Friendster's Identity Search

June 13, 2005 — -- When Taek Kwon takes the reins today as CEO of Friendster, he'll have his work cut out for him in getting the once buzz-worthy company back on the road to profitability.

The social networking Web site was a media industry darling as recently as a year ago, racking up subscribers and page views while being named one of Time magazine's 50 Coolest Web sites in 2004. But more recently, a wave of competition and stagnant U.S. page views have left Friendster searching for an identity that might lure subscribers back.

"Friendster used to be the only game in town, and a lot of people copied off of that success," Kwon said. "The landscape now is that there are a lot more options, which has really changed the competitive landscape."

The Friendster Web site launched in 2003, offering users a place to link up with existing friends, friends of friends, their friends, and so on down the line. The site was billed as a place to make dates, find activity partners, open up business opportunities or whatever other purpose users chose. The concept quickly made Friendster a hip Web destination, and the company now boasts more than 16 million worldwide subscribers.

But analysts say the challenges within the Internet's "social networking" segment have changed dramatically since 2002, when the company was founded. Similar services have sprouted up, fragmenting Friendster's user base as other sites moved quickly to identify specific niche audiences to lure page views.

"There was a lot of investment into this segment that was eerily similar to the late '90s boom. They figured, 'We'll get a big audience and then figure out how to make money later,'" said David Card, media analyst with Jupiter Research. "But they might be realizing that just signing up users is useless."

Competing start-ups have gone in several directions. Some, like linkedup.com, appeal to business networkers while others have morphed into cyber-dating services that charge fees for access to their networks. The current king of the block in terms of viewership is the music-related MySpace.com, which approached 13.5 million unique U.S. page views in April, according to comScore Media Metrix. Comparatively, Friendster had 984,000 unique views in April, down from 1.1 million in April 2004.