The launch of Orkut has re-ignited the debates about whether or not there's any money in this whole "social networking" game. More specifically, many folks wonder if a purely social networking company can make money without becoming part of a larger (Google, AOL, Yahoo, Microsoft, eBay) company.
I'm of two minds on this issue. First, this social networking craze is really just the beginning. The services we see today are too numerous and require far too much of our time, energy, and attention compared to the value they deliver. They're fads. They'll either evolve or die when then initial "gee whiz" factor wears off.
My other mind points out that the only social networking services offered by the big guys today (Instant Messaging) likely don't make any money either. If those companies decide to get in the game, they'll likely start with enhancements to their instant messaging and e-mail services while pouring bits of social networking goo into the rest of their offerings (shopping, job search, travel, etc).
The only thing I can't figure out is if this social networking craze is a "winner take all" scenario. Had you asked me about that during the very early days of IM, I'd have said something like "that's obvious, isn't it? We either need one big service that has 95% of the users, or 2-4 big services that all co-operate on some fairly basic level."
But clearly neither of those has happened. The IM market today is basically AOL, Microsoft, and Yahoo with roughly equal pieces of the pie (or so I'm told).
I really wish I knew the answer.
I was wrong. Though hard numbers are hard (or expensive) to come by, there is some data to indicate that AOL was in the 90% range in the year 2000.
While Yahoo and Microsoft have been the fastest-growing IM services of late, according to recent Media Metrix numbers, America Online's AIM and ICQ remain the team to beat. Together they comprise an estimated 90 percent market share, analysts said.
Anyone have more current data than that? No, I'm not gonna pay $2500 for the pleasure of knowing.
Now I'm left wondering why Microsoft and Yahoo even bother. Even Apple, the king of small marketshares, teamed up with AOL for their iChat service.
Even so, AIM doesn't require an AOL account, so my assertion stands. It probably doesn't make any money.
Another Update: See also Newer IM Marketshare Numbers.
Posted by jzawodn at January 25, 2004 02:29 PM