updated below
Ning, a service that lets users create their own social networks, has passed a new milestone: Users have created more than 115,000 social networks, the company said.
But Ning’s efforts to build a real audience and retain it faces some serious challenges, and it’s not clear how it will ever get big enough to justify the massive $44 million investment it received earlier this year, which gave it a $214 million post-money valuation.
First, here’s what Ning does: Ning allows anyone without technical knowledge to design and build a social network and features full page customization and built-in widgets for photos and videos. Social networks on Ning include “Ask a Ninja”, a social network built around a ninja character and “Fingerstache,” a social network for users who make a mustache by drawing on their finger and putting their finger under their nose.
Ning’s challenges come in three areas: First, users of any particular social network built on Ning can’t share their data across different Ning social networks, negating the advantages of network effects. This means that each social network on Ning has to grow an audience to start from scratch. (From Ning’s perspective, separate data gives social network creators more control). Second, if any social network actually becomes popular, there’s a good chance that it will migrate off Ning because independence affords more flexibility and control. Third, alternative platforms, like Facebook, offer far greater reach. Build an application on Facebook and you can market yourself to Facebook’s 53 million active users. Even if Ning allows for data sharing across Ning users, it has a fraction the active user base of many social networks.
The number of social networks on Ning continues to grow quickly. Since the announcement on November 1st, the company says the number of social networks on Ning has grown past 122,000. On Ning’s blog, the company has kept tabs on the latest count of social networks created on Ning here (there are least nine other posts on the subject, including here, here and here).
Typical measures of a website’s popularity are page views, active users, time spent on site and login frequency. The number of social networks might matter, if only it meant users were active. But for Ning, that’s questionable because there aren’t many unique visitors per social network and it will be hard for Ning to grow at the lightning fast pace it expects.
Ning’s actual web traffic is somewhat of a mystery. Panel estimates do not accurately estimate traffic because Ning offers a white labeled service and other features that are not accounted for in panel estimates, according to the company. But Bianchini declined to share company data for Ning’s traffic measured in unique visitors or page views. That leaves panel estimates. The panel estimates of unique visitors per month vary widely. According to Comscore, Ning attracted 793,000 unique visitors in the US in September, a ratio of only 7.8 visitors per social network created. According to Quantcast, Ning attracted 158,000 unique visitors in the US.
By comparison, Facebook has 55,000 regional, work-related, collegiate, and high school networks. Facebook has 964 active users per network. MySpace is just one giant network. From Ning’s perspective, the comparison isn’t meaningful because Ning is designed to let many users create social networks. In contrast, Facebook creates networks based on real world organizations. Still, Ning’s low ratio of visitors per social network suggests Ning traffic might be spread thin.
According to Bianchini, Ning’s page views are growing 10 percent each week. She said 40-50 percent of Ning’s traffic is outside the US, numbers that aren’t accounted for by Comscore’s and Quantcast’s estimates.
Bianchini said Ning, a Palo Alto company, can develop into a major player. She said: “We’re doubling our size every 2-3 months and we only need to double another 10-15 times to become a top site.” Doubling 10 or 15 times would multiply traffic by a factor of 1,024 or 32,768. But many websites given that traffic multiplier would become a top site, so can Ning really make it? Consider this: A site with only 2 million page views (Ning probably serves many more page views than this) at that growth rate would grow to as much as 65.5 billion page views per month in as little as two and a half years. By comparison, Facebook serves over 65 billion page views per month. If you think it sounds far-fetched that Ning would grow that fast, you’re not alone.
Ning grew only 11 percent from last December to this past March, but then it doubled from March to September, according to Comscore data. The reason for the growth is that Ning launched “Your Own Social Network for Anything,” according to the company. Granted, Ning is still in early stages of ramping up traffic, but traffic growth is still choppy. Expecting Ning’s traffic to double every two or three months for the next few years is brave, to say the least.
[Update: Bianchini says internet history shows users prefer openness, demonstrated by the departure of early internet users from AOL’s walled garden, to launch their own websites. Bianchini’s vision is that masses of users will migrate to Ning because Ning offers that freedom for building social networks.]
Expectations for Ning are high, at least for its investors. Ning’s early backer was Netscape co-founder Marc Andreessen. In June, Legg Mason Capital Management invested $44 million at a $170 million pre-money valuation, a stunning figure, especially because Ning is still a young company. Legg also invested in Zillow, which we recently reported may be in trouble.
Why does Ning need all that money? Randy Befumo, Legg’s director of research, said, “I think that starting Web 2.0 is easy, but scaling it is much more complex. Scale ultimately involves infrastructure and people to make that infrastructure work, who are not free. Further, you can start great apps, but if you want to monetize, you need systems and staff. We see our investments as allowing good ideas to scale and also allowing people to begin monetizing good concepts.”
But with questionable traffic growth for Ning, what needs scaling? Buying more servers and hiring new employees doesn’t necessarily make Ning’s product more compelling to users. Trumpeting the number of social networks created on Ning seems to mask underlying questions about the utility of Ning’s service and whether it can grow into a substantial business.
[Disclosure: Doug Sherrets owns a small number of Facebook shares.]
Tags: co:Ning, inv:Legg-Mason11 Comments
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Pran Kurup said:
How many social networks can you be on? My feeling is that its the same 100-200K users who go around trying all these sites. That doesn’t mean they use these sites on a daily basis. So 115K means nothing.
In the Internet space,when you have a founder with terrific name recognition, more than half the job is done. Its exactly like the dotcom days. You start something, spend a bunch of money marketing and hyping it (that’s why they need all this money!), get a critical mass of users and finally sell out irrespective of whether you have a viable business model or not (Didn’t Youtube do it?). Its the same game being played all over again by a privileged set of people. Good for them!
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Charles Yong said:
“In the Internet space,when you have a founder with terrific name recognition, more than half the job is done.”
I would argue the opposite. Unfortunately, most “internet celebrities” have far less reach than “actual celebrities.” A person with a big name will more easily get their stuff tacked up on TechCrunch, but TechCrunch has a tiny userbase (if you’re talking about “normal” people).
Shocked to hear that? Ask your Facebook friends if they’ve heard of TechCrunch, or your favorite internet mogul. Of the 500 or so friends I have on Facebook, probably 6 of them would actually know about these things.
Of those 6, I’ve only met 2 of them in person, which says something about how I found those 6 in the first place.
Getting funded, on the other hand, is a different story. But with web startups are cheap as they are to start, it’s not that big of a deal.
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Keith P. said:
While early adopters and younger users might be drawn to MySpace and Facebook, many people are overwhelmed by these larger sites. That is where a platform like ning comes in… allowing anyone to build a local/niche social network.
I built one on Ning for my high school alumni association in August and there are now almost 1000 users. The site will continue to grow organically and we expect 10,000 users by june. While these are still not huge numbers, this is just for one high school.
What is interesting is that for MOST of the people that have joined… this is the first time they have ever joined a social network. As a result of being exposed to this network and the easy of the Ning platform, about 30 people have contacted me to learn more about the platform and have started their own networks on Ning. Most people are attracted to it because they aren’t developers or even that tech savy and like the ease of use. While Ning has a free offering, I have no problem paying $20-25 a month to remove google ads and to mask the domain with our own URL.
I also think that Ning is going to explode in china.
Yes I am a huge advocate of Ning and the platform they have built. Not because of any vested interest in the company or personal relationships… but because the product is great and keeps getting better. Looking forward to seeing what they do with OpenSocial.
Keith
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Internet CEO said:
Wow Doug I commend you for sticking your neck out and speaking the unvarnished truth, even though it reflects poorly on one of Silicon Valley’s heroes. (I, on the other hand, am not as courageous and thus am posting anonymously.)
It has always been crystal clear to me that the Ning idea is dead-on-arrival. For many of the reasons you state above, any of Ning’s “social networks” works better as a Facebook Group, period.
The only thing Ning has going for it for right now is Marc Andreesen, who’s track record and celebrity status is enough to attract huge investment and great employees - even for a loser of an idea.
That said, I don’t count out Ning precisely because they have Marc. Great entrepreneurs often go through several bad ideas before hitting on the winner. Let’s see if Marc can make the tough decisions and course corrections necessary here - for the sake of his business, investors, and employees.
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A. Smith said:
I think both Pran and Keith P. are correct here. The difference is informal or impersonal networking (MySpace, Facebook, etc.), versus formal or personal networking (email, phone, etc.) which is the opportunity Ning is betting on. Note that the personal networks are far more limited in monetization opportunities online.
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NDL said:
Doug, great analysis. It’s tough to be the “Bad guy” in an even-handed fashion…which you have done.
I agree with many of the posts…I just feel that we are going a bit crazy on the Social Networking Front. I can only handle 2-3 max and of those, FB is really the only one I use on a regular basis (Linked-In and Doostang occasionally). I think that while Ning has a slightly different approach, it can’t compete long-term with the broad range of services offered under the FB umbrella (now, and as it expands). Even the point that FB is comprised of young users is paper thin, as the older generation begins to use social networking and is turning to the recognized leader–not re-inventing the wheel for those with a few gray hairs.
Marc may be able to keep it afloat, but I think this one’s headed the way of the Dodo.
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Joseph Smarr said:
Doug-I think you nailed it when you said “each social network on Ning has to grow an audience to start from scratch”. In other words, the problem is a lack of good data portability across an Open Social Web. I can imagine lots of people that would want to build custom niche social networks with extra features for their specific area of interest, where a one-size-fits-all social network would be lacking, but it’s asking a lot to make people create new accounts, profiles, friends, etc. just to do that. The Ning platform is really impressive, but the social friction is too high because most of the existing social networks are walled gardens.
But if you imagine a world in which users have control and portability of their own data (including their profile and friends list), then a serivice like Ning would be great because you and your community could easily “pick up and move” into a more customized and friendly environment, continue to do what you normally do in terms of basic profile and friends-list maintenance, and Ning would continue to provide an “up-to-date” experience that’s connected to the rest of your life. More importantly, Ning could focus on what they do best–providing powerful-yet-easy-to-use customization options–instead of having to re-build yet-another-social-graph to provide their unique value.
This is some of the thinking behind the Bill of Rights for Users of the Social Web (http://opensocialweb.org)–until users get control back from walled gardens, a vision like this is going to be hard to make practical… js
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Gerald Zuckerwar said:
I created a network on Ning. And that’s where it still sits today - not a single member.
I run a popular aviation-related discussion forum that brings in about $2,000 per year in advertising revenue. It took a lot of hard work to build and advertise the site. Why should I expend lots of time and energy on a Ning network so that they can collect the revenue? It’s a lot of hard work! They ought to offer a revenue-sharing scheme with the network creators. You win, they win.
http://www.zipityzap.com Internet Television. Cafeteria Style. Seeking investors for a mid-2008 launch.
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Debbie said:
Doug, these are great stats. I am an avid user of Facebook and agree that it is tougher to build network quickly when starting from scratch. After starting to use Ning recently, however, I am an advocate of the site — whereas a custom network might cost $50,000 to build and $20,000 per year to maintain thereafter, Ning offers a decent solution at virtually no cost. In addition, the added features like groups within groups, blogs, and the ability to make the network independent of Ning and free of ads for a small cost are advantages that Facebook has yet to offer.
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Brian McConnell said:
I use Ning, and I think it is well positioned to serve a similar role as Yahoo Groups. It is a great tool for building your own affinity group, for your flying club for example.
I have used it for a couple of projects, and found it to be very useful. Facebook is becoming too noisy, just as Myspace did, so I like having control over the appearance of my site. I am not using Ning to create giant networks, just closely focused groups that work together.
FWIW, I think they’d be smart to focus on fee based services for organizations and businesses. There’s plenty of room to apply social networking there, and more value.
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Ido said:
I would say that Ning gots some impressive ‘features’… however, to me any thing that Marc Andreessen (co-founder of Netscape & co-author of Mosaic and lots of other ’small’ internet startups ;) is involve in is something we should just keep our eyes open.
There is no secret that the minute Ning will have a good rav-share program the ball game will be different!
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