By Category By Month Recent Posts
Consumer Internet IPOs Consumer Internet M&A Enterprise Internet IPOs Enterprise Internet M&A

« Software's Top 10 2005 Trends: #1 XML | Main | Clash of the Titans: Oracle and SAP »


Earth to Friendster: We Have A Problem

The recent public announcement of MySpace's Series A financing combined with Yahoo!'s recent confirmation of its planned Yahoo 360 offering adds up to one thing for Friendster, the heretofore king of social networking: trouble.

You see, despite all the hype about social networking, it has now become readily apparent that social networking is not an application in and of itself, but rather a by-product of other activities.  While Friendster represents the previous social networking othodoxy of having the social network itself be the application, MySpace, and now Yahoo 360, reflect the new understanding that social networking will be just one aspect of a fully encompassing online "social environment".

MySpace, has arguably blazed the path in the creation of a social environment.   Rather than focus soley on networking, MySpace early on tried to make its site a complete "social experience" by sponsoring real world parties and encouraging interaction within its membership.  MySpace has been particularly aggressive in using music as a way to bind and organize its community.  To that end, it has aggressively pursued bands to have them launch and maintain fan sites on MySpace and it has encouraged fans of bands to launch their own sites, blogs, and discussion threads about music.  This emphasis on music makes tremendous sense given that music tastes are one of the key ways that young people often segment themselves.   Thus, MySpace's social network is a actually a multi-dimensional experience that not only connects people who know or indirectly know each other, but links groups of people together by their interests/hobbies/passions.  It's no wonder then that MySpace now generates far more page views and time-on-site than Friendster: people on MySpace actually have something fun to do.

Compare this with Frienster which is still stuck back in Social Networking 1.0 with a rather unimaginative focus on dating.  Yes, dating is indeed one of the main applications that a pure social network can be highly useful for, but by starkly casting themselves as a dating service Friendster has in some ways become wildly "un-cool".   After all, most young people are loath to admit that they need a dating service to meet people, so hanging out at Friendster is the equivalent of walking around with a big "L" on your forehead.   Of course, many folks on MySpace are undoubtedly there trying to get a date as well, but at least they are have a bunch of other pretenses for being there and even if they strike out they might still make some new non-romantic friends that share their interests.

Yahoo has clearly grasped that MySpace's "social environment" is the wave of the future and its Yahoo 360 service sounds like it will become a very strong competitor to MySpace over night.  That's because Yahoo has some tremendous pre-existing assets in mail, chat, and music, that it can theoretically string together to create a much more rich and functional environment than MySpace.  Of course Yahoo is also a big company with a ton a moving parts and it will likely be difficult for them to keep up with the frenzied pace of innovation on MySpace, but MySpace will clearly have its hands full.

How this space ultimately plays out will undoubtedly be interesting to watch.  Perhaps "social environments" will emerge at the long term winner, or perhaps the peopleweb, as theorized by Marc Pinus, will overtake centralized "networking desitinations" and instead create a vast, highly distributed, web-based social experience.  Whatever happens, it should be fun to watch.

March 18, 2005 in Internet, Venture Capital | Permalink


Legal Disclaimer

The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.