web 2.0 in social networking sites industry analysis

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SOCIAL NETWORK INDUSTRY ANALYSIS PRAXIS BUSINESS SCHOOL

WEB 2.0 (Social Networking sites - Industry Analysis)

PPRRAAXXIISS BBUUSSIINNEESSSS SSCCHHOOOOLL

A report

Submitted to

Prof. Charanpreet Singh

In partial fulfilment of the requirements of the course

Web 2.0

On 19/11/09

BY GROUP: LETZ SCHOOMZE!!

Apoorva Jain Gunjan Dugar

Manoj Mani Iyer

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Executive Summary

The project involved analysing a sector from the gamut of online services. The sector chosen by

us was that of social networking sites. The product description involved introducing social

networking sites, SWOT analysis, popular social networking activities and the key enabling

technologies. The customer/participant profile for the social networking sites was shown. Then we

described the framework of web 2.0 and the role web 2.0 plays on social networking sites as a

component. We described the evolution of social networking sites and factored in the ratings to find out

most happening social networking sites globally. After doing this analysis the top three networking sites

were facebook.com, myspace .com and twitter.com. This was as per the ratings of the year 2009. Then

we did a company analysis in terms of history, geographic spread as per usage intensity, demographics

of users and the financials and revenue model of each of the sites. We also discussed certain legal and

regulatory issues which have cropped up as a result of proliferation of these sites in recent times. We

looked at certain factors like the copyright and intellectual property rights, privacy issues and the taxing

implications for these networking sites.

We analysed this industry from the Indian perspective in terms of popularity of social networking sites

in India for participation of Indians in the network. Then we also gave a brief description of some of the

famous Indian social networking sites.

We also analysed the future trends and predictions for web 2.0 as a concept and the direction social

networking sites are heading towards. We discussed how web 2.0 evolved from web 1.0. the endless

possibilities that web 3.0 And 4.0 present and some of the key changes in product and services that they

have to offer.

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Table of Contents 1 Introduction ................................................................................................................................................................ 4

1.1 History of web............................................................................................................................................................. 4

1.2 Product Description .................................................................................................................................................... 5

1.2.1 What is social network ....................................................................................................................................... 5

1.2.2 S.W.O.T Analysis of Social Networking Sites ...................................................................................................... 6

1.2.3 Popular social networking activities .................................................................................................................. 6

1.3 Key enabling technology ............................................................................................................................................. 7

2 Customer/participant profile ...................................................................................................................................... 8

3 Web 2.0 component .................................................................................................................................................... 8

3.1 The framework ........................................................................................................................................................... 8

4 The Competitive Scenario ........................................................................................................................................... 9

4.1 Evolution of social networking sites ......................................................................................................................... 10

4.2 Ratings ...................................................................................................................................................................... 10

5 Company Analysis ..................................................................................................................................................... 11

5.1 Facebook.com ........................................................................................................................................................... 12

5.1.1 Geographic Spread ........................................................................................................................................... 12

5.1.2 Demographics .................................................................................................................................................. 13

5.1.3 Financials and revenue model .......................................................................................................................... 13

5.2 Myspace.com ............................................................................................................................................................ 14

5.2.1 Geographic Spread ........................................................................................................................................... 14

5.2.2 Demographics .................................................................................................................................................. 15

5.2.3 Financials and revenue model ......................................................................................................................... 15

5.3 Twitter.com .............................................................................................................................................................. 16

5.3.1 Geographic spread ........................................................................................................................................... 16

5.3.2 Demographics .................................................................................................................................................. 16

5.3.3 Revenue model ................................................................................................................................................ 17

6 Legal and Regulatory issues ...................................................................................................................................... 17

6.1 Copyright and IP ....................................................................................................................................................... 18

6.2 Privacy....................................................................................................................................................................... 18

6.3 Taxation .................................................................................................................................................................... 18

7 The India Story .......................................................................................................................................................... 18

7.1 Participation of Indians in the network .................................................................................................................... 19

7.2 List of some of the famous Indian Social networking sites ....................................................................................... 19

8 Future Trends ............................................................................................................................................................ 21

8.1 Way ahead – WEB ..................................................................................................................................................... 21

8.2 Products and services – future ................................................................................................................................. 22

9 Bibliography ............................................................................................................................................................. 23

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1 Introduction

1.1 History of web

Vannevar Bush In his July, 1945 article “As We May Think” in The Atlantic Monthly wrote of the need

for new ways to manage the explosion of knowledge that was even then threatening to overwhelm the

ability of professional to keep pace with developments in their areas of interest. He described the

necessity to provide access to large bodies of separate pieces of information and proposed a mechanism

for connecting the pieces to one another into “trails” that could be followed to track the information

associations.

In 1989 Tim Berners-Lee “proposed that a global hypertext space be created in which any

network-accessible information could be referred to by a single "Universal Document Identifier"

(UDI).

In 1990 he wrote the first hypertext server and an editor named “Worldwide Web”. A simple

browser for hypertext document written by Nicola Pellow was also released, creating what would

become the World Wide Web (WWW).

The real breakthrough was the publication of the

specifications of the enabling technologies – UDI

(since changed to URL), HTML, and HTTP,

on the Web server, allowing everyone who wanted

to take part in the new way of sharing

information to jump in and create their own Web servers, pages, sites, and browsers, leveraging

the strength of the idea...

THIS WAS WEB 1.0

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1.2 Product Description

1.2.1 What is social network

The concept of social networking as a platform for engaging a community is clearly not new. What is

new is how technology has facilitated the development of virtual social platforms that extend the reach,

power and potential of community.

A social network service focuses on building online communities of people who share interests and/or

activities, or who are interested in exploring the interests and activities of others. Most social network

services are web based and provide a variety of ways for users to interact, such as e-mail and instant

messaging services.

Web 2.0 is about harnessing the potential of the Internet

In a more collaborative and peer-to-peer manner

Users communicate and collaborate while at the same time contribute and participate

Is shaping the way you work and interact with information on the web

Mindset change towards collaborative participation

Shifts the focus to the user of the information

User can search, choose, consume and modify the

relevant content

Web 2.0 refers to the adoption of open technologies and

architectural frameworks to facilitate participative computing

THIS IS WEB 2.0

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1.2.2 S.W.O.T Analysis of Social Networking Sites

1.2.3 Popular social networking activities

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1.3 Key enabling technology

•It become mainstream and ubiquitous

• The result of which is in an increased usage of the internet for even small tasks on different devicesBroadband

•It involves a web page requesting an update for some parts of its content and altering that part in the browser, without refreshing the whole page

•The use of Ajax techniques has led to an increase in interactive or dynamic interfaces on web pages

Ajax

•It is a protocol which permits syndication of content across contexts and sites

RSS

•It is a markup language that allows the look of a web page be gathered in one place

•It also allows for different users to have different looks and styles on the same webpage

CSS

•It is a mark up language that describes other data

• It can facilitate sharing of data across systems and standards.XML

•A widget is anything that can be embedded within a web page.

•Widgets often take the form of on-screen tools.Widgets

•This facilitates low-cost high quality software availability for both consumer and businesses

Ruby on Rails

•In web development, a mashup is a web page or application that combines data or functionality from two or more external sources to create a new serviceMashups

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2 Customer/participant profile

A targeted audience is the group or classification of people to which a campaign aims to appeal. Social

networks include members from virtually every demographic – so initially, it would seem quite simple

to reach a target market through social networking. However, many businesses can attest to the lack of

specificity which is often characteristic throughout social networks.

Social networks involve natural, unbiased communication between a variety of individuals.

The use is voluntary which creates a genuine representation of targeted audiences among

potential consumers.

In doing so, social networking has created a simplistic, yet genuine capacity for marketing

among consumers of a targeted audience.

Making use of this capacity, however, requires that social networks institute a more practical

method for distinguishing and establishing targeted audiences.

3 Web 2.0 component

3.1 The framework

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As per the above framework participation, decentralisation and user control have been added as a

unique feature of the web 2.0 component in the social networking service encouraging the users to

choose what and what not to publish generating tremendous amount of interest.

4 The Competitive Scenario

The above mentioned sites have been segregated on the basis of their primary services although

all these web 2.0 sites have multi-functionality as they have continued to add on services to survive and

to stay ahead in the competition.

Almost every day there are new sites coming up with add on features over and above the main

function of providing platform for people to interact with each other, the main objective being attracting

more and more registered users who are active, thereby increasing the popularity of the site.

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4.1 Evolution of social networking sites

Blogs and email are the originators of this new trend of social networking, with sites such

as Xanga and Livejournal paving the way to the more common blogs of today through mediums such

as Wordpress.

From the very beginnings of social networking ten years ago in 1999 to the present day

popularity, it is obvious that some shift in usage occurred at some point.

Sites such as Twitter and Facebook have become cultural iconsand have

increased internet communications across the board. Facebook and Myspace have been two of the

longest lasting fads in the internet world

Thus paving the way for sites such as Twitter and any new sites to come. However, they were not

the original social networking sites either, with the original formation of such “blogging” sites beginning

well before 2000.

In the online social networking service providers we see more and more players coming up with

some add on features as a differentiating factor besides providing a platform to socialise

4.2 Ratings

Top 10 Global Web Parent Companies(SEP 2009) Source: Nielsen Net View

RANK PARENT UNIQUE

AUDIENCE (000)

ACTIVE

REACH %

TIME PER PERSON

(HH:MM:SS)

1 GOOGLE 337,039 80.89 1:50:40

2 MSN/WINDOWSLIVE/BING 263,519 63.25 3:09:20

3 YAHOO! 232,672 55.84 2:20:09

4 MICROSOFT 215,795 51.79 0:46:55

5 FACEBOOK 193,250 46.38 5:00:29

6 YOUTUBE 190,965 45.83 1:03:41

7 WIKIPEDIA 145,681 34.96 0:15:04

8 AOL MEDIA NETWORK 133,182 31.96 2:24:25

9 EBAY 119,187 28.61 1:38:54

10 APPLE 107,884 25.89 1:06:17

The above table shows the rankings of the top 25 social networking sites UV stands for Unique

visits.

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Top 25 Social Networks (ranked by monthly visits - 2009) Source: Compete.com

Rank Site UV Monthly Visits Previous Rank

1 facebook.com 6,85,57,534 1,19,13,73,339 2

2 myspace.com 5,85,55,800 81,01,53,536 1

3 twitter.com 59,79,052 5,42,18,731 22

4 flixter.com 76,45,423 5,33,98,974 16

5 linkedin.com 1,12,14,160 4,27,44,438 9

6 tagged.com 4,48,915 3,96,30,927 10

7 classmates.com 1,72,96,524 3,52,19,210 3

8 myyearbook.com 33,12,898 3,31,21,821 4

9 livejournal.com 47,20,720 2,52,21,354 6

10 imeem.com 90,47,491 2,29,93,608 13

11 reunion.com 1,37,04,990 2,02,78,100 11

12 ning.com 56,73,549 1,95,11,682 23

13 blakplanet.com 15,30,329 1,01,73,342 7

14 bebo.com 29,97,929 98,49,137 5

15 hi5.com 23,98,323 94,16,265 8

16 yuku.com 13,17,551 93,58,966 21

17 cafemom.com 16,47,336 85,86,261 19

18 friendster.com 15,68,439 72,79,050 14

19 xanga.com 18,31,373 70,09,577 20

20 360.yahoo.com 14,99,057 51,99,701 12

21 orkut.com 4,94,464 50,81,235 15

22 urbanchat.com 3,29,041 29,61,250 24

23 fubar.com 4,52,090 21,70,315 17

24 asiantown.net 81,245 11,18,245 25

25 tickle.com 96,155 1,09,492 18

5 Company Analysis

As per the analysis done based on the global rankings, the 3 big players in this industry turned out to be

Facebook.com

Myspace.com

Twitter.com

We would be looking at each of these 3 players in detail

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5.1 Facebook.com

Website: facebook.com

Location: Palo Alto, California, United

States

Founded: February 1, 2004

Funding: $716M

Facebook is the world‟s largest social network, with over 300 million users.

Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for

Harvard.

5.1.1 Geographic Spread

The above map shows us the widespread demographics of the network as well as the user intensity in

those areas. Facebook is clearly spreading across the world.

http://www.crunchbase.com/company/facebook

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5.1.2 Demographics

Age

5.1.3 Financials and revenue model

Revenue model

Display ads: Accounts for most of its current revenue through an advertising outsourcing deal

with Microsoft (CPM 0,30 €)

Sponsorship: the sponsorship of groups seems to be the major potential source of future revenue

($300,000 for a 3 month presence, up 200% in June2007 vs. February2007), more than150

companies are already present such as Nike, Victoria‟s Secret, …

Gifts: limited edition gifts for sale at a low price ($1)

30-day traffic

Unique Visitors 110 M, 370 M

Reach 45.6%, 28.8%

Page views 52 B, 160 B

Total visits 3.1 B, 8.7 B

Avg visits per visitor 28,23

Avg time on site 20:00, 23:20s

Facebook

0%

5%

10%

15%

20%

25%

0 – 17 18 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65 or more

18%

7%

14%

20%

24%

12%

4%

Series1

GENDER

MALE 43%

FEMALE 57%

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5.2 Myspace.com

Website: myspace.com

Location: Beverly Hills, California, United States

Founded: August 1, 2003

Acquired: July 1, 2005 by Fox Interactive Media for $580M in

Cash

MySpace is one of the world‟s largest social networks, with about 125 million users. Originally inspired

by Friendster, MySpace quickly grew to become the world‟s largest social network.

5.2.1 Geographic Spread

http://www.crunchbase.com/company/myspace

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5.2.2 Demographics

Myspace

30-day traffic


Reach 26.1%, 9.1%

Page views 32 B, 39 B

Total visits 1.2 B, 1.5 B

Avg visits per visitor 19, 13

Avg time on site 23:20, 21:40

Age

5.2.3 Financials and revenue model

MySpace operates solely on revenues generated by advertising as its user model possesses no paid-for

features for the end user. Through its Web site and affiliated ad networks, MySpace is second only

to Yahoo! in its capacity to collect data about its users and thus in its ability to use behavioural

targeting to select the ads each visitor sees.

On August 8, 2006, search engine Google signed a $900 million deal to provide a Google search facility

and advertising on MySpace. MySpace has proven to be a windfall for many smaller companies that

provide widgets or accessories to the social networking giant.

0%

5%

10%

15%

20%

25%

30%

35%

0 – 17 18 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65 or more

34%

10%12%

16%

19%

7%

2%

Series1

GENDER

MALE 36%

FEMALE 64%

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5.3 Twitter.com

5.3.1 Geographic spread

5.3.2 Demographics

Twitter


Reach 10.1%, 5.1%

Page views 2.1 B, 4B

Total visits 270 M, 550 M

Avg visits per visitor 11, 8.3

Avg time on site 12:10, 11:40

Type : Private

Founded: 2006

Headquarters: San Francisco, California

Industry : Mobile Social Network service

Revenue : $400000 Q3 2009

Employees : 74

GENDER

MALE 43%

FEMALE 57%

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Age

5.3.3 Revenue model

As of now there are few online advertisements displayed on twitter.com

The site is having a lot of third party applications and get revenue based on the usage of

the twitters of those applications

The site has got many users on mobile and it generates revenues through tie-ups with

many mobile companies especially in Japan, Indonesia etc.

6 Legal and Regulatory issues

The two most important statutes to consider when discussing the legal liabilities and obligations of the

social networking sites are Section 512(c) of the Digital Millennium Copyright Act and Section 230 of

the Communications Decency Act.

Section 512(c) removes liability for copyright infringement from websites that allow users to post

content, as long as the site has a mechanism in place whereby the copyright owner can request the

removal of infringing content. The site must also not receive a financial benefit directly attributable to

the infringing activity.

Section 230 of the Communications Decency Act immunizes website from any liability resulting from

the publication of information provided by another. This usually arises in the context of defamation, but

several courts have expanded it to cover other sorts of claims as well.

0%

5%

10%

15%

20%

25%

30%

0 – 17 18 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65 or more

11%

8%

16%

29%

20%

11%

3%

Series1

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6.1 Copyright and IP

Copyright: In the simplest terms, "copyright" means "the right to copy." Only the owner of copyright,

very often the creator of the work, is allowed to produce or reproduce the work in question or to permit

anyone else to do so. Suppose, for example, that you have written a novel. Copyright law rewards and

protects your creative endeavour by giving you the sole right to publish or use your work in any number

of ways. You may also choose not to publish your work and to prevent anyone else from doing so.

Intellectual Property (IP): Intellectual property (IP) refers to the legal rights to ideas, inventions and

creations in the industrial, scientific, literary and artistic fields. It also covers symbols, names, images,

designs and models used in business. You may not realize it, but your business may be creating IP assets

that should be protected.

6.2 Privacy

Internet privacy consists of privacy over the media of the Internet: the ability to control what

information one reveals about oneself over the Internet, and to control who can access that information.

Many people use the term to mean universal Internet privacy: every user of the Internet possessing

Internet privacy.

6.3 Taxation

The internet companies follow the taxing model as per the country it is based in, the companies

generate revenue through various sources like online advertising, Subscription fees etc which are

accounted for and based on the taxing implication of the country the tax is paid by these sites.

7 The India Story

India is slowly emerging as the next big hub for the online network service providers industries with

many social networking sites becoming big like Orkut.com, facebook.com, twitter.com, linkedin.com,

youtube.com etc.

Many sites have seen the huge potential in Indian market which is large in population and is untapped

considering the fact that the internet connectivity and penetration is growing consistently.

Along with the big players like facebook.com, Orkut.com, twitter.com there are many Indian sites that

are coming up with their audiences clearly defined and with added features with customisation to cater

to the needs and tastes of Indian users. Some of the popular Indian sites include Bigadda.com,

Fropper.com, Bharatstudent.com, Indyarocks.com etc.

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7.1 Participation of Indians in the network

Orkut is still the leader in India although Facebook and twitter are catching up big-time.

7.2 List of some of the famous Indian Social networking sites

Indyarocks is well known for sending free SMS to any mobile within India but is a fully functional

social networking site, one can compare it‟s features to Ibibo. Indyarocks also has a Facebook line

messaging bar in bottom. Indyarocks is more rich in features but very far from Ibibo in traffic.

Bigadda is owned by Reliance Entertainment an Anil Dhirubhai Ambani Group (ADAG). Bigadda is

growing social network. Bollywood super star Amitabh Bachchan‟s blog is on Bigadda known as BigB

and other stars also has their blog on Bigadda.

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Dhingana is well known for music streaming but some of its features identifies itself as a social

networking site. One can listen latest Hindi, Marathi and Punjabi songs on Dhingana. One can see

photos, videos and trailers of Bollywood movies, can make friends, join communities and perhaps can

create also one.

Fropper is known as a dating cum social networking site but dating section is separated from regular

section.

BharatStudents was launched targeting the Indian students. It acts as platform for student interaction,

tips for exams etc One can also upload documents, post classifieds etc.

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8 Future Trends

8.1 Way ahead – WEB

Web 2.0 (2000 - 2010)

Some people might be wondering what Web 2.0 is? In a nutshell, it‟s the creation of social media - rich

networks of people coming together to add another dimension to the information which they present.

That‟s a bit vague - so maybe a concrete example would be better.

Imagine a site that users list hotels and review them. Each hotel is then ranked, based on the reviews.

The reviews are trusted because they come from users with no vested interest. Users can book hotels

through the site. The site makes a commission for each booking.

Web 3.0 (2010 - 2020)

Web 3.0 is termed „the semantic‟ web - this means that the information on the web is fully split from the

presentation. And also, the relationships of the information is organized in a way that can be understood

by humans and machines.

Most web pages these days contain code like this -

<li>Mustang</li>

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The <li> tag can be interpreted by browsers to mean „list item‟ - like a bullet point. But what does

„Mustang‟ mean? A type of horse, or type of car? And is it related to anything? You can‟t tell. So we

need a better system, maybe something like -

<car>Mustang</car>

This is simplified, but it illustrates semantic mark up. Using this, machines can do much of our work of

searching / reading. Instead, the machines will fetch data to present to us so we can concentrate on other

things, like figuring out whether the Mustang is worth buying.

Web 4.0

At this stage, we‟re looking at the web working with us. Taking the networking of Web 2.0, and the

information accessibility for machines from Web 3.0, we‟ll have the often hyped computer „agents‟

working for us. It‟ll be like signing up to groups which are managed by a computer program.

8.2 Products and services – future

The Future – Imagination The web is constantly evolving and is not only a product of our imagination,

but will soon be a product of machine imagination, once access to information is opened fully.

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9 Bibliography

www.wikipedia.org

www.nielsonnetratings.com

www.myspace.com

www.facebook.com

www.twitter.com

www.digitaltrends.com

www.paulgraham.com/web20.html

http://www.wikipedia.org/

http://www.nielsonnetratings.com/

http://www.myspace.com/

http://www.facebook.com/

http://www.twitter.com/

http://www.digitaltrends.com/

http://www.paulgraham.com/web20.html

web 2.0 in social networking sites industry analysis

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