TECH TALK: Cyworld: Success (Part 2)

Tomi Ahonen in September 2006 wrote how South Korea’s inherent advantages helped Cyworld succeed:

Cyworld is based in South Korea, the most digitally advanced country in the world. It has every advantage. The highest broadband penetration rate in the world – or actually neck-to-neck with Hong Kong to be precise. The highest penetration of 3G phones (over 50%, Japan a close second). The first country to launch mobile digital TV broadcasts over a year ago and already over 4% of all South Koreans have bought the new top-end TV-phones (there are no handset subsidies in Korea so they pay from 500 to 800 dollars for these ultimate top-end phones). 4% might not seem like a high number, but it is incredibly rapid. Blackberry is considered a big success. It has spent 5 years and still does not have 4% of the American population. Apple’s darling, the iPod, took well over three years from launch to break 4% of the USA population. 3G next generation mobile phones first launched in Japan five years ago, took over three years to reach 4%. So for a gadget more expensive than a Blackberry, iPod or 3G phone (subsidised in Japan) – that TV-phones have achieved 4% penetration in little over one year is quite impressive indeed. But I digress – about Digital Korea.. Credit cards? 50% of South Koreans already use the credit card or debit card function on their mobile phones. The cities are now building intelligent parking lots to tell you where is the nearest available parking place. One in ten Koreans play online videogames every day. Worldwide about 5% of all web users maintain blogsites, in Korea it is over one third of the total population. 45% of all music sold in South Korea goes directly to mobile phones – note that iTunes accounts for only about 5% of the music sales in the USA. The Korean government aim is to have a robot in every home in ten years. South Korea is truly science fiction.

Specifically the monetary dimension of Cyworld was founded on solid economics. The Cyworld users would buy and sell content using a payment mechanism called the acorn (worth about 10 cents). These can be easily purchased on your mobile phone. So right from the start, Cyworld had a solid economic foundation to rapidly grow and build a robust foundation for success.

BBC News wrote in May 2006 about the influence that Cyworld has had on South Korean culture:

One in three South Koreans has a Cyworld membership and amongst people in their twenties the take-up is 90%. Jae-yeon says even her mother has signed up – and leaves messages for her daughter on her Cyworld page every day.
At Cyworld’s headquarters, 3,000 servers handle traffic for the virtual world in a control room fit for a space mission.

The business is profitable – with most of its revenue coming from selling all that virtual furniture – and is expanding into China and Japan. “We have a new word in Korea” a manager tells me proudly – “Cyholic – for someone who is addicted to Cyworld.”

Young Koreans are now so accustomed to running their lives via the internet that they find it difficult to conceive of how life would work if the technology wasn’t there.

Back at her apartment I asked Jae-yeon what would happen if the internet crashed and she couldn’t get to her Cyworld miniroom. “For how long?” she asked, a wave of panic crossing her face. “I just don’t know how I would cope.”

This is what Wired wrote in an article in August 2005:

“The word Cy in Korean means ‘relationship,'” said Cyworld executive Rick Kim. “Cyworld, therefore, literally means ‘relationship world.’ It underscores our commitment to creating an environment where wholesome, friendly relationships are created and maintained.”

Cyworld user Shin said Korean social customs contribute to Cyworld’s success. “Everyone (who visits your page) starts leaving you messages,” said Shin. “If you don’t write back or leave a (guestbook) message on their site, they get upset.”
In Korea, not responding in a timely fashion is seen as rude and upsetting. The end result is a “vicious and unending cycle of messages,” Shin said. “You can literally spend all day on the site writing everyone a message.”

Cyworld uses real names for users’ pages, so if people meet at a party, it’s increasingly likely they’ll swap Cyworld addresses, not phone numbers.

“Instead of asking for a phone number or e-mail address, people ask, ‘Do you Cy?'” said user Jennifer Park.

Tomorrow: India


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Rajesh Jain

An Entrepreneur based in Mumbai, India.