SNS's Line of Business Advertisement or Selling?

"Coming of Another Black Ship" with 16 Mil. Registered Clients on Board

Many gather at SNS. How do the operators raise revenues?

   The largest SNS in South Korea "Cyworld" started business in Japan in December last year. Its registered membership as of October last year was 16 million, accounting for one third of the entire population of South Korea. Ninety percent of women in their 20's are said to be registered as its members. According to a study conducted by the Ministry of Internal Affairs and Communications in March, a total of 7.16 million people are registered as members of all SNS sites in Japan. So, on the basis of the size of the membership, it could be said that the Cyworld's coming is like the coming of the "Black Ship" that sailed into Japanese waters from America under the commandership of Commodore Perry more than 150 years ago, demanding an end to Japan's national seclusion.

   The chief business of Cyworld is to sell "digital items." It sells the wall papers and BGM (background music) that decorate the self-introduction pages on the internet. According to Daisuke Kashiwakura, of Cyworld Japan Co., Ltd., the revenue from the sales in South Korea amount to 1 billion yen per month. The revenue of the site all depend on digital items, he says. In the Japanese version of the site, the members first buy the site's own currency of which the unit is "donguri (acorn)." One donguri is equal to 10 yen. A wallpaper, for instance, can be purchased at 15 donguri.

mixi's Advertisement Space Selling Like Hot Cakes

   Japan's SNS operators that meet the coming of Cyworld have already established their business method of earning revenues from advertising. The biggest SNS of them is mixi, which had increased its membership by six times in less than one year to 3 million as of March this year. This size of membership can not fail to draw the attention of business firms. Susumu Fujita, President of Cyber Agency, Inc., the internet advertising agency, has told the weekly Toyo Keizai, "The advertising space of mixi is selling like hot cakes." Besides advertising, mix offers another main source for revenues, the charged "mixi premium" service which enables its clients to expand the function of their pages. For the term ending in March 2005 (2007 ?), the sales of mixi are expected to exceed 1 billion yen.

   Another major Japanese SNS, Gree, earns 99% of its revenues from advertising. Hiroshi Chihara, person in charge of public relations of Gree, pointed out as an example that Google is growing fast on revenues from advertising and said that his company would consider other sources for revenues as part of the company's plan for business expansion. But, he added, "I don't think (relying on) advertising alone is an unstable way of conducting business." He also said, "It is a matter of course for a business enterprise to try to increase its revenues, but it should not be obsessed with earning revenues."
   Gree was primarily managed by an engineer, but as its scale expanded it was re-established as a corporation for more stable management.

   Rakuten Co., Ltd., which just started its SNS "Rakuten Hiroba Links" in March this year,does not even carry advertisement. "We are still in the stage of developing the idea. We are aiming at expanding our overall revenues by luring the users to Rakuten Ichiba, Rakuten Travel and other EC sites operated by Rakuten," said Mari Katsuura, of the public relations department of the Rakuten group. The group thus seems to be raising its revenues as a whole rather than earning revenues from SNS itself but using it as a "catalyst."

   Business enterprises seem to be working on ideas differently from one another as to how to take advantage of the SNS to create a new business chance.