Ning provides tools and hosting for social networks. Like many other social media services, it uses the freemium model. But it won’t for much longer, according to an email to all Ning employees from CEO Jason Rosenthal.

When I became CEO 30 days ago, I told you I would take a hard look at our business… Our Premium Ning Networks… drive 75% of our monthly US traffic, and those Network Creators need and will pay for many more services and features from us.

So, we are going to change our strategy to devote 100% of our resources to building the winning product to capture this big opportunity. We will phase out our free service. Existing free networks will have the opportunity to either convert to paying for premium services, or transition off of Ning.

Matthew Ingram at GigaOM describes Ning’s move as a sign that the much-hyped “freemium” model might not be the road to riches many seemed to think it was. While it’s true that Ning are about to drive off that road, I don’t think that anyone ever claimed freemium as a sure road to riches.

Rather, freemium sometimes seems like the best way of forging a trail on the social media frontier. But Ning is no longer on the frontier. It’s a well-known settlement, in charted territory. Ningsville is known to everyone who might want to set up shop there. Those who have set up shop are being told to pay up or move out.

This is hard on those who didn’t want to set up shop, but just wanted to hang out. It’s harder on those who wanted a storefront to do good things – in other words, it sounds really tough on nonprofits. I wonder if Ning will continue to offer free service to nonprofits.

You may have noticed that I disagreed with Matthew there, but did so very gently and mildly. Others prefer to disagree with fellow bloggers more vehemently. Here’s for example, is 37signals’ David, taking issue with TechCrunch’s Jason Kincaid.

Ning is laying off 40% of its staff and dumping free versions of its service. That’s a shitty day for the people who lost their job and the folks left behind without their coworkers… But I can’t help but be puzzled by the coverage of this. Here’s TechCrunch on the situation:

While the massive layoffs are obviously a big hit to the company, it isn’t all bad news for Ning: the service is still seeing its traffic grow according to comScore. But traffic growth is no longer good enough for the company — it needs to start generating some serious revenue, and advertising clearly isn’t cutting it.

Are you kidding me? The company has blown through $120MM of VC funding over six years, built up massive traffic, yet just had to slash and burn, and you’re saying that “traffic growth is no longer good enough”. How the hell was it ever good enough?

One of the point frequently made in favor of freemium is that the free users don’t cost much. The above quote from Jason R suggests that’s true of Ning. So why cut the free networks? To give David something to gloat about? Unlikely. Because the conversion rate from free to premium isn’t high enough? Maybe.

Because Ning needs to raise more money? That’s what I’d bet on. I suspect that Ning needs more funding, and wants a new story to tell when it passes the hat. Freemium is the old story. Double down on premium is the new story. I don’t see a happy ending. How about you?

Has social networking taken over from email as king of communication? Fred Wilson proclaims that it has, and adds: long live the king. (Fred draws on a Morgan Stanley report, available as a pdf.)

Fred focuses on one particular trend: social net overtakes email. I’d like to point out a couple of related trends. Neither is new, but each is interestingly related to the trend Fred emphasizes.

  • Facebook is the new AOL. Some people live inside Facebook, popping out onto the wider web when they have to. Sound familiar? It should to those old enough to remember when millions used AOL for email, chat, games, etc. Well, for Fred’s kids, and, I think, for millions of others, FB is the main inbox.
  • Connection trumps content. To quote Fred (although the emphasis is mine):

    Whether it’s Twitter, Facebook, or some other social networking service, I believe the lighter weight communication paradigm (say less, reach more) is superior to email for many things and I’m certainly moving more of my communications away from email.

I think that each of the above points is a reasonable translation of Fred’s proclamation that social networking has deposed email. Of course, there are other translations, and of course, I’d be delighted if you would provide more in comments. I’m not delighted with the points I make, in that neither is a particularly good thing: again, that seems like a good place to stop posting and start hoping for comments.

Couchsurfing and Networking

January 18, 2009

I was familiar with couchsurfing as a term for finding couches to sleep on, usually during travels. But I wasn’t aware of Couchsurfing.com. As the name suggests, its a web service connecting couchsurfers with couches and with those willing to lend them.

It turns out that it’s rather more than that. It’s also a social network. Moreover, an article in Good magazine (via Reddit) makes the argument that Couchsurfing is one of the more impressive social networks. I tend to agree with the statement that “the utopian promise of internet networking—the ability to leap across the previously inviolable social boundaries of school or town or country or culture—is far from being met… we’re not really finding new people to connect with; we’re talking to the people we already know.”

In contrast, Couchsurfing seems to have fostered many new relationships spanning social boundaries, particularly country boundaries. Its interactions include meeting in person in the home of one of the people involved. That sounds deeper than a thrown sheep or a 140-word tweet (and yes, I do find it hard to resist digs at Facebook and Twitter, and Digg for that matter).

The article isn’t only about the upside of Couchsurfing. Nevertheless, it does support its conclusion. “CouchSurfing, for all its problems, might well be an example of an online social network that actually works.”

Fred Wilson puts the difference at $14.8B – if we take “the publicly available information about the most recent financings of the two companies ($15bn for Facebook and $200mm for Automattic)” to provide good measures of the respective company’s values. But Fred isn’t any more impressed with that measurement that I am.

I think that some aspects of Fred’s post could use clarification. I’ll continue the job of clarification started in a comment by Jeff Jarvis. I’ll also plug some of my own writing about WordPress.

After quoting the funny money numbers, Fred moves on to a chart of unique visitors to Facebook and to “WordPress.” Jeff’s clarification is that the WordPress line in that chart almost certainly refers to the site WordPress.com, and that many WordPress blogs are hosted elsewhere. Jeff also remarks that WordPress is a platform, not a social network.

We need to be clear about three different but related entities.

Comparing unique visitors at Facebook.com and at WordPress.com is comparing an apple with an orange. Automattic has other oranges in its bag, and hence has other revenue streams. If we want to compare the $ values of Facebook and Automattic, we should look at all the oranges in Automattic’s bag, and not just at WordPress.com.

Having noted the clarification in Jeff’s comment, I’d like to follow up on another statement from the same comment: “WordPress is not a network. WordPress is a platform.” That’s mostly true, but it ignores a couple of important points.

First, WordPress has several of the ingredients of a social network. Consider, for example, Diso: “an umbrella project for a group of open source implementations of… social networking concepts… first target is WordPress, bootstrapping on existing work and building out from there.” I’ve added emphasis to show that Chris Messina and his buddies consider WordPress a good starting point for an open, standards-based social network.

Second, WordPress.com has several network-like features. Once signed on to WordPress.com, you can leave comments on other blogs hosted there (including this one) without having to provide further identity. There are WordPress.com-wide tag and category pages; as an example, here’s the page for the tag automattic.

One of the things that makes Automattic interesting is that it’s in the business of making money from free software. If you share my interest in this aspect of Automattic, you might want to check out my series of posts on it. It starts with this introduction. The most successful post in the series (indeed, on this blog) is the one on making money from WordPress.com.

I don’t attempt to put a $ value on Automattic. I am convinced that its $ value does not lag that of Facebook by many billions of dollars. I think that Fred Wilson shares my conviction. I wonder if he attempted to get his VC firm, Union Square Ventures, a piece of the Automattic action. Earlier this year, Automattic got a $29.5M round of funding.

The Economist‘s recent article on social networks is worth a read. It draws many connections between social networking and email.

If you suspect that there will be little in the article that you haven’t seen elsewhere before, you’re probably right. But an article that brings things together, makes good points, and makes them well is a pleasure to read, and may be a good introduction for people wondering what the fuss is about. Talking of making points well, here’s one about how deals such as Microsoft/Hotmail and AOL/Bebo are sometimes viewed.

The correct half is that a next big thing—web-mail then, social networking now—can indeed quickly become something that consumers expect from their favourite web portal. The non sequitur is to assume that the new service will be a revenue-generating business in its own right.

Blogs and social networks are often contrasted. For example, we could say that blogs are about content, and social networks are about connection.

It may seem strange, then, that there are a couple of reasonably prominent projects out there that use the WordPress blog software to build social networks. One, DiSo, is prominent because of its links with standards efforts.

Another, BuddyPress, has just become more prominent because it has become part of Automattic. By that, I mean that Automattic has just hired Andy Peating, developer of BuddyPress, and has added BuddyPress to its projects.

In announcing the news, Matt remarked that the future is social, and Om said that we told you Automattic saw it that way.

A bit of history: Andy developed a social network called ChickSpeak, using WordPress Multi-User to do so. BuddyPress was his project to take that work and make it an open source social network platform. It’s still his project, but now he a paycheck and other support from Automattic to work on it.

In terms of Automattic’s direction, the most interesting aspect of BuddyPress is the contrast with the Prologue theme. Matt described a WordPress blog with that theme as like a group Twitter. He went on to say that:

Some folks have suggested that using WordPress, Prologue, and RSS you could create a pretty effective distributed version of Twitter. This isn’t something we’re personally interested in, but we’ve made the theme available as open source under the GPL so if you want to hack around it yourself you’re welcome to.

So, Automattic isn’t going to pounce on Twitter; it’ll leave that to Pownce. But it is going to jump on the opportunity to build an open source social network platform.

Is BricaBox staking out the undesirable market territory that was already prospected, and then abandoned, by Ning? Several people have in effect asked this question: most recently, Hashim in a comment on my post; earlier, some of those who commented on the RWW post.

To refresh memories, Ning launched in October 2005 as a web service for the building and use of “social applications.” The Ning Launches! post at TechCrunch was enthusiastic: “allowing people to build cool new stuff that they normally wouldn’t (empowering the users) is one of the best things you can do on the Web 2.0 space.”

But by January 2006, Mr TechCrunch was suggesting it was RIP/deadpool time for Ning. Let’s look at his reasoning.

The idea of Ning… is brilliant… But the reality of Ning is that it’s lost whatever coolness it had, no one uses it and Ning is going to have a very hard time getting people’s attention when they finally do roll out better functionality.

Here’s are the problems:

First, You have to know PHP, or at least HTML, to build anything unique on Ning…

About a year later, in February 2007, Ning relaunched as “your own social network for anything.” A year after that, Ning CEO Gina Bianchini lit the virtual birthday candle and remarked on the size (over 185,000 networks) and growth of the service since the relaunch.

On the same day (Feb 26 2008) BricaBox launched its public beta. Having brought ourselves up to date, we can now address the question of whether it launched into a space already proved by Ning to be inhospitable.

First of all, let’s have a look at the above quote from Mike Arrington. He described the idea as brilliant, but found the implementation lacking. The first of his specific points is that you needed to be able to code in order to do anything with Ning.

BricaBox, in contrast with the Ning of a year ago, does not require coding. To build your BricaBox, you drag and drop content blocks into columns. For example, in my BricaBox keeping track of WordPress Multi-User sites, the page for each site includes a comments block (here’s a sample page).

I could go down the rest of Mike’s list of what was initially wrong with Ning, but I’ll leave that as an exercise for the reader. I’ll tell those of you who skip such exercises that BricaBox does not seem to have made the same mistakes.

So, looking at Mike’s critique of Ning, BricaBox does not seem to be following in Ning’s misdirected footsteps. You might of course disagree with his critique, or with my application of it.

Now let’s look at the question (remember the question – the one in italics right at the top of this post?) from a broader perspective. Over the last couple of years, we’ve seen the growth of blogs, the growth of social networks, and, more recently, the awareness that there are opportunities between the two, or combining the two. So the environment is now friendlier for BricaBox, as a social content platform, now than it would have been a year or two ago.

In particular, BricaBox launched into a more promising territory in February 2008 than did Ning in October 2005 – even if much of the difference is in time, rather than in location. It is also avoiding some of the potholes into which Ning fell.

That’s enough from me. I’d be interested to hear from you. If you are one of those who posed the “Ning question” about BricaBox, what do you think of my answer? Whoever you are, if you’ve read this far (and I thank you for doing so), you might as well take a little more time and leave a comment.

Follow

Get every new post delivered to your Inbox.

Join 107 other followers