highlights
Asian social networking sites profit from virtual money
(Agencies)
Updated: 2009-09-09 10:16
The model has taken off abroad, but there is still a long way to go until the West catches up with Asia.
Habbo, a social networking site for teenagers owned by Finland's Sulake Corporation, sells virtual clothes and furniture. Meanwhile, games such as Pet Society which is available on Facebook and allows users to raise virtual pets, sells goods such as virtual pet accessories and e-food.
With seven million or so inhabitants, the virtual world Second Life offers a range of e-wares for sale for Linden dollars, its internal currency. Some are mundane and others are controversial such as guns and virtual phalluses with price tags based on the size.
Asia is also a playground for a range of virtual business models such as rentals. For example, Cyworld rents background skins of popular South Korean baseball players for limited periods. Such rentals drive repeat sales and tap into trends.
Lost in Translation
The success of these East Asian sites contrast sharply to the frustrated social media landscape across the Pacific where despite immense popularity, Facebook and Myspace are yet to fully harness the profit potential of their massive user bases.
Facebook, the world's biggest social network with close to 300 million visitors per month, is on track to bring in more than $500 million in revenue this year, mostly from advertising, but its focus is on growing its user base rather than making money.
Still, a recent New York Times article suggested signs of an exodus from Facebook as disillusioned users leave due to privacy concerns or complaints of rampant commercialism.
Rupert Murdoch's MySpace has been unusual among the major social networks in turning profitable through advertising sales, although is now undergoing a major overhaul, including ousting its CEO and firing hundreds of staff, in the face of worrying user metrics.
Meanwhile, both Facebook and MySpace are eyeing the virtues of virtual money. Facebook, which sells virtual goods mainly in the form of 'Facebook gifts' through a credit system, said in March that it was looking at offering a common virtual currency to third-party application developers.
At the Web 2.0 Summit late last year, Myspace's recently-departed chief operating officer Amit Kapur mentioned that that the firm was also seeking to develop a payments and virtual goods system.
Meanwhile, Internet entrepreneurs are coming to Asia to pick up on innovative web business models.
In June, 32 venture capitalists and Internet entrepreneurs visited Japan and China under the banner "Geeks On A Plane", to learn about local success stories such as DeNA, video hosting website Tudou, and gaming website PopCap.
"They were all blown away even though some of them already knew about what was going on here," said George Godula, founder of Shanghai-based consultancy Web2Asia. "They (Asian social networking sites) are quite nimble at finding out business models or ways of how to make money," he told Reuters.
