Whereas social networking sites (SNS) in China tend to follow and imitate trends in the west, this has not always been the case in Asia. Korea in particular is a place where people have been quick to digitalise and move their lives online and it’s also the birthplace of a social networking site that has in some ways defined what we now see as the prototypical SNS.

Created in 1999 Cyworld has grown to become the dominant player in the social networking scene in Korea, seeing off the likes of Friendster, Facebook and MySpace. By 2003 one third of the Korean population was hooked and operator SK boasted that 90% of South Koreans in their 20s were subscribers to the site.

Cyworld’s success has been based on an innovative business model and pioneering services and functions that have since been established as default for competitor social networking sites. In this post I will look at how Cyworld achieved such dominance and then consider whether we can take any lessons away from this case study.

The Digital Context

Korea and Seoul in particular is a dense and easily wired landscape for broadband – most citizens of Seoul live in recently built, identikit apartment blocks in the city suburbs, so laying down the network infrastructure for one of the world’s most densely populated cities has been a relatively straight forward job. At the end of 2003, more than 11 million households – three quarters of all homes – had broadband access, which according to cable companies, was saturation point.

Couple this with the forward-thinking Korean telecommunications industry, which until the release of the iPhone recently had been dominated by home-grown handset manufacturers and service providers that pushed out innovative services way beyond anything we have yet to see in the UK.

You get the general picture - Koreans don’t think about integrating digital into their lives, it’s already a part it. And if you were looking for the optimum environment for a social networking site to prosper, then Korea would certainly be it.

In looking at the critical success factors of Cyworld, I have identified 3 areas – Content, Context and Cash.

Content

The heart of any Cyworld page is surely the photoblog, where every cappuccino, cute puppy, school trip and (in)significant event is recorded and commented upon. When Cyworld’s popularity exploded in 2003 we were entering the era of personal photography. Digital camera prices were falling with photo quality increasing and handset manufacturers were on the verge of adding cameras to mobile phones.

Through good timing, luck or brilliant insight (perhaps all three), SK pre-empted this revolution, identifying photos or more accurately photo sharing as the killer content for their social network and offered unlimited photo storage for users on their blogs. This was the hook that drew people into Cyworld and coupled with a unique way to share photos called ’scrap’ (from scrapbook) it provided the essential community incentive to remain.

Whilst the rest of us were too busy creating content to think about what to do with it, SK was already looking at ways for Cyworld members to share content by connecting people through networks based on degrees of closeness – this actually maps well onto offline relationships in Korea (quite different to those in the west), and the importance they play in Korean society. By 2003 Cyworld had reached its tipping point and literally tens of millions were connecting, sharing content and interacting with one another.

Context

The context I’m referring to here refers not to the wider context of Korea that I referred to earlier, but the time, place and device that the user uses to update their page - more specifically the mobile context.

The mobile arm of SK were quick to take the opportunity of offering direct blogging to Cyworld accounts and when it was introduced several years after Cyworld took off, it surely helped to sustain the initial growth and market share and kept Cyworld ahead of emerging foreign competitors who were slow to add mobile functionality. Mobile blogging is the second biggest value-add service in Korea today, ahead of music, behind only gaming revenues, averaging about 3.40 USD per user.

Cash

Cyworld stands out as an important example of how one can make money off a social network and it seems to have united two trends by combining social networking with Koreans love of online shopping and thus emerged as a highly profitable business.

Basic services on the site are free, but the site generates close to $250m in annual revenues following a very unique revenue model. Most of this revenue comes from the sale of Cyworld’s virtual currency dotori (acorns), which members use to buy virtual objects to decorate their homepage and accessorize their avatars. Value added services like accessorizing one’s page can be used to good effect on social networks because there is an inherent tendency for one-upmanship.

This business model is distinct from other SNS as the revenue is generated through the user’s interaction with the platform and not through online advertising as is the case with MySpace. The figures speak for themselves, Cyworld makes $10 per user per year MySpace makes $3.

What can be learned from this?

In looking at the Cyworld model we can see several things. Firstly, there is a strong sense of right time, right place for Cyworld and there was a coming together of many things that helped it to grow; the digital landscape was right, communities were emerging on the web, we were moving into an era of personal content publishing through easy to use platforms, it was the beginning of the social web as we know it. Cyworld was genre defining and as SNS emerged in other parts of the world they all borrowed elements of it, then tweaked and tuned them and took them forward in different directions.

As a website owner these days, the make-up of social networking sites is well defined and the likes of Drupal provide easy to configure solutions that make up the core functionality (and more) that we expect to see.

What Cyworld did particularly well was to cater specifically for the Korean market – the look and feel (gaming inspired), the use of offline relationships as a model for online network building, the understanding that online shopping and social networks could be merged and the early move into mobile. It was perhaps so well tuned to the Korean market that when SK attempted to export the service to the USA and other parts of the world it failed spectacularly.

If your ambitions for your social network are regional rather than global, then there is a strong case for a much more customised and localised feel to your site. This brings me full circle to my opening statement about sites in China.

For every large SNS, portal or search engine site or web service that you care to mention, you’ll find a Chinese clone that does exactly the same (partly because it’s been based closely on the original), but which has some element, small or otherwise that has been changed to cater to Chinese tastes. To do this obviously requires an understanding of the market and the users and their tastes. In the final blog in this series I will give an example of how an educational social network was shaped and adapted for a Chinese audience and how this was done using local research and user profiling.