The social networking scene is constantly in flux. The big 3 (Facebook, Twitter and LinkedIn) are at the top of the heap right now. But challengers are springing up all the time, hoping to leverage the next big wave into a lucrative IPO.
Actually there are two giant waves in the sea of social networking: mobility and games.
As people move from desktops and laptops to iPads and smartphones, everything is moving to mobile apps, says Gartner analyst Michael Gartenberg. "People have their phones with them all the time, not their laptops. When they communicate, whether it's verbal, text, or a social app, they use their phones."
And since people are on the move, the savvy social media companies are adding location into the mix, either by having people check-in wherever they are (Foursquare), or by using GPS to connect people who are in close proximity (Color).
The second major trend is what Altimeter Group's Jeremiah Owyang calls "gamification." People don't just want to post updates and read updates from others, they want to play games.
"Social gaming opportunities are huge," Owyang says. "These new gaming products that incorporate competitive opportunities into a social gaming environment will drastically impact consumers, and the opportunities for brands (and threats for other vendors) are enormous. Products like Empire Avenue are a highly addictive experience that's similar to stock market gaming of your own social network. It is, in fact, the Farmville for social media."
In other words, social networking apps that raise the bar to a competitive level, in the form of a game on a smartphone, are not only the future, but the payload of the future.
Here are 5 social media sites that are creating a buzz:
1. Empire Avenue
Founders and date founded: Duleepa Wijayawardhana (aka Dups), Dr. Michael Mannion and Niall Brown, 2009
What it does: Empire Avenue is a social media exchange network and, according to Tom Ohle, vice president of Marketing/Media Relations at Empire Avenue, is the world's first and only social network of its kind.
Members invest virtual currency in people and brands that interest them. Share prices are based on the individual or the brand's activity, engagement and reach across other social media networks including Empire Avenue, Twitter, Facebook, YouTube, LinkedIn and others. Basically, it's a social network and a game that helps members meet and connect with new people, gain insight and metrics of their social media activity across the web, and have fun while becoming better at using the social media environment.
Why it's hot: Empire Avenue asks its members one fundamentally different question, and that is: if every connection members made cost them money from a limited source (even if that source is virtual currency), who would they connect with and why?
This leads to many interesting connections that most members might not otherwise make. "Our 'Buy' mechanism generates a connection that is much deeper than a 'Follow,' but less intrusive than a 'Friend,' which makes it easier to connect across the world while playing a fun game that, in itself, is based on social media engagement," Ohle says. "And, based on how deep members get involved, they might end up using it as a training tool, a social network or as a way to become a virtual millionaire."
Stats: Web traffic grew by more than 150 percent from March to April. And, as it continues to climb, they are keeping their members highly engaged, averaging over 10 page views and 12 minutes per visit.
Funding sources: Privately funded by Boris Wertz, Dr. Ray Muzyka, Dr. Greg Zeschuk and Kevin Swan.
Founders and date founded: Bill Nguyen and a team of engineers, 2010
What it does: Color is a free iPhone and Android app that creates an instant social network based on users location and proximity to others. The objective is to facilitate better relationships with neighbors and co-workers without the rigors of establishing permanent connections. Users can instantly share images, videos and text conversations with others in proximity by capturing information as a group instead of an individual.
Why it's hot: Color is addressing the question: What is social networking in the post PC era?
According to founder Bill Nguyen, Color provides a mobile layer on top of the social networks users already love. Color works by using advanced technology to process location information, social network graphs, and device sensors to accurately define proximity, so users can share and interact with their community in a way that's more personal and relevant than the broadness of the web. "We believe that relevance from proximity is the next step forward for social networking," says Nguyen.
Stats (page views, number of subscribers, followers, etc.): Color representatives elected not to disclose this information. The site is still very young.
Funding sources: Bain Capital Ventures, Sequoia Capital and Silicon Valley Bank
Founders and date founded: Dennis Crowley and Naveen Selvadurai, March 2009
What it does: Foursquare is a location-based mobile service that enables participants to share their location with friends by checking-in via a smartphone app. It enhances real world experiences by allowing users to bookmark information about venues they want to visit, then provides customised recommendations. Merchants and brands benefit by using the self service tools to attract and engage customers and fans.
Why it's hot: "The latest version of the mobile app (3.0) has transcended the check-in to actively change the way users experience the world around them," says Erin Gleason, PR manager at foursquare. "We've done this by highlighting three things: discovery, encouragement and loyalty."
For example, individuals use foursquare to "discover" new experiences, then make or provide recommendations to friends. "Encouragement" thrives through check-ins, which generates points that are displayed on a Leaderboard showing the top users each week. Participants compete for high scores using exploration in their own cities as a baseline. And "loyalty" is rewarded with specials and free tools to attract, generate and maintain continued relationships and increased growth.
Stats: Almost 9 million users worldwide, with about 50% international usage, approximately 35,000 new users each day with over 3 million check-ins each day, 3,400% growth in 2010, 250,000+ businesses use the merchant platform.
Funding sources: Union Square Ventures, O'Reilly AlphaTech Ventures, Andreessen Horowitz and several angel investors.
Founders and date founded: Caterina Fake (also co-founded Flickr) and Chris Dixon (site advisor founder and angel investor); June 2009
What it does: Hunch maps people to their interests. It calls this a "taste graph," which tracks everything that users like and dislike. The site asks users a series of questions about specific topics, then lets them rate the answers. In a nutshell, Hunch customises its results by asking questions about who you are and then makes recommendations for things that other users like you prefer.
Why it's hot: Members can search their friends' favourite things and use the information for purchasing gifts. Users can explore another's preferences to prepare for a date or job interview. It's a very useful and clever way to get acquainted with new people and avoid those embarrassing situations such as giving your boss a bottle of wine that he dislikes.
Stats: Hunch has 68,998 page views per day, 26,775 visitors per day and the United States usage is 46.4%. 1.2 million unique visitors in February 2010.
Funding sources: Khosla Ventures, General Catalyst Partners, Bessemer Venture Partners and original angel investor Ron Conway (also an early investor in Google and PayPal). The lead investor was Gideon Yu, the former CFO of YouTube and later Facebook.
Founders and date founded: Will Harvey, Co-Founder and Chairman and Eric Ries, Co-Founder and IMVU Board Observer, April 2004
What it does: Originally created for Windows, this site didn't really take off until the owners created an app version for the iPhone. The response was so popular, a Mac version was developed and the site gained even more popularity.
Geared to a younger crowd, IMVU is an online, social entertainment network for members to meet new friends, to chat, join groups, share interests and play games. Membership and participation is free, and the site provides each new member 1,000 promotional credits of virtual currency to get started. Members earn more promotional credits by participating in other experiences.
Why it's hot: IMVU members use 3D avatars to represent themselves on the site. They can create these avatars using virtual products such as clothes, shoes, etc. or purchase one of the many hundreds of predesigned avatars from the avatar catalogue. In addition to the games and social environment, members can create and sell their own virtual products such as furniture, clothing, jewelry, hair, animations and/or anything else that other members might use to create their virtual identity including personalised homepages and private rooms.
Stats: 50 million registered users, 10+ million unique visitors per month, 50% in the United States. Core members are young adults 18 to 24 with about 7% older than 35. Members must be at least 13 years old to use register and participate.
Funding sources: Menlo Ventures, Allegis Capital, Bridgescale Partners and Best Buy Capital
Back from retirement
And three sites that went from hot to not, and are now hoping to get back in the game.
Founders and date founded: Tom Anderson and Chris DeWolfe, 2003
What it does: The new MySpace is an entertainment network that connects members to music, celebrities, TV, movies and games. Users customise their own pages to feature their entertainment specialty. MySpace Music has an expanding catalogue of free streaming audio and video content for members to view and use. However, much of the site has become more of a huge, online portfolio for unknowns to post their works.
Why it declined: Back when Facebook membership was limited to college students only, MySpace built up a strong following among high schoolers and others without an .edu email address. But once Facebook opened its membership up to everyone, MySpace started to spiral down. In January, MySpace tried to re-invent itself by focusing primarily on pop culture and entertainment. It still ranks in the top five social networks for members/usage, but the popularity of this one time giant and only real Facebook competitor has fallen drastically.
In fact, it was announced last week that News Corp has sold social media site Myspace for about $35 million to online advertising company Specific Media, according to a source familiar with the transaction. The deal calls for News Corp to retain a minority stake in the website that it purchased six years ago for $580 million, the companies said.
In January, the company laid off 47% of its staff in an effort to revive the site's financials. This coincided with the redesign and refocus on the entertainment industry.
Stats: Claims 100 million users worldwide with 23% new growth this year, and 50% market share in the 13-35 demographic in the United States. And, advertises that the Myspace Mobile users spend over 40 minutes a week on this service.
Funding sources: Acquired by News Corp. in October 2005, sold to Specific Media in June 2011
Founders and date founded: Jonathan Abrams and Peter Chin, 2002
What it does: Like MySpace, Friendster has redesigned its site to focus more on music and gaming. It looks a lot like IMVU with its new offerings of games and avatars, but has also incorporated a number of the MySpace features in the music areas. It provides similar options for connecting with friends and family, but still lacks the numerous features and functionality of Facebook and MySpace.
Why it declined: Friendster famously lost out to Facebook in the battle to become THE social networking site. Abrams himself told students in a Stanford Graduate School of Business class that Friendster is now used as a business school case study of what not to do. Still, Friendster is popular in Asia.
Stats: 90% of the traffic is from Asia, 115 million registered users, 61 million unique visitors a month (globally), 19 billion page views per month.
Funding sources: Kleiner Perkins Caufield & Byers, Benchmark Capital, DAG Ventures, IDG Ventures. Acquired in December 2009 by MOL Global
3. Classmates (now called Memory Lane)
Founders and date founded: Randy Conrads, 1995
What it does: Originally, it was just set up to allow members to search for classmates by the years of school attendance or by graduation date, plan events such as reunions, and create bulletin boards for notes and messages. However, it was just completely redesigned with a sort of "50s" look and a new slogan claiming that it's the "premiere destination for accessing nostalgic content, yearbooks and connecting with people."
Why it declined: It has less functionality than its competitors (Facebook, MySpace, etc.), a confusing interface, and it charged members for services that all the other social networks provide for free.
Also, its business practices generated a fair amount of criticism. Some members complained via online forums that it auto-renewed memberships without permission, and in 2006 PC World magazine listed Classmates.com as one of the worst companies for cancelling membership. Also criticised was its practice of sending out emails to new, potential members that said old friends and classmates were searching for them, but requiring that people paid for a membership before being allowed to see who those old friends were.
Stats: According to Classmates, it receives 566,876 page views per day and 225,540 visitors a day.
Funding sources: Madrona Venture Group was the primary funding source for Classmates.com. The company was acquired by United Online in 2004. United Online reports the first quarter (2011) results as follows: total revenues of $241.5 million, operating income of $22.6 million and adjusted OIBDA of $44.2 million.
The bottom line, according to the analysts, is that success in the social networking environment depends on four things: the site must be designed for mobile platforms, it should use game mechanics as a reward system, it must be original and it can't be proprietary. That is, it has to easily integrate and share information, friend lists, favourites, etc.