Anyone who spends more than 2 minutes on StudiVZ must come to the conclusion that the site is a total knock-off of the American original. It’s even rumored that several lines of very early StudiVZ code contained the word “Fakebook” and as a German, I can say StudiVZ is more or less a translated duplicate. But today the County Court in Cologne (where the suit was filed in November) decided against Facebook. And the judges were pretty harsh in their verdict.

The court argues that it can’t identify any unfair practices, mainly due to the fact that StudiVZ isn’t trying to trick users into thinking they are actually on Facebook. Another factor in favor of the German site: When StudiVZ went live in Germany in November 2005, Facebook was virtually unknown in that country. The court says this changed only in March last year when Facebook started specifically targeting German users.

And as if that’s not enough, the court criticized Facebook’s lawyers for being too sloppy, saying they made too many unfounded guesses instead of presenting hard facts that prove StudiVZ stole source code. As a consequence, the judges refrained from getting the opinion of independent experts who could have looked into this specific allegation. However, it was acknowledged in court that StudiVZ and Facebook “obviously share some similar and identical elements”.

Take a look at this screenshot of a profile page below:

It’s still open if Facebook will appeal the ruling (a Facebook spokeswoman said her company would now review all legal options). The lawsuit against StudiVZ in the US is still on.

And Facebook might want to boost their efforts to at least win that one since winning in Germany means winning in Europe’s biggest web market, where the StudiVZ network is a big player: A total of 12.9 million people from German-speaking countries are registered at StudiVZ itself (mainly for university students) and its spin-offs schuelerVZ (for high-school students) and meinVZ (for everybody else). Facebook has about 2 million users in Germany.

Screenshot from Golem.de

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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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You could already make free calls to your buddy list over WiFi, but as of today Nimbuzz also enables VoIP calls to landlines and mobiles via Skype-Out, and thanks to partnership agreements with global SIP providers like Gizmo5, Vyke and SIPgate you can now also call over WiFi using the iPod Touch device. And for those not on WiFi, Nimbuzz is introducing a so-called “Dial-Up VoIP” option that lets users make calls over 3G in over 50 countries, using a fresh interface with a full dial-pad (screenshots below). Update: to clarify, what Nimbuzz does is dial a local access number that connects to their VoIP servers when WiFi is unavailable.

Another new feature allows Twitter updates via the Personal Message option in the mobile social messenger app.

Solid stuff.

In other news, Nimbuzz has announced a deal with major Italian social networking portal Giovani.it, which will incorporate its communication services into the community website (which has over 2 million active users). This is very similar to an earlier agreement Nimbuzz reached with Germany’s largest social networking portal, StudiVZ.

Nimbuzz has raised over $25 million in three rounds, mostly from Luxembourg-based Mangrove Capital Partners. The company claims it is growing at 20,000 new users per day now, with a 25% active user base in over 200 countries.

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StudiVZ, which counts over 12 million users spanning across Germany, Switzerland, and Austria, will become the first in what Nimbuzz refers to as a series of international networking sites to integrate its technology, bringing real-time web and mobile communication capabilities to online communities. Nimbuzz says similar deals in Turkey, Asia and Italy are imminent.

Nimbuzz’ web chat feature is fully integrated into the existing StudiVZ interface allowing IM conversations between all community members. The full mobile Nimbuzz portfolio including voice calls, chat, file sharing across popular IM communities will also be made available later.

The partnership is effectively a revenue sharing agreement with income generated from ads sold as part of StudiVZ’s own advertising opportunities.

Nimbuzz has raised over $25 million in three rounds, mostly from Luxembourg-based Mangrove Capital Partners. The company claims it is growing at 10,000 registrations per day, with a 25% active user base in over 200 countries.

(Image credit: Mobile Industry Review)

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Even assuming StudiVZ doesn’t get anymore new users, it would take Facebook over 20 years to catch up at this rate of growth. In Germany (where I hail from), organic growth doesn’t seem to be an option for the company and it seems Facebook understood that reality: After taking action in July (when StudiVZ was sued for infringing Facebook’s “look, feel, features and services”), Facebook is now taking another (quite unusual) stab at its clone by partnering up with Smaboo, a Zurich-based promotion agency.

On its web site, Smaboo is currently calling for so-called Facebook “ambassadors” who will help organize Facebook parties in Berlin and Munich. In October, the first 200 German ambassadors will be invited to a kickoff event and later engage in a “Berlin vs. Munich battle” to decide which city rules by recruiting more new Facebook members. (The German capital has a population of 3.5 million, while there are about 1.35 million inhabitants in Munich). Smaboo says ambassadors can win non-cash prizes such as iPhones, Wiis or an internship at Facebook’s HQ in Palo Alto. All they need to do is rate their determination to recommend a Facebook membership to their friends on a scale from 1 to 10 and state what they like about the site. Smaboo claims in the company blog it’s the first time Facebook is running a campaign of this kind.

What’s almost as noteworthy as the campaign itself is that this user-acquisition strategy is actually a clone of the one StudiVZ pursued during its early days: In 2005/2006, StudiVZ identified particularly enthusiastic users on their site and recruited them as so-called campus captains (StudiVZ means “university student directory” in German), evangelists who actively approached fellow university students to get them to sign up.

Although both the Facebook and StudiVZ initiatives are based on the idea of human-powered and offline viral growth, there are a number of differences: The German site never revealed the exact number of campus captains but said they never received any kind of payment for their work (apart from StudiVZ swag). In addition, Facebook’s ambassador program has an artifical flavor to it, with an outside party running a professionally organized campaign. Also, in the course of imitating Facebook’s success story, StudiVZ limited its platform population strategy to universities before opening up to the general public at a later time (Smaboo asks for the name of the university the applicants attend but doesn’t verify the given information at the time of submission).

Facebook saw its number of unique visitors in Germany jump from 545,000 last March to 1.8 million in August this year (a 224 percent increase, according to comScore). During that same time period, StudiVZ grew from 6.5million uniques to 13.7 million (a 110 percent increase). Facebook still trails far behind. Will this locally limited experiment (which might be repeated in other cities and even countries) lead to a significant jump in Facebook’s German user base in the months to come?

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StudiVZ says they “cannot comment in detail” about the lawsuit since they haven’t seen it yet. But that isn’t stopping them from talking smack about Facebook in general. StudiVZ says they’ve filed for a declaratory judgment in the District Court in Stuttgart, Germany to “to have the responsible German court declare that the claims made by Facebook are without merit,” whatever they may be.

Marcus Riecke, the CEO of StudiVZ, goes on to call Facebook arrogant and says they are trying to create an international monopoly over social networking:

Now that Facebook, despite trying hard, has not been successful in the German market, the company seeks to obstruct studiVZ through court action. Their strategy appears to be: If you can’t beat them, sue them. There are numerous social networks. Facebook was not the first and certainly isn’t the only one. By attempting to harm studiVZ through a meritless California lawsuit, Facebook is arrogantly laying claim to an international monopoly over social networking sites that the facts show it does not deserve.

These comments would be credible if StudiVZ wasn’t such a direct ripoff of Facebook’s look and feel (see screen shot). Early versions of the StudiVZ site reportedly “borrowed” Facebook’s CSS files as well.

Perhaps StudiVZ could save themselves the legal bills and just hire a designer to come up with a unique profile and interface instead of posturing and filing counter suits in Germany.

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Facebook is starting to pursue social networks that have copied their design or features by suing German site StudiVZ. The Financial Times has reported that Facebook filed a suit in California against the German company for what it claims is an infringement of Facebook’s “look, feel, features and services”.

StudiVZ claims to have 10 million active members, and is the largest social network in the German-speaking world, covering Germany, Belgium, Austria and Switzerland. The network is actually comprised of three different sites, each one a separate social network aimed at different segments of the market. StudiVZ.net is the classic site for college-aged students, SchuelerVZ.net is for high school students and MeinVZ.net is for older adults (these three networks were very hard to decipher in German when I attempted to sign up).

Facebook does seem to have a claim here, as the German site looks like nothing more than Facebook in red and translated in German. Everything from the first public page to the sign-up page and the profile pages look eerily similar to the US-based social network. StudiVZ was acquired earlier this year by the German media group Georg von Holtzbrinck, with an acquisition price in the €100M range. They always say you should sue where the money is, and Facebook has certainly found a pile of it by targeting Verlagsgruppe Georg von Holtzbrinck.

Disclaimer: This is not the real Mark Zuckerberg profile in StudiVZ (at least we don’t think so).

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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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Hype vs. Hesitate
Just as this week’s Pew Internet Study stirred a debate on the view of Web 2.0 in the US, Germany has seen similar arguments on the size of the phenomenon locally. For a long time, several indicators had hinted that Germany was falling behind in broadband penetration compared to other European countries like Sweden or Norway. But a recent OECD study painted a very different picture: looking at the total number of households (as opposed to per-capita penetration), Germany comes out on top in Europe with 14.1 million subscribers in December 2006 (followed by the UK at 12.9 and France at 12.7 million). So the crowds are here, but where can they go?

“Web 2.0” is a term that brilliantly translates around the world, but many of the sites that are commonly associated with it have a language barrier for international audiences (take MySpace for example: it officially launched its German version only in March of this year).

While English certainly isn’t foreign to Germans, it has still slowed their adoption – and network effects, which have been a driving force, are often tied to language and reach as well. What’s been the consequence in Deutschland? A mushrooming of German copycats that have localized and copied their US role models, sometimes down to the last pixel.

Copy/Paste Innovation
Whether you’re looking for social bookmarking, photo sharing, video posting or a college social network, Germany’s clever entrepreneurs have done the translation for you and some even fared quite well.

The best example by far is StudiVZ, whose name stands for “student directory.” Launched in October 2005, it now claims to house 2.1 million users. Despite a myriad of security problems and controversies, new users kept coming in, which only speaks to the universally strong demand for such networks among students. In January of this year, Germany had its mini-YouTube moment when StudiVZ sold for €85M ($100M) to the German media conglomerate Holtzbrinck Group.

If the screenshots look familiar, you won’t be surprised to hear that StudiVZ’s early versions of the site were using filenames like fbook.css or poke.php. (Facebook was in talks with StudiVZ but it walked away because of scalability and security concerns about the platform. Instead, Facebook is now working on its own strategy – let the battle begin).

Another success story is Xing (formerly OpenBC), a professional network like LinkedIn. In December 2006, it became the first Web 2.0 company to go public and is now traded at the Frankfurt stock exchange. Xing’s rapid growth among the German business community came rather unexpected after it launched in November 2003, especially in a country that isn’t typically known for its culture of business networking. The site now boasts 2 million members and about 13% of its users pay for a monthly premium subscription of €5.95. With revenues of €10 million in 2006, Xing’s performance at the stock market has been somewhat lackluster and the real test for the company will come as both Xing and LinkedIn expand beyond their original markets (LinkedIn now has 9 million registered users and $10 million in 2006 revenues; it recently raised $13 million more).

The Brighter Side: What’s next
Of course there are creative and innovative startups to be found (and growing any multi-million user base is a feat in itself regardless). For some inspiration, take a look at our previous coverage of Plazes (currently a sponsor) and SellABand; last week also saw the launch of MindMeister, a promising online mind mapping collaboration tool. Other notable services include blauarbeit.de, a growing reverse-auction site for jobs and services, and we have yet to wait for a successful US counterpart.

In short: Germany is buzzed right now and the biggest question for the startup scene is how the many look-alikes will develop over the next year. You’ll often hear that investors are hesitant to invest in ideas that “haven’t been proven in the US yet” but there are several other factors at work here: Germany is generally more risk-averse, the bureaucracy is more cumbersome, and entrepreneurial networks like Silicon Valley aren’t as strongly developed.

Nonetheless, the country’s business angels and media conglomerates (Holtzbrinck Group, Burda, Axel Springer) are eager to invest with rapid-fire pace at the moment but the majority of German internet users have yet to be convinced that there is a land beyond eBay, Google, Wikipedia and some online news sites.

Meanwhile, German and other European startups are in a prime position to tinker with mobile applications and I wouldn’t be surprised to see more innovation in this space soon. The continent is covered with advanced data networks and the UK has already seen the introduction of flat-rate data plans at reasonable prices. Germany’s market is sure to follow and the boon of the mobile web will start in Asia and Europe sooner than in the US. You also want to watch out for innovations around IPTV as subscriptions are expected to reach 2.6 million in Germany alone by 2010.

Until then, let’s see how Facebook and StudiVZ duke it out

Curious fact: Google’s market share for search is near 92% in Germany. And yes, it’s a verb here, too.

Gregor Hochmuth is an analyst and entrepreneur in residence at Hasso Plattner Ventures. He runs zoo-m.com and his own homepage at dotgrex.com.

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The story broke on German news site Spiegel. See here for a beautifully useless translation of the article.

We’ve gotten confirmation on the transaction, but not specifically on the price, from a contact within Holtzbrinck. More from GigaOm and CenterNetworks.

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