The Biz of Coding

Are Social Networking sites Next Gen of Yahoo! like Portals

by Ujwal Tickoo on August 3rd, 2007

My answer is yes. Bear Sterns has published an interesting 34 page report on recommendations for Yahoo! to enter the Social Networking (SN) Space (pdf). Mike Arrington has discussed the Facebook valuation done by Bear Sterns at Tech Crunch. Here are some points on SNs that I find valuable in the Bear Sterns report:

1) Social Networking Sites may be the Next Generation of Portals

This is something that seems intuitively and quantitatively correct to me. From the Bear Sterns report — for June 07 in US and 115 million users which represent 64% of US internet traffic:

• Yahoo! sites have a reach of 74%
• Social networking sites have an aggregate reach of 64% (39% MySpace, 16% Facebook)
• While Y! traffic has had an yoy growth of 3%, Facebook has grown 103% and MySpace by 35%. (International growth rates are faster e.g. Facebook grew at 235%)
• 51% of younger people (age 13-24) spent more time on user generated sites. This group as it grows older would not necessarily drop off. They will carry on with their habits. Proof? Even now age groups 34-54 are between 34-44% of users on Social networking sites (Facebook, MySpace, Bebo, Friendster, Hi5).
• Page Views at Facebook grew at 143% YoY whilst Yahoo! experienced a 12% negative growth rate (partially due to Ajax implementations).

Yahoo!'s portal based success happened when people were grappling to understand the world wide web.  WWW was an unkown place. Thus getting all services in one place — news, directory search, messaging, mail made sense. Search, internet proliferation and user learning over the last 10 years has solved the problem of getting around the unknown web. User voted or submitted content is now helping people discover interesting stuff and get connected to others instead of generic portals.

Social networks not only solve the problem of staying implicitly connected over time with people you know or work with but also help share news you read, photos you take, video's you watch, software widgets you use, online games you play, or find jobs you might be interested in. Social networks provide you an online identity and help you organize your life. People do the job of filtering the information on the web.

2) Four Categories of SN Sites

• Leisure Oriented (Facebook, Myspace)
• Professional Networking (LinkedIn)
• Media Sharing (YouTube, Flickr)
• Virtual Meeting Place (Second Life)

I havent seen hard data, but from anecdotal evidence my guess is that people tend to belong to atleast 2 or more social networks. E.g. I am on Facebook and LinkedIn which are two different types of networks.

What will be interesting would be finding a single SN Portal that will allow users seamlessly travers various Social Networks depending upon their needs for leisure, professional networking or media sharing etc. Yahoo! owned Wretch (in Tiawan) allows media sharing and lesiure oriented social networking.

Yahoo! has Groups and 360 products in the SN space — where Groups has more traction (though not as huge as Facebook or MySpace). Google has Orkut but it is mainly popular in US, India and Brazil. Both internet leaders need to rethink their SN strategies for sure. Yahoo! needs a rethink more urgently as Google has a much more focused position as a pure search engine. What do you think?

POSTED IN: Social Networks