“Ning” Always Sounded Dirty
Posted on January 6, 2008
Filed Under Web 2.0 Kool Aid |
And according to a group called “CPM Advisors,” it is. Apparently, quite a few of the most trafficked Ning social networks are porn-related. Allen Stern at Center Networks has asked “Is Ning a Porn Facilitator?” and Valleywag has “Is Marc Andreessen running a porn ring?”
In the past, I’ve said that Ning is little more than Yahoo Groups 2.0 and I find it interesting that, in his response, Marc Andreessen mentions Yahoo Groups:
Yahoo has always had an enormous amount of adult activity and material — some estimates are that as much as half of Yahoo Groups’ activity is adult in nature, for example.
Marc goes on to argue that Ning is “pro-freedom” and so long as the adult content found on a Ning social network is legal, the company will allow it to stay. Frankly, I don’t take issue with this stance.
But I do think the situation highlights just how risky the $44 million investment in Ning is (an investment that was rumored to leave the company with a quarter a billion dollar post-money valuation). Here’s the bottom line:
- Ning is still nothing more than Yahoo Groups 2.0 and as Marc noted, a huge chunk of Yahoo Groups is little more than a virtual Red Light district. While this might generate traffic, it’s not the type of traffic that is going to be highly-monetizable via mainstream advertising.
- While Ning does offer some segmentation features, any company that offers this type of social networking platform to a diverse range of users is going to face challenges. Although it’s quite possible that a Ning church group’s members will never have their space “invaded” by a Ning porn group’s members, there mere fact that such groups exist on the same platform can create problems. If certain groups were to find out that Ning “supports” porn, for instance, it would not be unreasonable to expect that some will move elsewhere out of principle.
- Some commenters on TechCrunch have made the erroneous assumption that because Ning is being used by pornsters, it is doing something right. First, ostensibly the adult-oriented social networks on Ning are primarily being set up by fans of porn, not porn businesses. Second, that the porn industry has often been at the forefront of technological innovation is irrelevant to this discussion. Not everything the porn industry does is innovative, and for Ning, the use of its platform for adult-oriented social networks probably provides little financial benefit as I know of no porn sites that make money hand over fist that are monetized by mainstream advertising. Unless Ning plans to jump head first into the real porn business, adult-oriented Ning social networks, as noted, are unlikely to generate massive revenues and could in fact be a liability.
At the end of the day, I’d observe that, as I predicted, Ning does seem to be following the same development path as services like Yahoo Groups. That is, it is attracting a lot of small groups and many of these are “lowest-common-denominator” groups. While there is definitely a market for these types of services, I sincerely doubt that when investors poured $44 million into Ning on such a rich valuation, they were hoping for these kinds of results. eGroups (which became Yahoo Groups) was purchased for $432 million in Yahoo stock at the height of Bubble 1.0, however given the current dynamic in today’s market, I don’t see a blockbuster acquisition in store for Ning anytime soon. And if the rumors about the valuation Ning received are accurate, the company would need to be acquired for over $500 million for investors to make a decent return. If I was a betting man, that isn’t a bet I would take.
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Drama 2.0 spikes the Web 2.0 kool aid by providing a critical analysis of Web 2.0 startups and the impact of Web 2.0 on the media industry. Other topics are explored when Drama 2.0 has a slight buzz. Read more about the Internet's version of Keyser Söze here.
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