Social Networks: A marketplace for the future

The last 3 years have been all about social networking. The term became so significant that the entire world wide web had to be renamed to "Web2.0", primarily to depict the emergence of social networks.

Brief fact sheet of social networks

Friendster is widely known to have pioneered the phenomenon, but it was mastered first by MySpace, the site that grew to 100+ million users in some 2.5 years. In a matter of months the site was acquired for $650 million, which everyone in the current setting looks as one of the smartest bargains. And who wouldn't, when a much newer website YouTube which primarily leveraged the MySpace phenomenon to warrant a $1.6 billion acquisition by Google.

Orkut, Bebo, Facebook and MySpace are a few popular social networks geared towards youngsters where several million users interact with each other almost daily. Similarly LinkedIn and Ryze are extremely popular for professional networking.

We at Wirkle have a mobile social network LinkNSurf focused around sharing mobile content with your network.

Why do we need social networks?

10 odd reasons according to me:

- Meet new people
- Find long lost friends
- Organize our contacts and easily communicate with people
- A past time hobby
- Find leads for our business
- Find Jobs
- Find answers from a expert group of people willing to answer our queries
- Discover new entertainment like music, videos, etc.
- Create our online/mobile identity (An open diary of sorts or better its like your real estate which you keep on decorating with the stuff you like)
- Just because everyone else in the damn world is doing it ("If you are not on MySpace you don't exist" phenomenon)

Now where is the money? (or rather who should be making the money)

Web 1.0 approach towards this: "I am MySpace. My site has 100 million users. All the advertisers will advertise on my site, I make all the moolah. Period."

Web X.0 approach towards this: "I am MySpace. My site has 100 million users. I have the largest shopping mall on the planet. I allow people to build and promote their shops in my shopping mall and enable them to make money from my site (of course in turn I make money by charging them for the transactions that happen)"

Let me elaborate a little more on my analogy:

Look at a typical shopping mall today, it has dozens of shops (some more popular than others). These shops are not inherently different from one another, in essence everyone has one objective "Make themselves more and more popular, sell more and more stuff and pay rent/profit share to the mall owner)". Now even malls can be specific e.g. GoldSouk (focused just around selling gold) or Generic e.g. (One's that should have a Movie theater, Book bazaar and Nike store at a minimum). At max even the biggest mall would have provision to accommodate only a few hundred shops.

Now think a social network like "MySpace" or "LinkedIn" or "LinkNSurf". Could these be the biggest digital marketplace of all times? You host your stores to
- Sell your videos (think movie theaters). Again some stores are more popular than others so maybe the CNN hosting videos is popular than your user generated one but you can make a lot of money by posting a cool user generated video
- Give expert answers (think consultants), so you as a wireless expert can answer people's queries and get paid for it.
- Resell popular music, videos, art, furniture and what not (think Best Buy). The more popular your profile is the more people visit your store and buy more.
- Even Google Ads on your profile should pay you cos you are making more money for the social network than a person who barely opens his account.

This is just a small food for thought, maybe there are a dozen different possibilities of how creatively you can utilize your profile(a.k.a shops) to sell stuff like e-cards, ringtones, class notes, etc... the possibilities are endless and the proposition is simple "You make money and hence your hosting social network makes money"

So what do you think, by catering to the long tail of people ready to sell stuff will social network be the biggest marketplace (or in a more polished language the mother of all marketplaces) ever known to us?

Mark your calendars: MoMoDelhi is back in town - Jan 20th

To all the mobile enthusiasts in and around NCR, please mark your calendars for the next Mobile Monday event on Jan 20th at Impetus, Noida.

Venue: Impetus Infotech Pvt Ltd,
D-27, Sector-59, Noida.
Phone: +91-120-4363300

If you plan on attending please register here

Thanks to our sponsors: Impetus for providing the venue and One97 communications for sponsoring this event.

So what's the big fuss about Indian Telecom Space?: Hutchison Essar Bid

"The battle over Hutchison Essar has emerged as the largest corporate takeover battle in Indian history. What is today the fourth-largest mobile provider in India will, overnight, become one of the largest firms in Asia should it fetch the expected valuation of $16 billion to $20 billion." (Source: International Herald Tribune)

In a country dominated by the missed call syndrome (India probably holds a record for the maximum number of missed calls in the world), what is it that is driving the Vodafone's, Ambani's, Hinduja's, Essar's of the world backed by big private equity firms like Blackstone, Texas Pacific, Citibank, Morgan Stanley etc. (rumors for bidders also include Verizon Wireless in the United States and NTT DoCoMo of Japan) for taking over not the first, not the second but the fourth largest mobile telecom operator in India at a valuation of anywhere between $16-$29 billion?

While the ARPU for the Indian consumer stands at around a meager $9/month as against close to $45-50/month for the operators in the US or Western Europe. The average price per call on the Hutchison network is close to 2 cents a minute as compared to over 40 cents on NTT DoCoMo in Japan. Even Sunil Mittal of Airtel the Indian telecom giant in a interview with business standard quotes "`Hutch-Essar buyout is too expensive`". With such facts at hand it doesn't seem a profitable business to be in at the first glance.

So why is at that everyone in the world seem to be hoarding to take over the Indian telecom space?


A: While India lacks in the ARPU, it makes up for it with volume and the highest growth rate in the world.

International Herald Tribune has an interesting comparison between Vodafone and Hutch:

At first glance, Vodafone seems the more enviable enterprise. Vodafone reported 16.3 million subscribers against Hutch's 15.4 million in the first quarter of 2006, and it generated £1.2 billion, or $2.3 billion, in revenue to Hutch's $436 million, according to Wireless Intelligence.

It took Hutch four customers to make as much money as Vodafone earned on one.

But for Vodafone, and for mobile providers throughout the West, the future looks ever bleaker. Over the one- year period through March, 2006, Vodafone U.K. signed up 1 million new customers, as Hutch added 7.6 million. And even with its pared-down prices, the Indian company has been running a pre-tax operating profit margin of 34 percent, just higher than Vodafone's 32 percent.

B: Mobile probably is the only potential medium to bring broadband (and hence long term money) to a potential population of over 1.1 billion

Broadband over mobile (3G) will play a significant role in Indian scenario. Since it is impossible to deliver broadband through copper or fibre everywhere in India especially the rural segment, 3G will help deliver these services. Even the most rural parts of India will have people seeking basic information services such as farmers looking for the market prices of grains or fisherman for the weather data; mobile will become the default channel for the same.


C: Potential billion+ customers

Mobile probably is the only medium with the potential to reach over a billion people and hence brings in the most lucrative proposition for advertisers. Targeting the right segment of people on the basis of location, household income, spending power could never have been easier.


Not only these mobiles in a Indian scenario opens the door to a number of visible possibilities such as mCommerce, Microbanking, etc. (and several which we cannot foresee at this stage), each of which would be a topic for independent discussion which I will try to write out later.