social networks

Mashable just came out with an interesting story that I'm blogging about because it's worth a read, and it is relevant to what I have been posting here about Facebook previously. Also its relevant to what is happening in the economy and with the US dollar right now.

Go read it:

http://mashable.com/2009/02/12/facebook-valuation-3/

(in the post Mashable is quoting Associated Press and links a bunch of documents that indicate FB's valuation to be 3.7 billion USD or less)

Earlier in July 24 2008 the PEDataCenter blog posted some juicy info on Facebook valuations as well:

http://pedatacenter.com/pedc/blog/view/10

The latest entry in their post gives Facebook a valuation of 7.75 USD per share in February 26 2008. and now the Mashable post has it at 8.88 USD per share. Not that much positive growth in a years time, don't you think?

If fact if you look at data from the Federal Reserve:

http://www.federalreserve.gov/releases/h3/current/h3.htm

...they have been printing so much US dollars out of thin air, and granting so much loans lately that it is arguable that the US dollar has lost so much of its value that the valuation (or rather; true value) of FB is actually far less now than it was a year ago.

The FED just 2 days ago unveiled a 1 trillion dollar program to print more US dollars out of thin air and give them out as credit:

http://money.cnn.com/2009/02/10/news/companies/consumer_loans/index.htm

What happens to value of money when more money suddenly appears out of thin air? It dilutes like the entrepreneur who takes onboard 4 VCs at once..

Facebook being valued at 3.7 billion USD is perhaps secondary news to the fact that 3.7 billion USD isn't quite what it used to be, and with more money being printed out of nothing the trend is likely to continue towards perhaps even a total value collapse of the dollar. Which would certainly bode interesting times to us all, and to Facebook's survival as well.

.. I suggest that you stay on top of this and keep an eye on what happens with the dollar. It certainly doesn't look all that rosy right now, and there's a sense of huge looming risks in the air.

One e-newsletter on this that I can honestly endorse would be this one:

http://www.frontlinethoughts.com/gateway.asp

Subscribe to that, and especially read the latest issue from Feb 6.

Xiha Life (www.xihalife.com) is a multi-lingual social network enjoying 1M+ monthly unique visitors and expanding rapidly.

XIha has been making revenue by selling casual games from their website (amongst other models). Recently they slashed their game pricing;

http://en.xihalife.com/b/webmaster/blog/new-game-pricing/

..to half or less than half of what it used to be (from 20 EUR to 7-10 EUR)

www.arcticstartup.com wrote about it here:

http://www.arcticstartup.com/2009/02/06/xiha-life-drops-prices-to-attrac...

..saying that "If you look at pricing on a larger scale - it doesn’t make much sense to try and sell casual games at 20-30 dollars"

And Xiha's case would seem to prove this; since making the change the average revenue Xiha gets from this source has gone above the average. Which can only mean that lower prices actually broaden the "market" and more consumers than ever before are buying the products.

It is just about as classical pricing strategy dilemma as anything could be; figuring out your optimal volume versus your optimal price tag is rarely a cakewalk. Questions like; would you business need 10K transactions at 10 EUR each? or 100K transactions at 1.2 EUR each? are really hard to work out in practice.

Consumer Internet services and online communities however offer an ideal experimental ground in this regard; they either love what you are doing, or hate it. Sometimes the response is lukewarm and you can't tell. What ever the case there is usually an immediate reaction to everything you do; the results being instantly visible in your business and key metrics.

Ilja Laurs (http://www.mobileattitudes.org/) the CEO GetJar in our Slush panel (http://tane.li/2008/panel-slush) really stressed the importance of having good metrics and KPI's in place from the beginning when you are building your online business. Very much agree with that; figuring out your KPIs early and building a culture of daily check on them is important and can help you make smarter decisions in situations where the visibility otherwise is near zero (which it almost always is with Startups).

Way to go Xiha Life!

You know me as a strong advocate (and ex-CEO) of www.irc.fi - IRC-Galleria who has long held the top spot in the finnish youth Internet world and still remains as one of the most active social media sites on the net.

I blogged a detailed entry on their recent-enough statistics in November here:

http://tane.li/2008/irc-galleria-remains-most-active-social-media-net

and more recently compared them to Facebook's Finland network here:

http://tane.li/2009/facebook-finland-network-revealed-irc-galleria-compa...

This time however I have to objectively look at some data and ask the questions:

* Has the growth of IRC-Galleria hit a wall?
* Has it reached its saturation point in Finland?
* Are they suffering from Facebook's success in Finland?
* Is the focus on foreign expansion leaving the domestic site/service lost at sea?

Please note that I haven't been with the company for quite some time now, so I will have to speculate a bit on this.

On 18th of October IRC-Galleria had a big party to celebrate 500K registered + active users. That's only about 3 months 2 weeks ago.

Now they have a userbase of 506484 users. Growing by 6 thousand users in 3.5 months is about less than 2000 users a month - a very dismal figure for a service that has become accustomed to seeing that amount of growth in a week or so.

It seems that IRC-Galleria's growth has slumped by roughly 75% and is currently as little as one fourth of what it used to be - in fact what it has been pretty much throughout the history of the successful site.

Old ancient data that I have shows IRC-Galleria having 283509 users on December 14, 2005.. which would suggest a growth rate of more than 200 (about 207-210) users per day up until they hit 500K in October 2008. Naturally the curve isn't entirely flat like that; towards the more recent years daily user growth has been quite a bit more than that.

The current growth rate ever since hitting 500k has been no more than about 60 users per day or so.

And it looks like it might be slowing down further.

IRC-Galleria's user counter only counts the registered and active users. When people leave the service they almost certainly delete their accounts. Because the whole concept is being built in a way that requires you to be active. Having an inactive account in there is out of the question for many people. Thus every day hundreds of people come in and hundreds get removed from the number, the grand daily total showing currently as modest growth of 60 or so net users per day.

Altogether there has been something like over 2 million accounts created throughout the service's lifetime. Which means that user churn is rather high and some people frequently switch accounts, never complete their registering etc etc. the usual stuff.

Why are the numbers growing so slowly? There might be couple of reasons:

- They have really hit the saturation point. Which I think is rather unlikely. There should be room to go upwards to 750K or ever 1M registered users by making the concept more appealing to older (in this case 30-something) people.

- They are focusing so much on conquering the foreign markets that their primary source of revenue; the domestic service, is left to drift lost at sea. Things such as this are known to happen to companies, and if they do have this going on they would not be the first to make this mistake. Hard to speculate further without much visibility.

- Are people leaving for Facebook? This seems entirely plausible; Facebook has grown "like crazy" in Finland with the kind of numbers IRC-Galleria has never seen. It is somewhat likely that especially the "older" folks in the service are starting to be come less active and switching the primary portion of their usage into Facebook. As far as I know this wasn't yet the case in early fall, but things might have changed over the past few months - as everybody seems to suddenly rush into Facebook. My 18 year old sister is in there. So is my 50+ year old mum. Similar situations seem to be the norm nowdays, with entire families and possibly generations of Finns having their stuff up in Facebook.

Wonder how many of them realize that Facebook has background ties to the CIA (through their venture capital arm, In-Q-Tel) (further reading on that can be found all over the place, for example here.)

Yet still; IRC-Galleria is a giant in the local youth Internet and the activity levels are way high up there far above Facebook.

That's the double-sided sword right there; if your concept requires everyone to be very active, it is very hard to turn it around if people start abandoning it en masse (for any reason) or some other place has more contemporary sex appeal of the hour.

IRC-Galleria got started in December of 2000.. in "Internet years" the service is pretty ancient and not much of the similar sites from 'back in the day' are around anymore. "oh where are the snows of yesteryear?" (some old medival lament).

The only way to survive in a changing world is to change yourself. Perhaps that's what IRC-Galleria needs to face - or we might start to see those tiny growth numbers turn towards the negative territory..

Neil Gaiman was once asked to summarize his truly marvelous and epic masterpiece story The Sandman in once sentence (it is 10+ books long). He said;

"The Lord of Dreams learns that one must change or die, and makes his decision."

As far as I know nobody has yet made an analysis about the Facebook Finland network with precise data.

I managed to get my hands on some Facebook Finland network data, and as far as I know it is entirely accurate. Meaning that it should represent quite accurately what they have in the real database, and there are no intentional errors and corrupt entries in it.

The data also allows me to do some comparison to IRC-Galleria's current data and perhaps even draw a few conclusions.

All data is a snapshot from 19 january 2009 and should be accurate enough.

Facebook Finland Network data contains all accounts that claim to belong to the "Finland" regional network. However such a claim can be made by anyone. Also people can have multiple accounts. Bands have accounts. So do companies. And imaginary entities like characters from TV shows or cartoon figures. This means that not nearly all the users listed in the Finland Network are actual people. It is simply everyone who claims to belong to the network at all - with no filtering what so ever.

IRC-Galleria data is more "pure" in that sense; all of it has been either verified by a real cell-phone number or manually screened by an administrator person. There are still a few hundred known fakes in the data, and a probably a few hundred unknown ones.

Facebook data doesn't know all of its users' gender, which I guess is a result of inanimate objects and such being capable of having their own Facebook accounts. While IRC-Galleria data is gender-precise.

All data in both cases have been provided by the companies directly.

IRC-Galleria data is publicly available here:
http://irc-galleria.net/dob.php
(as pointed out in the comments. Edited & added on Jan 20th)

Some stats from the Facebook data:

* Finland Network is about 927,530 users strong
* Males represent 363,120 users or 39.14%
* Females are the clear majority with 530,510 users and 57.19%
* There are 33,900 entities of unknown gender, or 3.65%
* Largest age-group for Facebook Finland is the 25 year olds with 54,100 accounts
* The ONLY age-groups with more men in them are the 64 and 65+ year olds
* Oddly enough there are 14.81% of users by the age of 63 with unknown gender
* and 16.13% of 61 year olds with unknown gender
* in 14 year old the unknowns only represent 0.63%
* The 25 year olds have most entities with unknown gender; 2180

Stats from the IRC-Galleria data:

* IRC-Galleria data only contains data for 12 to 40 year olds, not extending as high up as Facebook data does
* IRC-Galleria is 506,751 users strong
* About 7 thousand users are over 40 and thus not included in any of the following stats
* Females dominate again: there are 257,061 females to 242,025 males
* Largest user group is the 16 year olds with 47,705 users
* While the average age is still well above 20 at 20.41 years
* In all the younger age-groups females dominate, until at 21 years of age the tide turns and from thereon males form the majority
* The biggest difference is in 15 year olds with clear female dominance of 59.14%
* While after the tide turning 30 year old males form a majority of 68.57%

And here's the real beef, some charts that chew through the data.

Each image opens up to a higher resolution version for better examination of the data. All charts were made with Apple Numbers (which did beat the hell out of excel for this task):

Image: Facbook Finland Network by Volume, Age and Gender

Image: Facebook Finland Network by Gender distribution and Age

Image: IRC-Galleria by Volume, Age and Gender

Image: IRC-Galleria by Gender distribution and Age

And the Grande Finale:

Image: Facebook Finland Network vs IRC-Galleria on the same scale

I am not going to share the specific numeric data with you on this post. But if you do want to get it; feel free to contact me directly, or leave a comment.

..and then for some conclusions from all of this:

• IRC-Galleria is a service used by "young girls and old men" ;-)
• Facebook seems to have a whole lot of fakes and non-people profiles in the Finland network; if you compare some age group masses to the actual population structure, it doesn't quite add up.
• IRC-Galleria is clearly a youth service, where as Facebook is more used by folks that are generally 4-8 years older
• Finland seems to have an odd "business networking inside Facebook" effect that draws many senior professionals in there. (just a theory/idea)
• Facebook's data shows weird stuff about older males; they use it clearly more than females of the same age, wonder why is that? Grand daddys more adaptive to the Interwebz than grannies?
• The obvious: Social Media services are very much a Girlie Thing. The female dominance in the user figures is quite evident.
• Facebook has been way more successful in attracting females of all ages than IRC-Galleria has. This is quite obvious from looking at the both services in the same scale chart: the violet-color females are so much more "thick" and present in the Facebook demographics.
• Final interesting fact: according to my sources IRC-Galleria is about 6 times better than Facebook in monetizing its users. If Facebook would be equally good in monetization they would make over 2 billion EUR of annual revenue, which they certainly do not achieve quite yet.

I did this whole numbers play without really considering much about what facets in the data might be the most interesting.

How do you find all this, and is there anything useful or insightful in it?