid searches are the height of online business innovation.
For the broader marketing community, CyWorld presents possibilities not just for selling branded CyWorld-type design elements, but for creating fun online product and brand sites with sharable, viral messages and visuals.
The right market
CyWorld will be lucky to approach its Korean success in other markets. Social networking is being flooded with competitors, each hoping to concentrate online networking at their sites. Teens and 20’s are the core of CyWorld success in Korea and the US launch is wisely sticking to that demographic, aiming early-on at a niche rather than networking domination.
Early start
CyWorld was acquired for US$8.5 million in 2003 by Korea’s SK Communications, a subsidiary of Korean wireless provider SK Telecom. CyWorld earned almost US$8 per user in 2005 , accounting for half of SK Communications’ US$25 million profit.
By contrast, MySpace was acquired by News Corp in 2005 for US$500 million and earned just over US$2 per user. YouTube, another aesthetically repellant site with tremedous user statistics—and with no profit history—cost Google US$1.65 billion.
For Cyworld’s parent company revenue does not stop at direct online commerce: With millions of users accessing CyWorld via their photo-enabled mobile phones, an amazing 90% of image uploads on the Korean mobile network are by CyWorld users—generating lucrative upload fees for wireless carriers including SK Telecom.
Designing online success
Whether western teens are ready for CyWorld will be seen in the next year or two. Success or no, CyWorld’s creative and business innovation highlights its competiors’ weaknesses. If any would-be ruler of online networks is to reign, its design, features, novelty and innovative revenue devices will be jewels in the crown.