Digital World: A winning business model

Web 2.0 invitation-only sites are really nothing more than "poseurs" - a nice way of saying "hypocrites."

By DAVID SHAMAH
September 25, 2007 08:05

 
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Web 2.0 invitation-only sites are really nothing more than "poseurs" - a nice way of saying "hypocrites." While they won't let you in without an invitation, they're more than happy to have you invite your friends and contacts - once your "in." What gives? One minute you're not good enough to make the grade on your own - a member of the "lower classes" who doesn't rate admission on the bouncer line of Internet life - and the next minute you're a "valued member" whose very word is gold, who can recommend anyone and everyone for membership in what just a short time ago was a super-exclusive club that you had to practically beg to get into?! Examples? Sure. As I mentioned last week, game site Moola (http://moola.com) is an invitation-only site - the better to up its cachet among the Internet hoi polloi. But check out this page at the Moola forums (http://tinyurl.com/2pxa2n). It turns out that you don't really have to know someone; it's enough to post a request in the Moola forums to get invited, because "Moola members often have spare invitations available and are happy to provide them to potential new members." And how long does one have to wait to get "in da club?" Answer: "The normal wait time will be between 5-30 minutes." Admittedly, other sites - usually the more popular ones - have more stringent policies in which you have to "earn" invitations before you can send them out. But even sites like these eventually break down; users of Joost.com can now (since May) distribute unlimited invitations; formerly, they were selling them on eBay. In fact, formerly exclusive Joost is now so unexclusive that this guy (http://tinyurl.com/yrc56n) put up his login and password for the world to see, so that they could invite themselves from his account! Last week, I claimed that these invite-only sites were using invitations to up their status - to make themselves seem like a hot item. Some don't really need the extra hype; from personal experience, I can tell you that Joost is a great service. But other less fortunate sites are apparently relying on the invitation exclusivity formula in order to up their images. If that's the case, why not keep up the facade of exclusivity? Why is it "kosher" to send out invites en masse to your buddies when you're in - but not when you're out? Because, obviously, sites need users; and if they don't keep getting new ones, they will wither away and die. Many people sign up for Web sites and use the services once, twice or even thrice - and then move from being active to inactive users. Even the most "useful" sites with the longest waiting lists (the P2P download sites, of course) face the danger of becoming yesterday's news, as new sites pop up, featuring better download times and the advantage of being "new." Thus the policies on many sites - in answer to the double edged problem of remaining cool but opening up to as many users as possible, sites require that you get on line in order to bask in their coolness - but once you've been pronounced cool, you're encouraged to enroll as many of your (doubtlessly) cool friends as possible. And, in order to make sure you get the message, many sites will kindly offer to parse your e-mail contacts list and send out invitations to anyone you want it to - and, in some cases, everyone, even if you don't want them to. That apparently is the case with a "social networking" service called Quechup, which, upon your consent, will sent a viral invitation to everyone in your e-mail contact list, whether or not you planned to invited them; according to the Quechup terms of service, "By inviting contacts you confirm you have consent from them to send an invitation," implying that the site has your permission to send anyone in your contact list an invitation (since you clicked on the "invite contacts" button). Complaints about Quechup spam have been rife over the past month or so - you may have gotten one (or a dozen) yourself. Hopefully, you checked these people out before accepting the invitation! If you didn't, you can expect irate messages from people in your contact list - which probably includes casual correspondents who may not be so fond of you. I've got plenty of such contacts, who have sent me nasty letters because they didn't like something I wrote - and I can imagine the letters I'd get if I allowed Quechup to spam them! Note that I haven't include a link to the site here (although you could probably figure it out if you wanted). I don't want people surfing there - it's that dangerous. Now, of course, Quechup's reputation is down the toilet. According to Alexa.com, the site's usership shot up in the first week of September, when the company's "viral advertising" system kicked off - and has been falling ever since, until this week, it's down to almost the same (very low) level of usage it had before it kicked off its sign-up campaign. Pretty dumb business model, don't you think? Quechup's name is mud, as should have been expected, considering the general public outrage against spam. Whatever rapid growth Quechup's management (a company called iDate) anticipated, those models are now in the trash. But as savvy Web 2.0 entrepreneurs, how could they not have seen this coming? Think about this: Maybe the objective of Quechup wasn't to develop Quechup itself, but to develop - and prove the viability - of this automatic invite-spam used by the site! You have to wonder about a lot of sites in general; how do they expect to make money offering free services that have many competitors? There are plenty of social networking sites on the Net, all of them offering services for free; there is no way Quechup could make money by charging for services. Ditto for competing sites, by invitation or not. While some seem to have a logical business plan for expansion into premium (paid) services, most seem to be relying on advertising for their growth - a gamble that the odds are not with. Can sites like Quechup be that naive? Or is there more here than meets the eye? If the Quechup people have developed a foolproof system to parse users' address books with or without their consent (or maybe even knowledge), they have a product which will probably make them more money than a dozen social networking sites. What advertiser wouldn't be interested in a huge database of active, legitimate, socially connected users, who could then be collated into interest groups based on location, product preference, etc. After all, if they can read your address book, what's to stop them from searching your e-mail (very easy to do in Gmail, for example) for keywords that could build a profile on users, showing their interests, occupations, etc. How valuable would that be? Then there are the phone numbers, Social Security numbers etc. And while I don't think a "legitimate" company would sell such information to data theft rings, you never know. In truth, I prefer Quechup's style over some of these other invitation sites, who also claim "we won't automatically send invitations to all of your contacts" (does that mean they will send invites to "some" of my contacts - say, A through Y instead of through Z)? At least with Quechup, you know where you stand; with other sites, I have a strong suspicion that, despite their claims to the contrary, there's a legal out buried way down deep in their Terms of Service that lets them build up their own data-parsing product. Be very suspicious. http://digital.newzgeek.com

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