The pace of evolution among social-networking sites is so rapid the industry has been transformed in just a few years. Matt Mueller looks at the leading sites.
The rise of MySpace has propelled social-networking communities into the web stratosphere. Launched in 2003 and sold to Rupert Murdoch's News Corporation for $580m two years later, MySpace's early symbiosis between indie-rock bands and their fans - and the ability for users to personalise their pages - earned it a huge following among teens and post-college urbanites. But essentially, it was an organic phenomenon about people's desire to connect.
“After 50 years of passively watching television, people found a new technology where they suddenly found they could entertain themselves better,” says Peter Ruppert, of London-based Entertainment Media Research. “They've reached out to everybody because they reflect that hunger for personality, about showing how cool and popular you are even if it doesn't reflect your reality.”
Each networking site develops its own culture, with MySpace's early music-dominated hipness giving way to vast demographic growth. Last year, the college-networking site Facebook opened up its gates and witnessed a popularity expansion that may soon rival MySpace, thanks to elements such as a news feed allowing users to view what their friends are up to, and a facility for developers to build fun, portable applications. Social-networking sites are different all around the world. In the US, MySpace and Facebook rule. In the UK, Bebo governs the youth market, while Orkut (Brazil), SkyBlog (France) and QQ (China) dominate their respective territory's networking culture.
The big question is how loyal people remain to networking sites. Murdoch's MySpace purchase had some pundits predicting the site would drive away its core audience, although statistics have not borne that out. “Kids still have their MySpace accounts but when Bebo came, they moved to Bebo,” says Ruppert. “Then Facebook appears and suddenly everyone's moving over there. Soon, there will be another one that will start taking the traffic of Facebook.”
THE NEVERENDING FILM FESTIVAL
Created to establish a networking bridge between independent film-makers and the industry, iklipz was launched in July 2006 by partners Arthur Cohen and Richard Witkowski. The inspiration was a report claiming that of the 7,000 films submitted to Sundance, 130 are accepted and maybe five end up with deals. Realising there must be value in those thousands of other films, Cohen, president of marketing at Paramount Pictures for 14 years, decided to provide an outlet for projects that otherwise would be doomed to obscurity. iklipz consults with industry figures to showcase cutting-edge films and talent.
In its 14 months of operation, the site has grown to 6,000 movies available for free viewing and 1.2 million page impressions per month. They are also producing their own original shows featuring talent interviews and have launched a sister site called Comedy Klipz. “We're trying to be a film festival that never closes,” says Cohen, who cites their movie-playing software (which “we spent a fortune to build”) as one of the keys to iklipz's growth. “Switch from our site to YouTube and you'll see that our films look and sound better.”
Cohen's ambition is to give money to help a studio buy a film on the festival circuit in return for the right to air the first 10-15 minutes on his site. On the social-networking side, they are fixing technical issues to enable iklipz members to interact more effectively. “Unlike other people who have gone out and made $30m deals with Sony, we're trying to stay independent,” says Cohen.
THE ONLINE DISTRIBUTOR
Declaring itself an online community for people who enjoy world cinema, Jaman licenses and distributes cinema-quality films and documentaries online. Identifying that international independents would offer the greatest flexibility in terms of licensing rights, the site focused its launch strategy on that market. “If you want to build a large and global site,” says founder and CEO Gaurav Dhillon, “you have to provide them convenience, and working with an underserved section of the market gave us that.” Jaman built the technology first, going public in mid-2006 with a system that allows users to rent films - most obtained through revenue-sharing library deals - and view them on Jaman's high-definition player rather than having to purchase outright.
Not only can you chat with other members, Jaman's Movie Finder allows the user to use a scale that offers suggestions based on viewer ratings. “Up to now, people had only done this for music,” he says. “Now we do it with movies, so you can use the same trust and network to find people with similar tastes.”
Dhillon aims to increase Jaman's size before trying to license studio product. “We need to have the community first. It's our belief that it's all going to go digital, so whoever has the best overall environment for watching films online is going to win big.”
DAWN OF THE DOWNLOAD ERA
How soon will the web offer the full range of legitimate US studio movies to download, asks Diana Lodderhose.
The technology is now available for consumers to download-to-burn, and the service providers are poised and ready. But the widespread downloading of feature films has yet to materialise. The major studios are taking a conservative approach and discussing separate strategies rather than a universal model.
There are four different models in operation: download to own (DTO); video on demand (VoD) or rental; advertising-based services (which effectively offer free movies based on advertising revenues); and bundled subscriptions which streamline movies on websites without extra charge to subscribers.
While iTunes is now the biggest single download service in the US, holding approximately 80% of all digital movies sold in the US, it only offers new releases from Walt Disney, as well as library titles from Disney, Paramount, MGM and Lionsgate. The media conglomerate owners of Universal, Twentieth Century Fox and Sony have bigger platform ambitions.
The studios fear iTunes will become the single dominant platform for distributing movies online. Sony, for example, has its own platform with PlayStation, and issues over copy protection and whether certain titles would be exclusive to the PlayStation platform have yet to be ironed out.
The studios also have to contend with a thorny relationship with retailers, such as WalMart. Those retailers see online services as a threat and are putting added pressure on studios to shore up their existing business of retail DVDs.
Price erosion is also an issue. While retailers in the US sell DVDs typically for around $17, iTunes, for example, is selling downloads at a maximum $15 creating a $2-$3 gap that studios are not yet prepared to lose.
Meanwhile, illegal websites in China and Russia are already offering downloads of new titles for just $3.99 that are compatible with iPods and can be burnt to DVD. Further stalling from the studios is giving pirates room to grow to meet the consumer demand.