Cyworld: Bigger Than YouTube?
If nothing else, this South Korea-based social networking site is a reminder that the U.S. Internet market isn't the only show around. The site's mash-up of social networking, blogging, and music and video sharing has drawn users on a mind-boggling scale. According to Hyun-Oh Yoo, CEO of SK Communications, which owns Cyworld, the site now has 20 million users in Korea, a whopping 40 percent of the country's total population. Some 96 percent of 20 to 29-year-olds use the site "regularly," he said. And with 100,000 daily video uploads, Cyworld actually has more traffic than the highly touted YouTube.
What makes Cyworld particularly interesting, though, is its revenue strategy. While most American Web companies have decided to put their eggs in the advertising basketboth Ning and Vox are counting on ads as their main source of revenueCyworld demonstrates that next-generation Internet companies can also have powerful E-commerce components as well. Since the service started in 1999, the site has sold 160 million songsmaking it the second-biggest music store in the world behind iTunes. Its primary source of income is its $300,000 in daily sales of digital items used to decorate user Web pages.
A U.S. version of the site appeared in beta this summer, and while its impact has been tiny so far, the site's success in Korea demonstrates that there are still new models for an Internet business out thereand competition is looming.