Chinese social network QQ outperforms Facebook & Co.
(Credit: QQ)I just returned from a trip to Shanghai, and in case you didn't know anyway, here's my No. 1 insight: China scales.
Let's take QQ.com as an example, the leading Chinese online social network. The site is reported to have more than 300 million active accounts. That is eight times the member base of Facebook--and it's the same size as the U.S. population.
What's also remarkable (and different from the Western social networks) is QQ's monetization. Facebook posted revenue of $150 million for 2007 (and according to Plus8star a loss of $50 million); MySpace.com (purchased by News Corp. for $560 million) is projected to generate $750 million in revenue this year; and Bebo (purchased by AOL for $850 million) had revenue of just $20 million in 2007. While QQ reported revenue of $523 million and an astonishing operating profit of $224 million in 2007. The revenue distribution is unusual, too: 60 percent of the revenue came from services like games, an additional 21 percent from mobile services like ringtones, and only 13 percent from online advertising.
Do added value services trump ad based revenue models?
Tim Leberecht is frog design's vice president of marketing and communications and has worked in the media, entertainment, and high-tech industries. He is a member of the CNET Blog Network, and is not an employee of CNET.
If you recall Sony and Microsoft's moves into virtual marketplaces and read some of the comments they made at the time, you get at least a few answers to your question. Personally, I think there's more than enough room for a variety of approaches. For reference:
"Micropayments For Virtual Goods" - http://blog.rebang.com/?p=840 (includes additional links)
"The (Sony) State of Virtual Goods" - http://blog.rebang.com/?p=1162
"Virtual Goods? the Movie" - http://blog.rebang.com/?p=1404