Cyworld is like MySpace 2 years into future says Herald Tribune

The International Herald Tribune on Monday 25 September 2006 ran a big article on Social Networking Sites. Part of the big news is that Cyworld is now spreading beyond South Korea, and just launching in the USA. Readers of our blog know more than a third of all South Koreans are active inside Cyworld. But the article now tells us that Cyworld is spreading fast. Already 2 million users in China, launched in Taiwan and Japan, Cyworld launched in the USA and will launch in Germany before the end of 2006.

Alan and I are big fans of Cyworld and write about it regularly, such as these Cyworld: When Habbo Hotel meets Blogging, and 46,000 Citizen Reporters Can't Be Wrong and when the first announcements were made of Cyworld launching in America. We also love MySpace, and have tracked its meteoric rise and influence with numerous postings such as the Battle for My (voice) Space,  Stumbling upon Lily at MySpace, and Financial Times on MySpace and Broadcast Media.

Certainly with Ohmy News, YouTube and Habbo Hotel, Cyworld and MySpace are definitely among our favourite stories at this Communities Dominate blogsite. But being on different continents and having matured in their own ways of natural selection - and within the limits and opportunities of their home markets - it is no surprise that now MySpace users find Cyworld fantastic and extremely advanced. The Herald Tribune writes quoting people who have now used both: "Cyworld is more advanced than other social networking services" and "MySpace is an early version of Cyworld" and perhaps most tellingly: "After Cyworld opened, I hardly touched MySpace."

Why is this? Mostly it is because MySpace grew up in America and had to rely on "internet economics" to deliver its business logic - attract the eye balls, sell advertising. MySpace had the benefit of the most mature internet market, very high PC accessability and high broadband penetration. Then finding a wealthy buyer in Rupert Murdoch who bought the service and now bankrolls it as we wrote in Darwinism Rudely Arrives in our Media Ecology. The natural evolution of MySpace has suffered from America's lag in 3G cameraphone adoption and use among its target audience, although by the spring of this year, the m:Metrics survey released May 2006 showed that 33% of Americans age 18-24 already use cameraphones to post pictures to MySpace and other social networking sites like Flickr etc. Americans are usually surprised to find that for example in Britain, over 90% of the 12 year olds have cellphones.

But Cyworld is based in South Korea, the most digitally advanced country in the world. It has every advantage. The highest broadband penetration rate in the world - or actually neck-to-neck with Hong Kong to be precise. The highest penetration of 3G phones (over 50%, Japan a close second). The first country to launch mobile digital TV broadcasts over a year ago and already over 4% of all South Koreans have bought the new top-end TV-phones (there are no handset subsidies in Korea so they pay from 500 to 800 dollars for these ultimate top-end phones). 4% might not seem like a high number, but it is incredibly rapid. Blackberry is considered a big success. It has spent 5 years and still does not have 4% of the American population. Apple's darling, the iPod, took well over three years from launch to break 4% of the USA population. 3G next generation mobile phones first launched in Japan five years ago, took over three years to reach 4%. So for a gadget more expensive than a Blackberry, iPod or 3G phone (subsidised in Japan) - that TV-phones have achieved 4% penetration in little over one year is quite impressive indeed. But I digress - about Digital Korea.. Credit cards? 50% of South Koreans already use the credit card or debit card function on their mobile phones. The cities are now building intelligent parking lots to tell you where is the nearest available parking place. One in ten Koreans play online videogames every day. Worldwide about 5% of all web users maintain blogsites, in Korea it is over one third of the total population. 45% of all music sold in South Korea goes directly to mobile phones - note that iTunes accounts for only about 5% of the music sales in the USA. The Korean government aim is to have a robot in every home in ten years. South Korea is truly science fiction.

Specifically the monetary dimension of Cyworld was founded on solid economics. The Cyworld users would buy and sell content using a payment mechanism called the acorn (worth about 10 cents). These can be easily purchased on your mobile phone. So right from the start, Cyworld had a solid economic foundation to rapidly grow and build a robust foundation for success.

So Cyworld has had the benefit of a technology incubation base literally second to none. Even Japan is behind South Korea as a digital society, and California is years behind these two. With that, Cyworld has been able to spread and develop well beyond any other social networking site. Targeting first the youth, it has since spread well beyond its target demographic. Politicians, TV celebrities, pop music stars etc maintain a Cyworld presence. But even more, the economy on the whole. Once you have over a third of the total population active in that new medium, you have to be there too. All significant South Korean businesses already maintain a presence inside Cyworld. Its no longer a question of "should" Coca Cola or Nike or Ford find marketing tools to join MySpace. In Korea every consumer brand HAS to be inside CyWorld. 30,000 businesses, offer over 500,000 items of digital content for sale already. An honest virtual economy eco-system. And like we've mentioned here, Cyworld is now the biggest music sales outlet in Korea, selling over 200,000 songs every day to its members.

There are many elements that seem very "cute" for Western eyes, a certain "Pokemon" or "Hello Kitty" kind of Asian element. Some will claim this taints the service and prevents its ascendancy. I am not so sure.

The article also catalogues several other social networking sites that hold a top ranking in their national markets, like Mixi in Japan and Wrench in Taiwan. But I am now intrigued in the "competition" that arises - MySpace vs Cyworld? MySpace is the obvious global leader with over 100 million uses, but Cyworld has over 21 million. If these early opinions by people who have tried both MySpace and Cyworld prove indicative of the trend, then we might soon see Cyworld becoming a global phenomenon as well. In that case - be VERY alert on the fragile issue of customer loyalty in social networking sites - as we illustrated in the volatility in only 12 months, of users of video sites YouTube, MSN Video, Google Video etc in the blog: Lessons on Volatility in digital communities.

Comments

[Benjamin Joffe]

Hi Tomi,

This post to indicate we are publishing in 2 weeks the first detailed report on Cyworld covering things like:

- How did a single social network bring over US$60 million in 2005 with almost no advertising revenues?
- How more impressive this result is considering it happened in a country with only 33 million Internet users (about 1/6 of the US) and a GDP/capita about half the US’ average?
- How real-name registration policy is making sense in building trust-based information sharing?
- How did a small 20-people startup generated an online phenomenon?
- And many more!

I'll be happy to send you a sample or discuss some of those issues if you feel interested.

More information here until the dedicated site goes live:
http://www.plus8star.com/?page_id=24

Cheers,

Benjamin Joffe, CEO
[+8*] Plus Eight Star Ltd
www.plus8star.com

[Tomi T Ahonen]

Hi Benjamin

Wonderful posting, thank you so much. Alan and I'd love to have any exec summary etc material you have about the study - and if you'd like, we'd be very interested to feature any findings you might want to release from the study, published here at our blogsite (we're in the top 15 best read blogsites on mobile) and we could help you get more visibility and publicity for your findings.

Obviously we'd also love to discuss your findings and observations within the study and perhaps beyond on the general themes. Lets do that off line. You have my e-mail, right?

Tomi :-)

[alan moore]

Hello Benjamin,

I totally agree with what Tomi is suggesting. We would love to have some info on Cyworld and have a discussion with you...

You can email me alanm (AT) smlxtralarge (DOT) com

[amanda an]

umm cyworld was an independent im pretty sure a group of university students founded cyworld like myspace but was bought by the SK Telecom in 2003.. that was 4 years after cyworld was born..doesnt myspace have alot of advertising revenues from artists sites, and all da popups??

[tabz]

fuck you lilla squad all day