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SpirE-Journal 2007 Q3

The Paradigm Shift in Online Communications

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The Paradigm Shift in Online Communications

Since the birth of the Internet, the Web has been a platform for relaying and obtaining information. However, the emergence of second generation Web-based communities and hosted services are increasing dramatically. This article looks at the impact of this trend on information flows in Asia and why businesses cannot afford to be silent online.

Bonding online

Thanks to advances in technology, the Internet has become irreversibly more interactive and “democratic” in the way information is exchanged. It has also undergone a revolutionary change towards becoming a platform for social networking as opposed to pure information exchange.

Social networking Websites are essentially built from online communities of people who share interests and activities, or who are interested in exploring the interests and activities of others. These can be divided into E-communities (userdriven sites) and social media (peer-to-peer online platforms).

The rapid development and the rise in the number of Internet users are key reasons for the growth in such social networking sites. As of June 2007, there were an estimated 1.17 billion1 Internet users worldwide, representing an increase of 225 percent as compared to 2000. The worldwide online population is expected to increase at a compounded annual growth rate of 6.6 percent over the next four years. The Internet community is expected to surpass the 1.5 billion2 mark in 2011 which means that by then, nearly a quarter of the world’s population will be connected online.

Asia is in the midst of an exciting economic revolution where GDP growth is virtually unprecedented and computing technology has become pervasive among some segments of the population. Housing more than half the world’s population, Internet penetration in the region was a mere 11 percent in 2000. The number has since tripled and Asian users now command 36 percent of global Internet connectivity (see Fig. 1).

In Asia, China, Japan, South Korea and India have the highest number of Internet users, respectively. China, South Korea and Japan combined account for more than half of the region’s internet population (see Fig. 2).

By 2006, more than 90 million Internet users in Asia-Pacific had subscribed to broadband (including over 75 percent of Korean households), gaining higher speed access, minimizing download durations and raising the popularity of multimedia applications.

Prevalence of Online Networks

In the past year, social networking has taken off globally. Statistics house comScore recently released some figures on how quickly a handful of popular social networking sites are growing worldwide (see Fig. 3).

Tagged, one of the rising stars in the social networking world, registered an astounding growth of 774 percent from June 2006 to June 2007. The site saw a total of 13.2 million visitors in the same time period. Tagged has also the most “balanced” base of users around the globe4 – 22.7 percent of its base from North America, 14.6 percent from Latin America, 23.4 percent from Europe, 10 percent from Africa and the Middle East, and 29.2 percent from the Asia-Pacific region (see Table 1).

 

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In South Korea, the popularity of E-communities is largely attributed to Cyworld, one of the oldest and most successful social networking sites in the world. The site’s mash-up of social networking, blogging and music and video sharing has drawn about 20 million users in Korea, a whopping 40 percent of the country’s total population. With an estimated 100,000 daily video uploads in 2006, Cyworld actually has more traffic than the highly touted YouTube. The site is also the second largest music store in the world after iTunes. Thanks to its unique readership profile, South Korea has also seen the world’s first successful online “citizen newspaper”, OhmyNews, where the reading public contributes a majority of the reports.

Japan’s Mixi is the fastest-growing social networking site in the country. Though its current user base stands at 5 million, a far cry from today’s top community sites, its membership was reported to have quintupled in 2005. At 7 billion page views a month, Mixi only trails giants Yahoo! and Google in Japan’s online traffic.

The social media bug is also catching on quickly in China. The country is estimated to have 60 million bloggers at the end of 2006. Encouraged by enthusiastic online participation, several companies have been competing to become the Chinese MySpace – one of the more successful among these, WangYou, has garnered 8 million users since its launch in May 2005.

Corporate involvement online

Time magazine named “You” as its person of the year in December 2006, testifying to the public’s role in transforming the Web. Identifying a collectivity rather than an individual reflected the way the Internet is shifting the balance of power within the media through blogs, videos and social networks.

“It’s about the many wresting power from the few and helping one another for nothing and how that will not only change the world, but also change the way the world changes,” Time magazine’s Lev Grossman wrote.

The growth of social media means that online activity has never been more important when it comes to marketing and customer relationship management. At the center of much of this renewed interest is the E-community.

According to a recent study by Spire Research and Consulting (see Fig. 4), just over a quarter of the MNCs in Asia currently use E-communities to reach out to their customers. Of these, more than half feel there is improved efficiency over traditional media.

One compelling reason for participation is the ability to focus more effectively on target groups. Online communities usually have common demographic, psychographic or geographic characteristics. Another is the ability to reach large target audiences in a fast, cost-effective manner. The most widely targeted E-communities comprise subscribers in the 21 to 40 age group.

Common corporate strategies include paid advertisements in the form of popup windows or banners and sponsorship of contests related to their industry. These are, however, transitioning to interactive platforms. Kodak, for example, traditionally offered digital cameras as prizes for photo-shoot contests within photography-enthusiast communities. It went on to announce the Kodak EasyShare Gallery, an image-hosting Website, where members can share photos and buy prints online.

More than a third of the MNCs that currently do not employ E-community channels in marketing efforts recognise a greater need for such a strategy in the medium-term (next three to five years).

The Web has made such broad collaboration possible, and perhaps even more effective than traditional communication tools. A regional strategy is, however, a challenge in Asia, with its socio-economic diversity and 2,269 languages. Most of the wildly popular Asian social networking Websites, such as Cyworld, are catered to single countries.

Still, online communities will irrevocably transform media in Asia, as they have done in the West. Firms in the Asia-Pacific are only beginning to wake up to the opportunities created by E-communities. In time, the interactive and collaborative possibilities of E-communities will enable them to outflank traditional media to become the main arena for the marketing battles of the future.

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