The social networking bubble is growing day by day, but once-popular sites such as MySpace have begun to falter. Industry observers point out, however, that the lifespan of a social networking site is determined by factors such as ease of use, integration with other services and compelling content such as applications and value-added services.
Citing comScore, BBC reported last month that MySpace lost over 10 million unique users worldwide between January and February this year. There were around 63 million MySpace users as of February 2011, a drop of nearly 50 million from the 110 million users a year ago.
MySpace, said BBC, was the place to talk to friends and listen to music five years ago but the arrival of the likes of Facebook had changed the nature of social networking.
Figures from Ovum also indicated that the social media site has been bleeding financially in the last two years. In a report published in May 2010, the research analyst firm noted that MySpace's losses had mushroomed to US$150 million in the quarter ended Mar. 31, 2010, from US$80 million during the same period in 2009.
Innovation to keep users happy
In the report, Eden Zoller, principal analyst at Ovum, noted that social networks need to have attractive applications and value-added services so that their sites can drive engagement and usage, attract new users, and convince existing users to be loyal.
According to Frost & Sullivan's senior industry analyst Adeel Najam, there is "no typical lifespan" for social networking sites, but their longevity depends on whether there are attractive, compelling features for users.
"Even unsuccessful sites can linger on for a couple of years or [the] popularity of successful sites can wane," he said in an e-mail.
To stay relevant in the market and avoid following in the footsteps of MySpace, Najam said social networking sites need to put their users first. This includes making the site easy to use, creating the best possible experience for users through constant innovation, and allowing users to exercise control over their privacy.
In addition, social networks have to integrate with other key services and avoid having "too many ads" on their sites as users may be irritated, he noted.
More than social networking
Over at Friendster, CEO Ganesh Kumar Bangah pointed out that the core asset of a social network is the "social graph", or the relationships that connect people on the Internet. While the social graph "does not have a limited lifespan", social media sites are increasingly being made irrelevant because the global social graph is increasingly dominated by Facebook, he said.
Alternative sites, therefore, have to offer a different value proposition to users in order to be integrated into the social graph, Bangah noted, explaining that Friendster is adopting this approach to remain relevant and competitive.
Friendster, according to the executive, will be re-launched as a social entertainment site that will leverage the global social graph using Facebook's "Connect" feature, and that Friendster will not compete with but instead will complement Facebook, said Bangah.
He noted that while Facebook is a site where people can communicate with and find out what their real-life friends are doing, Friendster will be the place where people can meet new friends and play games and enjoy music with them. The pioneering social network will continue to innovate and be at the forefront of the social networking scene, he said.
But whether social networking sites can win user loyalty and new adopters with new moves, remains to be seen.
BBC, in its report, noted that MySpace, which was acquired by Rupert Murdoch's News Corp. in 2005 for US$330 million, had introduced changes to make the site more music-oriented. However, the continued user attrition may indicate the attempts have not been successful, the news agency said.
Earlier this year in January, the company announced a reorganization that saw around 500 layoffs, nearly half of its workforce.
Bebo, another victim of the competitive social networking landscape, narrowly escaped a shutdown last year, when parent company AOL--which bought the site for US$850 million in 2008--sold it off to Criterion Capital Partners for US$10 million.
Last week, Bebo announced a revamp which includes new features targeting its youthful base, BBC said in a separate report.