Wednesday, June 21, 2006

Social Networking Goes Mobile

MAY 31, 2006
News Analysis
By Olga Kharif

So-called "friend sites" are wising up to wireless. Before long, everyone's cell phone might make space for MySpace

MySpace is dipping its toes into wireless waters -- and is poised to take a plunge. In April, the social networking site struck a partnership with Cingular Wireless, the largest U.S. mobile-phone service provider. In May, wireless startup Helio began offering phones preloaded with MySpace features.

Under the Cingular deal, subscribers get short text messages when new comments or friend requests get posted to their MySpace profile. Helio phones include applications that make it easy for customers to view friends' profiles and post comments and photos onto MySpace (see BW Online, 05/03/06,
"Helio's Hot New Line").

BUILT-IN BENEFIT.  The site is pleased with what it's seen so far. "We thought there was significant demand for this, and our initial thoughts were confirmed," says Colin Digiaro, senior vice-president of sales at MySpace, a property of News Corp. (
NWS ). "[Now,] our advancement into mobile is one of the key initiatives on MySpace, extremely key to our growth. It's a huge opportunity."   So huge, in fact, that MySpace plans to make its mobile features available through all major U.S. carriers by early 2007, says Digiaro. If MySpace has its way, the network's mobile applications will come preloaded onto all mobile phones sold, becoming as integral a wireless handset feature as an alarm clock, calendar, or mobile e-mail, says Digiaro.

MySpace, which boasts some 80.7 million registered users, isn't alone in betting on a wireless social networking future. Companies including Google (
GOOG ), Yahoo! (YHOO ), and, the college and high school community site, have designs on mobile social networking as well.

FASTER FEEDBACK.  Many industry analysts have yet to make forecasts for this nascent market, but early signs suggest there could be demand, particularly from teens and young adults. Already, 33.2% of 18- to 24-year-old Americans post photos to Web sites via mobile phones, according to mobile consultancy M:Metrics. By contrast, only 18.7% of these young adults play downloadable mobile games, one of the most successful forms of mobile content to date -- and a $600 million market in the U.S. last year, according to consultancy IDC. "This suggests to me there's absolutely interest in participating in mobile social networks," says Mark Donovan, an analyst at M:Metrics.

Just how big could mobile social networking get? This application's usage could become "as big as online social networking," says Dennis Crowley, founder of wireless social network Dodgeball, owned by Google. About 45% of active Web users have been to online social networking sites, according to a recent study by Nielsen/NetRatings. As MySpace expands beyond its core market of teens and young adults, "We expect penetration of MySpace mobile to match penetration of cell phones," which are owned by 80% of Americans, says Digiaro. Mobile access could become even more prevalent outside of the U.S., where in some cases more people use cell phones than personal computers to surf the Web.

Indeed, it's the cell phone, rather than the personal computer, that's the constant companion for today's hip and socially networked. Why wait till you get home to log onto the PC to tell your 20 closest personal friends about your date? Teens can use a network-friendly cell phone to relay stories, pictures, and videos instantaneously. "You can use [the mobile application] in this two- or three-minute gap while waiting for a train," says Kakul Srivastava, product manager for photo-sharing site Flickr, which is owned by Yahoo and allows for mobile picture posting. "People are out there, living their lives. They are not sitting in front of the computer."

CLICK OF THE FUTURE.  Cell phones offer other capabilities PCs lack. Dodgeball is working to allow users to see an up-to-date map of friends' locations, collected through the Global Positioning Systems (GPS) available in most phones. When users of, a property of mobile marketer Juice Wireless, post pictures or video from their phones, the service will soon automatically provide information on locations where the pictures were shot.

Venture capitalists are taking note. In April, Juice Wireless closed its second round of funding, raising $3.5 million from a group led by 21 Ventures. Juice will use the proceeds to grow its social networking service.

Wireless industry giants aren't sitting still either. In April, Facebook began allowing users of Cingular, Sprint Nextel (
S), and Verizon Wireless to receive friend requests on phones and reply via short text messages (SMS). In April, the world's largest cell phone maker, Nokia (NOK ), said planned multimedia phones will come integrated with Flickr, allowing users to post photos shot with their mobiles onto the Flickr site with one click. "Virtually every online social network application is going to have a mobile component over the next year or two," says Jill Aldort, an analyst with the Yankee Group.

Wireless social networking could mean big bucks for the service providers that charge $5 or more a month for Web time. MySpace users spend an average of 215 minutes a month on the site. Cingular, which currently hosts four social networks -- Rabble, CoolTalk, MySpace, and The Facebook -- hopes to host as many of those networks as possible in the future, says David Garver, the company's executive director for segment marketing and sponsorships. The carrier also is working to extend the number of features offered to mobile social network users. "Will social network applications be some of the biggest applications Cingular sells? Yes," Garver says.

HOOKING UP.  Within two years, at least 5% of all text messages sent through wireless networks may relate to social network interaction, estimates Tole Hart, an analyst with Gartner. Today, SMS is a $3 billion market in the U.S. The application could also encourage more users to buy unlimited data plans, allowing for mobile Web access. Finally, there's mobile advertising to fall back on. Because they group users into highly targeted categories, such as music fans or people located in a particular city, mobile social networks might be able to charge a premium for ads, says Nick Desai, founder of Juice Wireless, which plans to start selling ads on JuiceCaster in September. "Advertisers are very excited," he says.

While standalone wireless social networks like and Dodgeball pioneered the genre, they and sites like them are increasingly partnering with other sites to gain traction. "I don't think there's a lot of opportunity for networks built entirely around a wireless persona," says Charles Golvin, an analyst with Forrester Research. "What's going to be much more successful are extensions of existing communities." Dodgeball, for one, is talking to fellow Google property,, which is hugely popular in Brazil; details on the collaboration are not yet available.   Much still remains to be done to smooth out the wrinkles of mobile social networks. Phones have to allow for easier typing. Carriers have to introduce more features, making mobile social networking a truly rich experience. And mobile communities may have to grow from tens of thousands of users today to millions of users.

EASY SELL?  To generate buzz, many mobile communities are readying new marketing campaigns. This summer, will challenge users to go into one of 100 selected restaurants and post mobile reviews. Every week the company will draw three winning restaurants, rewarding people who reviewed them with $100 bills. And Google might kick off a marketing push around Dodgeball later this year, says Crowley.

But judging from the earlier successes of plain old social networking, marketing the mobile message may not be a very tough sell at all.

Kharif is a reporter for BusinessWeek Online in Portland, Ore.

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