The Big Trend in Small Social Sites

Apple (AAPL) dove into interest-specific social media this month with the launch of Ping, a service for connecting music fans and artists. Unlike Ping, which has a ready-made feeder community of tens of millions of iTunes customers (and which surpassed 1 million users in just 48 hours), most niche network operators have to do more with less, building features into their sites to secure loyalty and interaction from users. There’s a payoff: They can charge higher ad rates. «The only way for a network to survive in a small community is to have a very high revenue per user,» says Jeff Clavier, a Silicon Valley angel investor who has backed canine site Dogster and video-gamer community Curse.

The exemplar of niche network success is myYearbook, founded in 2005 by siblings David and Catherine Cook. The site pulls in 25 million users, mostly teenagers, via dozens of games such as Blind Date, in which players attempt to match up compatible peers. «Our assumption is essentially everyone will have a Facebook account and use it to connect to friends and family,» says Geoff Cook, who joined his brother and sister soon after they founded the New Hope (Pa.) company, becoming chief executive officer. «Our users are here to meet new people.»


Niche social networks such as myYearbook and Dogster draw users and advertisers, adding up to a sizable portion of the social Web

By Douglas MacMillan
Saltwater fly-fishing pro Tony Biski recently came home with a story so good he couldn’t wait to share it. «It was a 12-foot great white shark viciously thrashing his tail and spraying us as he ran off with the fish,» wrote Biski, a resident of Chatham, Mass., in a post that grabbed the attention of dozens of other anglers on the Web. One commenter wanted to know if Biski had time to snap a photo. Another quipped: «Just in time for the 35th anniversary of Jaws

Biski didn’t bother posting his fish tale on Facebook, the 500 million-user site that’s the world’s biggest social network. Instead, he shared his story on GoFISHn, a community of a few thousand anglers. The site features maps that pinpoint where fish are biting, a photo gallery where members can show off their catches, and other quirks that distinguish it from a mass audience site. «We feel like we’re a moon orbiting Facebook,» says Ned Desmond, a former digital publishing executive at Time Inc. (TWX) who launched GoFISHn in December 2009. Desmond plans to create GoHUNTn and up to eight other interest-specific networks in coming years.

Facebook’s six-year rise from exclusive online hub for Ivy Leaguers to global digital directory has inspired a countertrend: niche social sites. Name an affinity, hobby, occupation, or demographic—mustache-wearing men, hamster lovers, moms, research scientists, boomers—and there’s likely to be a dedicated social network for it. While most niche networks are run by fledgling tech startups and are, almost by definition, small, they add up to a sizable portion of the social Web; in July at least 280 million people logged on to social sites other than Facebook and Twitter, according to audience tracker comScore (SCOR). Andrew Lipsman, comScore director of industry analysis, estimates the real number could be as high as 700 million, since many people use more than one social site.

Apple (AAPL) dove into interest-specific social media this month with the launch of Ping, a service for connecting music fans and artists. Unlike Ping, which has a ready-made feeder community of tens of millions of iTunes customers (and which surpassed 1 million users in just 48 hours), most niche network operators have to do more with less, building features into their sites to secure loyalty and interaction from users. There’s a payoff: They can charge higher ad rates. «The only way for a network to survive in a small community is to have a very high revenue per user,» says Jeff Clavier, a Silicon Valley angel investor who has backed canine site Dogster and video-gamer community Curse.

The exemplar of niche network success is myYearbook, founded in 2005 by siblings David and Catherine Cook. The site pulls in 25 million users, mostly teenagers, via dozens of games such as Blind Date, in which players attempt to match up compatible peers. «Our assumption is essentially everyone will have a Facebook account and use it to connect to friends and family,» says Geoff Cook, who joined his brother and sister soon after they founded the New Hope (Pa.) company, becoming chief executive officer. «Our users are here to meet new people.»

Viacom’s (VIA) MTV, Six Flags, and other advertisers provide the bulk of myYearbook’s revenue, which its CEO says has grown to about $2 million per month, up from about $1.2 million a year ago. One-third of sales now come from Lunch Money, a virtual currency purchased with real cash. Taking a page from Facebook’s playbook, the company plans to partner with up to a dozen game makers to expand the selection of activities on the site. Cook expects myYearbook to post its first annual profit in 2010.

While myYearbook focuses on teens, Eons attracts empty nesters with newfound time on their hands. Created by Monster.com (MWW) founder Jeffrey C. Taylor in 2005, Eons caters to the 50-plus crowd with discussion groups about retirement, spirituality, and the single life as a mature adult. «Facebook is really a place where you go, and it’s all about who you know—it’s me-centric,» says Linda G. Natansohn, chief operating officer at the Charlestown (Mass.) startup. «Eons is we-centric.» For example, some of the site’s 825,000 members meet up for boat cruises to Cabo San Lucas, Mexico, and excursions to Cape Cod. The outings are called SKITs, which stands for «spending your kids’ inheritance tours.» «Eons was created and continues to exist for the very targeted audience that we’re looking for,» says Tom Noland, a spokesman for Medicare coverage provider Humana (HUM), an advertiser on the site.

According to researcher eMarketer, the cost of a banner ad averages 62 cents per thousand page views across the universe of social networking sites. Advertisers on 700,000-user site Dogster sometimes pay upwards of $8, says Ted Rheingold, founder and CEO of the San Francisco company. A recent game for puppy lovers had users digitally hunting down and killing fleas—a promotion for Frontline’s flea collars. «Their brand is present as part of the whole dog owner experience, not just as a small ad to the right of the page,» says Rheingold, alluding to Facebook’s ad format.

None of these sites is a threat to Facebook. Rather, most depend on the larger site to get users learning the ABCs of networking online; the niche networks are the advanced course. «Two years ago everybody was talking about Facebook sucking all the oxygen out of the room,» says Rick Lewis, principal at U.S. Venture Partners and a member of myYearbook’s board. «There is potential that didn’t exist two years ago.»

Niche sites can help consumers get away from the noise of the mainstream while helping marketers in the endless quest for perfectly honed targets. «Need to find pilots who have experience in the Cessna 337 Skymaster that happen to live in California?» asks Rod Rakic, founder of aviation social network myTransponder. «We can do that.»

The bottom line: Facebook’s ascendancy has opened the way for an assortment of more focused social networks. That’s good news for marketers.

Douglas MacMillan is a staff writer for Bloomberg Businessweek in New York.
http://www.businessweek.com/magazine/content/10_38/b4195035456823.htm

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