Cyworld: yet another MySpace killer

Posted Aug 15th 2006 8:04PM by Tom Taulli
Filed under: Google (GOOG)

For social networking, it's all about critical mass. If you can reach a level like MySpace, you just might be able to get $900 million from, say, Google.

But, the cool thing about capitalism is competition. Big-money deals have a way of attracting a lot of attention. Of course, a swarm of competition is gunning for MySpace (for example, every day, I get about two to three social-networking pitches from PR people). The list has been growing ... Facebook, Xanga, Bebo, and on and on.

Well, the competition is not just local. It's global. Look at the latest splash: Cyworld, which is a wildly successful teen social networking site from South Korea. In fact, it basically owns the market in its homeland.

While MySpace has a clunky -- almost retro -- 1996 look, Cyworld is on the cutting-edge of coolness. Interestingly enough, the appeal is to girls.

The business model is to essentially create a virtual economy.

That is, if you want to have some stylish clothes or listen to music, you need to use Cyworld's currency. Yes, members can actually learn something here.

Something else: there is heavy usuage of mobile devices to access Cyworld. So far, in the US, mobile social networking has been tepid.

I interviewed Ginger Thomson, the CEO of a new social networking site, YouthNoise. According to her: "My philosophy about social networking sites is that teens view it as the 'new frontier.' Just as the European settlers saw the Western world as an undiscovered paradise, the kids and youth of today also search for the latest and greatest experience to explore and don't ever 'settle' in just one place. Cyworld can enhance the experience of users logging on and may in fact weaken the foundation that MySpace sits upon by drawing users away to a more user-friendly site, which allows for a more exciting experience byway of a more intimate approach to personalization of users' profiles."

Tom Taulli is the author of a variety of books, such as The Complete M&A Handbook (Random House) and operates InvestorOffering.com.

Tags: Bebo, Cyworld, Facebook, Google, MySpace, Xanga, YouthNoise