How to Wallop friends and influence people

27-09-2006

by Ciara O'Brien

Microsoft is hoping to beat its way into the popular social networking scene with a new spin-off invitation-only site to rival Bebo and MySpace.

The new, oddly-named venture -- called Wallop -- began as a research project in Microsoft's Research Labs, and is being funded by Microsoft, Norwest Venture Partners, Bay Partners and Consor Capital to the tune of USD10 million.

Wallop is taking a slightly different approach to rival social networking sites which are aimed at young internet users who want to build their own webpage, and create small communities throughout the internet.

Potential Wallop members must receive an invite to sign up, and it promises to contain no advertising. Instead, it offers a marketplace that allows users to buy graphics and other "mods" from Flash developers and designers. Individual members can control exactly what others can see on their profile, and share music and pictures across the network.

"After taking a long, hard look at social computing, it became clear that it is not simply about the technology, which has been limited and plagued with problems to date," said Karl Jacob, founder and chief executive of Wallop. "It's about the trend of self-expression moving online, creating enormous demand for easy and limitless customisation and an enlightened social experience where the user is in control."

With this in mind, it appears that Microsoft is taking seriously the notion that social networking is growth area of the future.

"Wallop offers an innovative business model and user interface that is designed to attract select groups of users who will prefer to use their creative skills to express themselves on their sites without having to learn any programming and without advertising," said IDC researcher for collaborative computing, Mark Levitt, in a statement.

"Now that social networking has become all the rage, we need to step back and examine whether current sites present the best images and practices for social networking," he said.

Social networking sites have attracted a phenomenal number of users in recent times. Leading social networking site MySpace is the fourth most popular website in the US with a reported 100 million registered users, while Facebook comes in at number seven overall -- and number two in the social networking ranks -- with more than 9.5 million registered users.

In Britain and Ireland, Bebo is the most popular social networking site. At one of the most recent counts, it boasted more than 25 million users.

The sites have proved a lucrative target for investors. MySpace was bought by Rupert Murdoch's NewsCorp last year for USD580 million. Facebook is also reported to be in talks to sell up, with Yahoo as the prospective buyer for a USD1 billion price tag.

Bebo has also been the subject of much acquisition speculation after it turned down a USD550 million offer, saying that it believed it was worth over USD1 billion.

Meanwhile, MySpace recently signed a EUR900 million advertising deal with Google, indicating just how valuable the networks have become to ad men trying to tap into the coveted teen markets.

However, it remains to be seen if the phenomenon will stay the course. Friendster, one of the forerunners of the phenomenon, initially achieved a high level of popularity but then saw its traffic figures halve, along with its EUR200 million price tag, according to media speculation.