What Friendster isn’t saying is how they’ll monetize this search, and whether Intelius’ scammy privacy services will be offered to Friendster users. Earlier this year we wrote again about Intelius and the myriad of lawsuits and consumer complaints that the company was fighting.

To summarize those posts, Intelius has been accused of tricking users into long term credit card subscriptions via a third party for worthless privacy protection products.

The Friendster press release doesn’t talk about how the service will be monetized, but it looks like the integration may be through a recent Intelius acquisition, Spock.

I’ve emailed Friendster for clarification on whether or not they plan on exposing their users to Intelius’ very questionable monetization practices. Because if they are this desperate for revenue, it’s a sign that Friendster is in very serious trouble indeed.

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Friendster, one of the oldest social networks, is actively looking for a buyer and has hired investment bank Morgan Stanley to find a party interested in acquiring the company or at least some of its assets.

According to documents obtained exclusively by TechCrunch, it looks like Morgan Stanley is shopping Friendster around in Asia, which makes sense considering almost its entire user base is located in the Asian-Pacific region. In the main document (embedded below), it says that 75 percent of its registered accounts are in Asia. The docs come from a credible source, are time-stamped ‘July 2009′ and carry a number of interesting nuggets about the influence Friendster still has in the social networking sphere, even if mostly in Asia.

In the summary fact sheet being sent to multiple potentially interested buyers, Friendster claims over 100 million registered users globally and touts its stronghold in the Asian-Pacific region as well as a bright future ahead since a number of its key markets (Singapore, Indonesia, Malaysia, Philippines, aka SIMP) are expected to experience robust Internet user growth over the next few years. The fact sheet also says Friendster attracts over 100,000 new users and 500 million page views on a daily basis, making it a top 20 global website based on user traffic. According to the documents, the company currently has an employee headcount of 105 employees spread out across its global network of offices (Australia, the United States, Philippines and Singapore).

The fact sheet that we obtained shows that Friendster/Morgan Stanley are gunning for a buyer who wants to gain quick access to the Asian social networking scene, emphasizing it would be hard for newcomers to establish themselves given the relationships with local vendors and partners that are needed for such a venture to become a success. Additionally, it touts Friendster’s portfolio of patents in the space (5 granted and 10 pending) and its experienced management team.

More interesting nuggets of information: Friendster is looking to expand its current revenue streams to include—besides online advertising—virtual goods, gaming, surveys, dating, music and classifieds.

One thing we couldn’t gather from the documents, which are embedded below, is the price Friendster is hoping to get. The company is backed by more $45 million in capital venture firms like Battery Ventures, Benchmark Capital, DAG Ventures and Kleiner Perkins Caufield & Byers, along with some early angel investors such as LinkedIn founder Reid Hoffman and Spinner/Grouper founder Josh Felcher.

Our latest model valuing social networks puts Friendster at only $210 million, based on Facebook’s recent valuation of $10 billion. Mostly that is because of the lower spending power of consumers in Southeast Asia, making advertisers value them less differently. That $10 billion Facebook valuation, though, was for preferred shares. If you look at the $6.5B valuation of the most recent sale of common stock, Friendster would be worth only $137M in comparison. Back in 2002, the company turned down a $30 million buyout offer from a pre-IPO Google. (In an interesting twist, Friendster’s current CEO, Richard Kimber, used to head up sales for Google in South East Asia).

We also took a look at the comScore numbers for Friendster in May, 2009 compared to the same period last year, and worldwide unique visitors dropped 45 percent to 21 million (suggesting there is a big difference between active and registered users).

With stats like these, no wonder the company and its investors are looking for a way to cash out.

Also amusing was that a quick search on Twitter turned up mostly messages from US-based users that were deleting their Friendster accounts.

And here are (screenshots of) the documents:

PJ Connect – Potential Purchaser CA –

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Even on the Web, world dominance must be achieved one country at a time. While Facebook has long been the largest social network in the world, and should soon pass MySpace in the U.S., it is not the largest social network in every country. The map above created by Vincenzo Cosenza resembles more a game of Risk, with Facebook sweeping across the globe from the West.

Using Alexa and Google Trend data, Cosenza color-coded the map based on which social network is the most popular in each country. All of the light green countries belong to Facebook. But there are still pockets of resistance in Russia (where V Kontakte rules), China (QQ), Brazil and India (Orkut), Central America, Peru, Mongolia, and Thailand (hi5), South Korea (Cyworld), Japan (Mixi), the Middle East (Maktoob), and the Philippines (Friendster).

Apparently, Alexa already thinks that Facebook is larger than MySpace in the United States. And Maybe it is, or maybe Cosenza’s isn’t using the best data. But I love being able to visualize market dominance on acountry-by-country basis. I wonder what the map would look like using comScore data, some of which can be found in our recent social network valuation model.

Below is an interactive version of the map.

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We’ve now remodeled social network valuations based on current user numbers and Facebook’s most recent $10 billion valuation. The results are dramatically different.

Based on the original year-old model, if Facebook was worth $15 billion (their then-current valuation), MySpace, with far more U.S. users, was worth nearly $20 billion:

Our model takes Comscore data for available countries and regions. We’ve graphed each of 26 well known social networks with the data we have been able to collect. We’ve then calculated the average advertising spend (estimated by PriceWaterhouseCoopers in a recent report) for each person online in each of those countries. For example, in the U.S., the total 2008 estimated Internet advertising spend is $25.2 billion. We’ve divided that by the number of people online in the U.S. according to Comscore (191 million), to get an average Internet spend per person of $132. View the raw data and calculations here.

The U.S., by the way, is only the 4th most valuable market per Internet user, trailing The UK ($213), Australia ($148) and Denmark ($144).

We’ve then multiplied the average Internet spend per user in each market with the number of unique users each social network has in that market, essentially creating a “weighted average” based on the advertising dollars chasing users. If a social network has more users in the U.S., Japan, the UK, Germany, Australia, and other bigger advertising networks, they will have a higher weighted average valuation.

We believe this model is an effective way to rank various competing social networks. It bumps down networks like Orkut and Friendster who have tens of millions of users in markets with very little advertising spend, and bumps up networks with lots of users in higher value markets.

Based on this model, MySpace is by far the most valuable social network. Second place Facebook has just 75% of the value of MySpace (even though it now has more users), followed by Bebo (26% of MySpace value), Hi5 and Amebio. LinkedIn comes in at no. 11, at 6% of MySpace’s value.

The new model takes into account the dramatic rise of Facebook usage over the last year, the massive recent decline in MySpace usage, and less dramatic changes in the other social networks. We’ve also modeled out the various valuations with the old Bebo ($850 million) and LinkedIn ($1 billion) valuations as pivot points. We’ve also added Twitter to the list just for kicks.

The bottom line: If Facebook is worth $10 billion today, MySpace is worth just $6.5 billion. Bebo is worth $1.8 billion, Twitter is worth $1.7 billion and LinkedIn is worth $0.8 billion. Facebook also accounts for 37% of all social networking value points in our model. Another way of saying this: If Facebook is worth $10 billion, the value of the entire social networking industry is $27.1 billion.

Lots of charts and graphs below. The full model is here if you want to look at all the data (I recommend zooming unless you have super vision). Thanks to TechCrunch intern Dan Romero for running the new model.

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The company’s new CEO, Richard Kimber, is based in Sydney Australia. Friendster’s old San Francisco headquarters have been relocated as well, and the company now has a small Mountain View office for U.S. employees. Today the company announced that they’ve opened new offices in Singapore and Sydney. They have existing offices in the Philippines. A majority of the company’s employees are now in the Asia Pacific region, and at least 85% of new hires going forward will be based there.

There is a terrific monetization opportunity in the region over the long haul, but the company must be hurting for revenue today. Ad rates aren’t anywhere near comparable to the U.S. and Europe. Luckily the company has a fresh $20 million venture round to see it through.

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What were the top social media sites of 2008? ComScore came out with its worldwide traffic stats for November a few days ago (so these don’t include December). They are a mix of social networks and blogging platforms. Blogger, the orange line in the chart above, still rules the roost with an estimated 222 million unique worldwide visitors in November (up 44 percent from November, 2007). Facebook, the blue line, is on pace to pass it soon with 200 million unique visitors (up 116 percent). (Note, though, that this is more than the 140 million active users Facebook itself reports—go figure). MySpace is pretty steady at 126 million uniques. Wordpress is a close fourth and gaining with 114 million (up 68 percent). And Windows Live Spaces is down 22 percent to 87 million uniques.

ComScore keeps a list of what it calls “social networking” sites, but these include blogging platforms and other social media sites as well. While the audience for blogs is still showing healthy growth overall, Facebook stands out as the social gorilla taking share from not only other social networks but blogs and other social media as well.

Below are the top 20 sites on comScore’s social networking list. It is really more of a social media site list, which is what I’m renaming it for this post. It is not definitive, but it gives a good lay of the land. (Here is a similar ranking from 2007). Note on this list the stubborn persistence of Yahoo’s Geocities at No. 6, the rise of Yahoo’s Flickr at No. 7, Six Apart at No. 10, and the presences of Chinese sites like Baidu Space and 56.com. The real surprise, though, is document-sharing site Scribd at No. 16, with nearly 24 million worldwide uniques.

Top Social Media Sites (ranked by unique worldwide visitors November, 2008; comScore)

1. Blogger (222 million)
2. Facebook (200 million)
3. MySpace (126 million)
4. Wordpress (114 million)
5. Windows Live Spaces (87 million)
6. Yahoo Geocities (69 million)
7. Flickr (64 million)
8. hi5 (58 million)
9. Orkut (46 million)
10. Six Apart (46 million)
11. Baidu Space (40 million)
12. Friendster (31 million)
13. 56.com (29 million)
14. Webs.com (24 million)
15. Bebo (24 million)
16. Scribd (23 million)
17. Lycos Tripod (23 million)
18. Tagged (22 million)
19. imeem (22 million)
20. Netlog (21 million)

Here’s a screenshot of the actual data (as you can see, I rounded above):

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Six months ago, OpenSocial was nothing but a list of promised partnerships. But the social network application platform backed by Google has made a lot of progress since then as those partners started to go live with their OpenSocial Apps. First there was MySpace and Orkut, then Hi5, and most recently Friendster. All told, if you add up the various social networks that are now live with OpenSocial, it reaches a total of 350 million users. And it will soon reach 500 million, as four more social networks and services prepare to launch by the end of of September (see chart above).

Google’s Joe Kraus gave me an update today on OpenSocial’s progress. He wouldn’t say which partners would launch next, but by the size of that pink bar in the graph above, one of them is relatively large—about the same size as Orkut. (My guess is that it will be either Bebo or Six Apart). He also mentioned some partners, such as imeem, launched without ever contacting Google (thanks to Apache Shindig) and that at this point only 10 percent of the engineers hashing out the OpenSocial specifications are from Google.

So how many OpenSocial apps are actually being used? There are about 4,500 different apps so far, which have been installed more than 150 million times. I couldn’t get daily active user numbers across all OpenSocial partners, but for Hi5 about 50 percent of members use an OpenSocial app at least once a day. There are 1,800 OpenSocial apps on hi5 alone, which have been installed 66 million times, so that may be representative of OpenSocial usage in general.

In contrast, Facebook, which is open-sourcing its own platform for developers, has nearly 37,000 apps, which have been installed 715 million times. RockYou’s apps alone have been installed 124 million times on Facebook.

Despite the strides it’s made in such a short time, OpenSocial still has alot of catching up to do.

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Now Friendster. They’ve hired Richard Kimber, who was Google’s Managing Director of Sales and Operations for South East Asia and had over 1,000 people in his organization, to take over as the new CEO.

Previous CEO Kent Lindstrom will become SVP Corporate Development, says the WSJ. And the company has also raised a new $20 million round of financing led by IDG Ventures. The company has now raised $45 million.

The Friendster story is long and mostly sad. The company was founded in 2002 and owned the social networking world five years ago. They turned down a $30 million offer from Google in 2003 because they thought their destiny was something greater (that stock would be worth many times that amount based on Google’s stock price today). Instead of selling to Google, founder Jonathan Abrams raised venture capital. Friendster eventually raised money from Kleiner Perkins Caufield & Byers, Benchmark Capital and Battery Ventures. Some of the most successful and well known venture capitalists in silicon valley joined Friendster’s board of directors. After a failure to sell the company in late 2005, they recapitalized the company and Kent Lindstrom, one of the founders of Friendster, took over as President.

By our calculations Friendster is the worlds 16th most valuable social network today, although it is the 9th most trafficked website.

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It’s time to start comparing the big global social networks on something other than unique visitors and page views. I believe an effective way to value a particular user is based on the average Internet advertising spend per person in the country they live in. The higher the spend, the more value the social network can get out of the user by serving them advertising and other products. That means that, for now, users in a handful of key countries are worth far more in terms of revenue potential than those in the rest of the world.

We’ve begun to build out a model that looks at social network usage by country/region and compares that to available data on total Internet advertising spend in each of those countries. The model is then able to turn an apples-to-oranges comparison into an apples-to-apples comparison. The early results are surprising.

The ultimate financial value of any asset is, ultimately, what the market will pay for it. We have only a few data points to help us: Facebook, Bebo and LinkedIn are worth $15 billion, $850 million and $1 billion, respectively, based on relatively recent valuations (although only Bebo was actually sold completely; Facebook and LinkedIn raised investments at those valuations). The last valuation of MySpace was just $580 million, back in 2005 when it was acquired by News Corp.

Which valuation is most “correct?” It’s hard to say based on the data that’s been available to date, which is mostly just aggregate page view and unique visitor numbers from Comscore and other services. Based on worldwide unique visitors, for example, Facebook recently overtook MySpace to become the “largest” social network.

According to raw worldwide user number, the biggest social networks are Facebook, Myspace, Hi5, Friendster, Orkut and Bebo, in that order. But when you apply the model that we’ve created below, which takes into account where users live, the rankings change substantially. MySpace is by far the most valuable social network based on available data. A competitor like Orkut is worth only 1/20th of MySpace, even though it has nearly 1/4 the number of users.

Properly Ranking Social Networks

Our model takes Comscore data for available countries and regions. We’ve graphed each of 26 well known social networks with the data we have been able to collect. We’ve then calculated the average advertising spend (estimated by PriceWaterhouseCoopers in a recent report) for each person online in each of those countries. For example, in the U.S., the total 2008 estimated Internet advertising spend is $25.2 billion. We’ve divided that by the number of people online in the U.S. according to Comscore (191 million), to get an average Internet spend per person of $132. View the raw data and calculations here.

The U.S., by the way, is only the 4th most valuable market per Internet user, trailing The UK ($213), Australia ($148) and Denmark ($144).

We’ve then multiplied the average Internet spend per user in each market with the number of unique users each social network has in that market, essentially creating a “weighted average” based on the advertising dollars chasing users. If a social network has more users in the U.S., Japan, the UK, Germany, Australia, and other bigger advertising networks, they will have a higher weighted average valuation.

We believe this model is an effective way to rank various competing social networks. It bumps down networks like Orkut and Friendster who have tens of millions of users in markets with very little advertising spend, and bumps up networks with lots of users in higher value markets.

Based on this model, MySpace is by far the most valuable social network. Second place Facebook has just 75% of the value of MySpace (even though it now has more users), followed by Bebo (26% of MySpace value), Hi5 and Amebio. LinkedIn comes in at no. 11, at 6% of MySpace’s value.

Valuation Ranges

The real-world revenue numbers being reported for the big networks supports this approach to valuation and shows a direct tie between monetization efforts and where a network’s users are. MySpace is estimated to have generated $755 million in revenue over the last year. The (now) larger Facebook, with a far higher percentage of users in less lucrative markets, will generate just $255 million this year:

EMarketer estimates that MySpace will post $755 million in revenue in the fiscal year ending June 30. MySpace would not comment on the estimate. About a third of the revenue is expected to come from the Google ad pact. For the year, Facebook is estimated to earn $265 million in ad revenue.

Since we have three recent data points valuing social networks (Facebook at $15 billion, Bebo at $850 million, LinkedIn at $1 billion), we can start to apply valuation ranges based on the model. Facebook’s 10.2 million value points and $15 billion valuation puts a $1,467 value on each value point. LinkedIn is valued very similarly, at $1,325 per value point. Bebo, with lots of users in the rich UK market, appears to have been undervalued at only $241 per value point.

Based on these three publicly available data points we’ve created value ranges for each of the top 25 worldwide social networks. There is a very wide disparity (MySpace, for example, is worth between $3.3 billion and $20 billion, based on which comparable you look at). But it does yield very interesting data. For example, If Facebook and LinkedIn were valued similarly to Bebo, they would be worth just $2.5 billion and $182 million, respectively, far less than what their investors recently paid for a piece of them.

Interestingly, the recent sale of Polish social network Nasza-klasa for $92 million appears to be right in sync with Bebo’s price. The model estimates its value at $91 million based on Bebo’s valuation metrics.

There are some big flaws with the model and analysis in its current state. First, LinkedIn may be in a different class of network, given that all of its users are business focused (no super-poking going on there). As a result, it may be able to monetize users far better than its competitors, no matter what geographic market is being looked at. Still, we’ve decided to leave it in as a data point, with that caveat.

The model itself needs more data. The user numbers are based on April Comscore. We will shortly revise it with the May numbers, although the absolute rankings probably won’t change. More importantly, some big markets are not included yet. The Chinese Internet advertising market, for example, is estimated to be $2 billion in 2008, yet they are not included (mostly because I can’t find data on user numbers for the networks). Also, the Philippines isn’t broken out separately, again due to data availability issues (although the total Internet advertising market in the Philippines is just $3 million this year, so it won’t affect the rankings materially even though Friendster is so strong there). Finally, Russia is currently grouped with “the rest of Europe,” and needs to be separately broken out – it has a large and growing online advertising market and lots of users, so that update may affect the mid-level network rankings.

The advertising spend model is just an estimate and from a single source. I’m less concerned with this data since it doesn’t matter to the model if the estimates are absolutely correct. If the estimates are wrong by different rates in different countries, however, the model will break. If we find better relative data between countries, we’ll update the model with that data. But for now, the PriceWaterhouseCoopers data seems to be pretty good.

Finally, this model doesn’t take into account execution at the company level. Two very similar networks may monetize vastly differently based on methods of advertising and even the brute effort and passion of the employees. This model obviously doesn’t take that into account.

I also note Andrew Chen’s analysis last week which takes a similar approach to this using Google Trends data instead of Comscore. The Google data isn’t granular enough to really dig in to relative values, however, and he was lacking current and deep data on average Internet spend. Still, I agree with his methodology.

As I wrote at the very end of this post, you have to consider the current monetization value of users when comparing social networks. Raw user numbers are pointless without it.

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In the U.S., though, which is the biggest advertising market, MySpace is still well ahead of Facebook, with 73.7 million unique visitors in May compared to 35.6 million for Facebook. And that number for MySpace is up 2 percent from April, whereas Facebook’s had 0 percent growth. So it remains to be seen if and how fast Facebook can catch up in the U.S.

As for the second-tier social networks, they have fewer than half as many visitors. Here is the breakdown for May:

Worldwide Unique Visitors To the Top Social Networks

Facebook—123.9 million
MySpace—114.6 million

Hi5—49.6 million
Friendster—38.1 million
Orkut—32.2 million
Bebo—25.1 million

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If you try to buy an ad on Facebook, there are certain words that are taboo. Any ads that contain four-letter words are automatically blocked. So too are ads with the names of competing social networks “MySpace,” “Friendster,” “Hi5,” , or “Orkut.” (Curiously, “Bebo” and “OpenSocial” go through just fine, as does “Microsoft,” “Yahoo,” “Google,” and “AOL”).

Okay, so Facebook doesn’t want to run ads for some of its competitors. But why is 3Jam blocked? The startup offers an SMS service that lets people send multiple text messages at once, and it even has a Facebook app that does the same thing.

CEO Andy Jagoe was befuddled when he tried to create a Facebook ad to test a new product, only to find out that the term “3Jam” was also blocked. (The product actually sounds pretty cool: it will be a way to send and receive text messages for free while you are online, and then route them to your phone when you are offline). Says Jagoe:

It seems crazy to think that they consider us competitive. This is kind of weird. It is like censorship.

It does seem weird. What other startup names or products are blocked by Facebook?

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New social network traffic figures released by Compete show that Fubar, billed as the “first online bar and happy hour” is the fastest growing social network, having increased its traffic by 3,272,217% over the 12 months to the end of February 2008, placing the network at 14th on the list of top 20 social networking sites (chart as shown).

Year on year MySpace hasn’t grown at all, managing to lose 1% of traffic compared to Facebook with 77% growth.

The other big gainers year on year include Ning at 4803% (sneaking in to 20th place) and Twitter with 4368%.

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While MySpace and Facebook are fighting it out for the top spot, back in the second pack some interesting sprints and scuffles are going on that are worth keeping an eye on. Everyone in that second pack (Hi5, Freindster, Orkut, Bebo, Imeem) are about a third to a quarter the size of the leaders in terms of worldwide unique visitors, so I’ve isolated their performance in the chart above (it is harder to see if you include Nos. 1 and 2, MySpace and Facebook).

In January, both Hi5 (No. 3, in red) and Friendster (No. 4, in blue), made moves to pull away from Google’s Orkut (No. 5, in green) and Bebo (No. 6, in yellow). The latter two maintained a more steady pace. Coming on strong from behind is Imeem (No. 7, in purple), which surpassed Multiply (No. 8, not shown). The chart below has most of the stats, except for the last two—Imeem had 17.8 million global visitors in January, 2008, a 477 percent annual growth rate (Multiply had 17.6 million, a healthy 203 percent rise from the year before).

For Hi5 and Friendster, global growth is a major part of their game plan. Friendster, for instance, which dropped off the radar for most of us in the U.S., is now the single largest social network in Asia. It’s top five countries are the Philippines, Indonesia, Malaysia, the United States (legacy members who never left, plus new growth among Asians here), and Singapore. Friendster has kept its growth going by launching fan profile pages for Asian pop singers, launching four new languages since September (Chinese, Japanese, Korean, and Spanish), and letting developers create apps for its site.

So does that mean that Friendster and Hi5 are worth more than the $1 billion Bebo is rumored to have sold itself for? Not necessarily. It depends on the actual composition of their members, click-through rates, and other financial factors. Generally speaking, advertisers like to target their campaigns by geography, and pay less for ads that target populations with lower per-capita spending power than in the U.S., Japan, or Europe. So not all members are worth the same to advertisers, and thus to potential acquirers. But as social networks become saturated here in the U.S., everyone will have to look overseas to keep growing.

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The service acts like a meta social network where users can collect and share content from multiple social sites (photos, video, blogs). See our earlier comparison with Vox. Users post 1.25 million photos, 16,000 videos and 55,000 blog entries daily. However, while the U.S. is home to the largest share of their registered users, most of their traffic is international.

The Philippines is one of the most pronounced examples of their large international following. Alexa ranks Multiply as the 5th largest site in the Philippines – with more than 2 million unique monthly visitors. We had earlier reported that 39% of the site’s traffic comes from the Philippines. Therefore it’s no surprise that they’ve managed to land a multi-year ad deal with one of the Philippine’s largest networks, ABS-CBN. ABS-CBN has 67 televisions stations, 19 radio stations, 30 websites and reaches 97% of the Filipinos with televisions. Under terms of the agreement, ABS-CBN interactive will sell advertising and mobile services for Multiply’s Filipino users, with the two companies sharing revenues.

The deal highlights the importance of international markets U.S. press often take for granted. Sites like Friendster and Orkut have found large international followings while their U.S. markets are dormant. With a global internet, foreign markets are expected to become even more important in the future. According to research firm Datamonitor Plc., by the end of this year, Asia will account for 35% of the world’s social networking users, with 28% of users in Europe, the Middle East and Africa, 25% in North America, and 12% in the Caribbean and Latin America. Once again, startups concerned about getting big may want to get international.

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MySpace and Six Apart will announce that they are joining Google’s OpenSocial initiative. Silicon Alley Insider reported the MySpace rumor earlier today. We’ve confirmed that from an independent source, as well as the fact that Six Apart is joining. Per the update below, Google has also confirmed Bebo is joining.

Google will be making an announcement today. MySpace and Six Apart join Orkut, Salesforce, LinkedIn, Ning, Hi5, Plaxo, Friendster, Viadeo and Oracle as announced Google partners. No word on whether MySpace will continue with efforts to complete its own recently announced platform, but the answer is probably yes. They are likely to simply do both (Update: see below).

Suddenly, within just the last couple of days, the entire social networking world has announced that they are ganging up to take on Facebook, and Google is their Quarterback in the big game.

Update (12:30 PST): On a press call with Google now. This was embargoed for 5:30 pm PST but they’ve moved the time up to 12:30 PST (now). Press release will go out later this evening. My notes:

On the call, Google CEO Eric Schmidt said “we’ve been working with MySpace for more than a year in secret on this” (likely corresponding to their advertising deal announced a year ago).

MySpace says their new platform efforts will be entirely focused on OpenSocial.

The press release names Engage.com, Friendster, hi5, Hyves, imeem, LinkedIn, Ning, Oracle, orkut, Plaxo, Salesforce.com, Six Apart, Tianji, Viadeo, and XING as current OpenSocial partners.

We’re seeing a Flixster application on MySpace now through the OpenSocial APIs. Flixster says it took them less than a day to create this. I’ll add screen shots below.

Here’s the big question – Will Facebook now be forced to join OpenSocial? Google says they are talking to “everyone.” This is a major strategic decision for Facebook, and they may have little choice but to join this coalition.

Bebo has also joined OpenSocial.

Flixster/MySpace screen shots:

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What they haven’t done is launch yet another social network platform. As more and more of these platforms launch, developers have difficult choices to make. There are costs associated with writing and maintaining applications for these social networks. Most developers will choose one or two platforms and ignore the rest, based on a simple cost/benefit analysis.

Google wants to create an easy way for developers to create an application that works on all social networks. And if they pull it off, they’ll be in the center, controlling the network.

What They’re Launching

OpenSocial is a set of three common APIs, defined by Google with input from partners, that allow developers to access core functions and information at social networks:

• Profile Information (user data)
• Friends Information (social graph)
• Activities (things that happen, News Feed type stuff)

Hosts agree to accept the API calls and return appropriate data. Google won’t try to provide universal API coverage for special use cases, instead focusing on the most common uses. Specialized functions/data can be accessed from the hosts directly via their own APIs.

Unlike Facebook, OpenSocial does not have its own markup language (Facebook requires use of FBML for security reasons, but it also makes code unusable outside of Facebook). Instead, developers use normal javascript and html (and can embed Flash elements). The benefit of the Google approach is that developers can use much of their existing front end code and simply tailor it slightly for OpenSocial, so creating applications is even easier than on Facebook.

Applications can have full functionality on profile and/or canvas pages, subject to the specific rules of each host. Facebook, by contrast, limits most functionality to the canvas page, allowing a widget on the profile page with limited features.

OpenSocial is silent when it comes to specific rules and policies of the hosts, like whether or not advertising is accepted or whether any developer can get in without applying first (the Facebook approach). Hosts set and enforce their own policies. The APIs are created with maximum flexibility.

Launch Partners

Partners are in two categories: hosts and developers. Hosts are the participating social networks, and include Orkut, Salesforce, LinkedIn, Ning, Hi5, Plaxo, Friendster, Viadeo and Oracle.

Developers include Flixster, iLike, RockYou and Slide.

What This Means

The timing of OpenSocial couldn’t be better. Developers have been complaining non stop about the costs of learning yet another markup launguage for every new social network platform, and taking developer time in creating and maintaining the code. Someone had to build a system to streamline this (as we said in the last few sentences in this post). And Facebook-fear has clearly driven good partners to side with Google. Developers will immediately start building on these APIs to get distribution across the impressive list of hosts above.

And they’ll do it soon, too. It’s clear that the developers who arrived early to the Facebook Platform party won easy customers. Those that came later had to fight much harder. Developers found their new gold strike, and they will soon all be there, mining away.

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Good thing we launched the CrunchBase widget, because you may need it to refresh your memory about a certain social networking company called Friendster that’s announcing its own developer platform today (okay okay, to be fair, they do have 50 million users and are very popular in Asia).

Friendster’s platform announcement comes five months after that of Facebook and not even a week after that of MySpace, the company that usurped Friendster a few years ago. Looks like Facebook will need to find itself another major differentiator, because developer platforms are becoming commodities just like social networks themselves.

Admittedly, it may be too early to make this prediction. We haven’t even seen either MySpace or Friendster’s offerings after all. One company may end up continually executing their platform much better than the rest. However, judging by Friendster’s description of their platform – which will be open to developers immediately but not live for users until November 30th – these platforms will probably end up looking very much alike.

Friendster will allow developers to advertise with their widgets but will not require any revenue sharing; there will be a “widget directory” much like Facebook’s application directory; widgets in Friendster will be promoted virally using a “My Network Module” akin to Facebook’s news feed; Friendster widgets will be able to access “Friendster data” (which must mean profile, or “social graph”, data); and Friendster vows to improve the platform over time in response to community feedback.

In what could amount to little more than fluff, but could also mean something more substantial, Friendster is claiming that its platform will be non-proprietary. The suggestion is that widgets developed for other platforms will be easily deployable on Friendster’s platform. Another possible differentiator: it looks as though widget creators will be allowed to display advertisements anywhere they please within their creations, and not just on canvas-like pages as in Facebook.

Friendster is calling this announcement the “third stage” of its opening up process. Apparently in August 2006 the company started letting users add HTML and Flash widgets to their profiles and in September 2007 they created “Fan Profiles” for music promoters. Thus, we arrive at the third stage. Yea, sounds like a stretch to me, too.

If you are a developer who wants to start working now in preparation for November 30th when widgets will be available to Friendster users, you can check out this online documentation.

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The social network that was the coolest thing on the block until MySpace came around has been slowly regaining its reputation and users over the years, and now boasts 50 million registered user and 27.4 million monthly unique visitors. The only problem (if you call it a problem) is that, like Orkut, most of those users are outside of the U.S. Specifically, they’re in the Asia/Pacific region – 24 million of the total 27.4 million unique monthly visitors come from there, as do 35 million of the 50 million registered users.

So it’s no surprise that the social network is playing to its strengths and launching its first non-English version, in traditional Chinese. This isn’t a separate website or URL; users simply click to Chinese to have the content localized to that language. User generated stuff remains in the original language.

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Friendster currently sits in 4th place on the list of popular social networking sites, behind MySpace, Facebook and Hi5, but ahead of Tagged.com, Bebo and Piczo.

In an age where everyone presumes that Facebook reigns supreme, the question becomes: how is it possible for Friendster to grow at 40%?

Prevailing theory relating to the growth of social networking sites suggests that social network popularity is a one or the other proposition in a finite marketplace. In others words users will abandon MySpace or Friendster when they begin using Facebook, and that the number of overall users isn’t growing. The growth rates from both MySpace and Friendster at the same time as Facebook is booming would suggest that the theory is wrong.

First, the one or the other proposition. As I noted on MySpace June 20, users have invested time and effort on existing sites and many will not want to give this up, particularly when the feature set of the alternative service (in this case Facebook) is not the same (personalization). Conversely users do want to link to friends where ever they are, creating a demand for multiple social networking memberships. In the same way that many may use Flickr for photos on Yahoo and Google for everything else, social network users may simply maintain different friend sets on each service, and will maintain participation on both. One is not used instead of the other.

Secondly, the overall market is growing. As noted in the Venturebeat article Friendster is experiencing rapid growth in Malaysia and the Philippines. There is a market place outside of the United States; only 4.53% of the world’s population lives in the United States (wikipedia), China will have more broadband users than the United States in the next 12-18 months and India has the largest number of English speaking people of any country worldwide. Smart startups build products that appeal to a global audience, an audience which provides a wealth of growth opportunities at much higher rates than in a mature marketplace such as the United States.

Friendster growing is good for the entire Web 2.0 industry. There can be no downturn without a broad decline in user numbers across many sites. Friendster proves that despite strong, and some would argue superior competition, there’s still room for any Web 2.0 startup to grow, even in a crowded vertical marketplace. There is more Web 2.0 cake for everyone.

Comscore stats below:

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The financial terms are not being disclosed. Friendster is not in the same league as MySpace and Facebook, but this is still a win for Google. Friendster generates 6 billion or so page views per month, about 1/6 of MySpace.

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In other news, one of the many MySpace alternatives, Facebook, is rumored to be in talks with IAC — or at least Zuckerberg (Facebook founder) and Jason Rapp (IAC SVP of M&A) were seen mingling together at the Foursquare conference in NY. Facebook has been in acquisition talks with Yahoo in the past, but either the price was too much or acquisition activity halted due to poor stock performance. A social network is something that the extensive IAC portfolio lacks, but I’m not sure Facebook with their primarily college demographic and steep price tag (rumored $2 billion) are the best fit. If I were IAC, I’d be looking at the well-branded (yet stagnant) Friendster — IAC’s network would breathe new life into Friendster, and the past rumored $50 – $100 million price tag pales in comparison to Facebooks’. Friendster has been up-for-sale in the past and holds actual patents on social networking, which likely will result in News Corp. paying licensing fees for in the future (once Friendster has rallied their legal case together, and once MySpace’s wallet, er, growth, plateaus — allowing Friendster to tap into a business worth much more than the $6 billion Rupert speaks of today).

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Friendster turned down a $30 million buyout offer from Google in 2003.

Everything went downhill from there.

Instead of selling to Google, founder Jonathan Abrams raised venture capital. Friendster eventually raised money from Kleiner Perkins Caufield & Byers, BenchMark Capital and Battery Ventures. Some of the most successful and well known venture capitalists in silicon valley joined Friendster’s board of directors.

Friendster stumbled just as MySpace rose. Many people point to Friendster’s massive slow down as traffic grew as the reason people bailed out for the then hot new MySpace. If Friendster had been able to handle its growth, MySpace may never have gotten the space it needed to become the 1 billion plus page views per day behemoth it is today.

Key points of failure seem to be a disastrous initial architecture that just couldn’t scale, a succession of high profile but out of touch CEOs (Tim Koogle, then Scott Sassa, then Taek Kwan), infighting at the executive level (particularly between the VP Product and VP Engineering) and a general level of arrogance at the board and executive level. No one is spared in the article, including Kleiner Perkins Partner John Doerr and former partner Russ Siegelman

After a failure to sell the company in late 2005, they recapitalized early this year and Kent Lindstrom, one of the founders of Friendster, took over as President. He’s not one to talk about his own accomplishments, but Friendster seems to be trending upwards now at least. He brings the company what it needs – a steady and low key leader who focuses on the product.

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Piczo is adding 35,000 new member registrations per day, 75% of which are teenagers between 13 and 16 years old. Ten million unique visitors come to Piczo sites monthly, adding up to 2.5 billion page views. While this isn’t much compared to monster competitor MySpace (which serves over 1 billion pages per day), it shows what the power of the network effect can do when applied properly – Piczo hasn’t spent a dime on marketing.

And unlike Myspace, Piczo is focused on safety first. It is virtually impossible to browse user pages on Piczo. There is no search or browse feature. Users must share their page URL with others for it to be found, and there are numerous ways for users, parents and others to report inappropriate behavior. Piczo has full time staff reviewing all complaints and takes swift action to protect its members.

Piczo was founded in early 2004 as a paid service. Based on early user feedback it was relaunched as a free service, and founder Jim Conning sent out 100 emails to Canadian teenagers announcing the new site. That is where Piczo’s marketing efforts began and, until now, ended. The result of those 100 emails has been a massive viral spread of the product.

Piczo brought in a high powered CEO late last year, Jeremy Verba. Verba was previously GM and Vice President of AOL’s Voice Services division, which he grew to over a million subscribers. In addition, he was co-founder and president of E!Online, a joint venture of CNET and E!Entertainment Television, now a part of Comcast. Piczo is well funded after pocketing a total of US$7 million over two rounds of financing from Sierra Ventures and Catamount in 2005 and 2006.

The Social Networking Space

I thought this was a good opportunity to look up Comscore numbers on the largest social networking players and see how things are evolving (these are U.S. numbers only). MySpace is still the king, with over a billion page views per day, 100 million registered users and 56 million unique visitors per month. If anything, their lead is growing over competitors.

But that doesn’t mean there won’t be other winners in this space, too. Facebook continues to dominate the college and high school markets, and their recent decision to open themselves up to anyone will almost certainly increase their userbase and page views. Bebo, Tagged, Piczo, Friendster, Tagworld and Tribe all also show very nice growth rates, with little or no marketing spends.

There’s still room to grow internationally as well. Bebo and Piczo both have a strong presence in the UK in particular. Of course, the argument that these companies will be successful in non-English speaking countries v. local competitors isn’t nearly as certain. We expect consolidation to occur in the next 12 months, and the largest independents (Facebook, Bebo, etc.) to be acquired by the big guys (Yahoo, Microsoft and Viacom in particular seem to be actively looking).

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Friendster has a number of prominent investors and Kleiner Perkins put in additional funds this February. CNN’s The Browser blog writes today that “Suing rivals for patent infringement is no way to make friends — but it is a way to make money.” When asked whether licenses or lawsuits were likely, Friendster President Kent Lindstrom told RedHerring.com, “it’s way too early to say…We’ll do what we can to protect our intellectual property.”

If this patent survives and is considered relevant to what’s now a huge sector of the online world, I expect that the chorus of voices demanding patent reform will grow much louder. It’s hard to imagine, though, what would have happened if this patent had been granted in a timely fashion. Advocates of a strong patent system often argue that unless innovations are given patent protection, no one will invest in innovating. Clearly that argument doesn’t hold up in this case.

It turns out the key to making the social network work was pretty simple: creating a scalable architecture that served pages fast, and allowing users a degree of freedom in creating their pages (instead of a rigid hierarchy that leaves all pages looking more or less the same). The result? A steady and impressive growth in page views since Kent took over.

So it isn’t unexpected that Friendster would copy yet more features of long time rival Myspace. And instant messaging is next. Myspace launched an IM client (Windows only) earlier this month, to generally positive reviews.

Friendster’s version, which is in development, will be web chat, not a downloadable client (”Meebo” style). I am getting conflicting reports on this: one source says that the service will be created in partnership with Los Angeles based Userplane. Another says its being built offshore by the company itself. Either way, I have early, rough screen shots of the product, below, and not much more information.