A new report from independent UK market analyst Datamonitor expects global active memberships in social networking sites to reach 230 million at the end of 2007.
Virtual communities and online social networking sites are providing a new, powerful and extremely popular medium for human connection and radio stations have just scratched the surface of connecting with listeners through these sites. Some panellists at this year’s Melbourne Radio conference even went as far as to say it is unlikely radio personalities will be hired in the future if they don’t have a profile on a social networking site or can’t blog.
Notwithstanding the fact that many users have multiple memberships, the growth of social networking represents an extraordinary cultural trend. The report, called The Future of Social Networking: understanding market strategic and technological developments, says infrastructure providers, social network providers and wireless players stand to profit largely in the near term.
The report’s author, Datamonitor Technology Analyst Ri Pierce-Grove has told radioinfo:
“For social networking services, barriers to entry are virtually non-existent, and both competition and innovation are ferocious. Users have a vast array of options, from Titanic generalists like MySpace and Facebook to tiny individual networks on DIY platforms like Ning… This year revenues from social networking services should reach USD$965 million growing to USD$2.4 billion by 2012.”
Social networking is growing around the world, everywhere people have Internet connections. Most large social networking services, especially those which allow the distribution of content like video, have a very long tail of geographic distribution.
According to Datamonitor, by year end 2007 Asia Pacific will account for 35% of the world’s social networking memberships. Europe, the Middle East and Africa will hold 28%, North America 25% while the Caribbean and Latin America will account for 12%. Adoption curves vary dramatically by region, but Datamonitor expects membership growth in all regions to have peaked by 2009 and to have leveled out by 2012.
Currently, there are two strains of thought about this market, both strongly influenced by memories of the e-commerce boom at the beginning of the century. At the moment, prevailing sentiment is excitement combined with anxiety. Players fear missing the next Google, the next Yahoo. But mixed with this exuberance is a thread of cynicism. Investors remember how few Internet startups survived the market downturn, and are repelled by what they see as overconfidence.
“The extraordinary proliferation of online social networks is fueled by real innovation and is substantially changing the way we communicate. However, the hothouse atmosphere of easy capital, media attention, and user curiosity which stimulates creativity will not be sustained indefinitely. All players therefore must develop a two-pronged strategy in order to survive the extremes of heat and eventual chill which this market will undergo,” says Pierce-Grove.
Media properties, search firms, and other commercial entities will look to lock down the new constellations of audiences brought together by social networking services. Market experimentation will continue as operators seek the optimal combination of features and functions as well as more sustainable operational models. However, the sites themselves will not necessarily consolidate; special interest social networking services will continue to play a valuable role, concludes the report.