B2.0 does a long story about the Korean sensation, Cyworld, the biggest social networking site there, and its entry into the U.S. market…it has just launched a public beta here, after heavy U.S.-specific customization.
The service, owned by SK Telecom, the biggest telecom firm there, has about 18 million Korean members, or more than a third of the country’s entire population. And 90 percent of all Koreans in their 20s have signed up, more than say MySpace’s penetration here.
How does Cyworld make money in Korea? There’s relatively little advertising and a whole lot of viral marketing, and the bulk of Cyworld revenue comes from the sale of virtual items worth nearly $300,000 a day, or more than $7 per user per year. By comparison, ad-heavy MySpace makes an estimated $2.17 per user per year, the story says. This year Cyworld expects to contribute $140 million in sales, with virtual items accounting for 70 percent.
SK plans to invest about $10 million into U.S. launch, and Cyworld hopes to attract 2 million American members by the end of next year.
Although the store will open with more than 5,000 virtual items for sale, Henry Chon, who is the CEO of Cyworld USA expects to make more money in the U.S. from advertising than from sale/use of virtual money. The pay-to-decorate model may be appealing—it’s why venture capitalists are calling every other week to ask if they can invest. (The answer is no.) But Cyworld expects that no more than 15 percent of members will actually pay for acorns in the early stages