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Social networking sites see rise in competition

Like thrill-seeking teens driving up and down a main drag, kids on the Web have cruised endlessly over sites like MySpace, and they want more. More action, that is.
/ Source: Forbes

Like thrill-seeking teens driving up and down a main drag, kids on the Web have cruised endlessly over sites like MySpace, and they want more. More action, that is.

MySpace's share of traffic among the top 20 social-networking sites shrank 1 percent from October to November, according to online monitoring service Hitwise — and while it still owns more than 81% of that category — its users are going exploring.

"I still go on MySpace and Facebook," says 21-year-old San Francisco resident Matthew Gorman. "But it's like a revolving door. You check your messages and you leave. There's just nothing to do."

But Gorman found a new site — — that entertains him enough to keep him coming back for 40 hours a week. Xuqa relaunched in August as a social-networking-site-cum-contest, where users compete for popularity points by accumulating virtual kisses and hugs, winning poker games, spending "peanuts," and even filling out surveys and looking at ads, all to attain status levels.

Only a few enterprising kids have "won" Xuqa by reaching the highest popularity level — 10 — and claiming a $1,000 prize. One or two Xuqa members have won rock band and modeling contests and the chance to be considered for agency representation. The site has more than 1 million members, who spend an average of 20 minutes on the site each time they visit, and the company is profitable, according to its 24-year-old co-founder, Ali Moiz. The site's ad-viewing incentives drive the average revenue per user up higher than typical social networks, he says.

"There's always stuff going on," says Gorman. "Once more [MySpace users] find out about this game, they'll realize what they've been missing."

Xuqa makes the transition easy — MySpace members can cut and paste their profiles into Xuqa — but like Gorman, most won't delete their profiles on the big networks. Moiz thinks social networking users have the attention span for more than one community.

Overall, the number of social networks evolving into games is on the rise. "Any site with a digital incentive system — like currency, avatars and control over the environment — is a game," says Moiz.

In November, Yahoo! bought, a social networking site designed to host performance-related contests of all kinds, for an undisclosed amount. Users watch videos, listen to karaoke and look at photos, then vote for "winners" based on their opinions of the submissions. Winners receive prizes awarded by the contest sponsor. But a social site doesn't need prizes and winners to feel like play.

Full-fledged virtual worlds, replete with money, customizable cartoon alter-egos and relatively scarce goods, are growing in number and popularity. Finland's Habbo Hotel and Korean SK Telecom's CyWorld have both made themselves available recently to the U.S. market, while Linden Lab's Second Life has amassed nearly 800,000 members in the U.S.

These companies don't market their online locales as games, but there's no getting around the role-playing element associated with representing oneself with a digital avatar. Avatar-based chat programs like IMVU and Gaia Online are also gaining popularity among teenagers. These sites are often described as similar to Vivendi Universal's hugely popular online role-playing game World of Warcraft, without the weapons, monster-slaying and excessive geekery.

But if perfecting an online look and collecting virtual trinkets and friends are game-like behaviors, then News Corp.'s MySpace fits the bill, too. After all, the glitzy profiles and thousands-long friend rosters at MySpace and other sites are essentially proof of social capital.

Just ask Brant Walker, a Web design student at San Diego's Platt College, who founded "Fake Your Space" in late November. In just two weeks, his startup found more than 300 customers willing to pay for fake friends for their MySpace profiles. But these aren't just any friends — they're male and female models who leave racy comments and photographs in their digital wake.

"What most of my customers want is simply to be liked," says Walker. "This will help them be perceived as desirable." His business is proof that MySpace is a competition for popularity, he says. The person with the most friends wins.

Xuqa's Moiz echoes the same thoughts about the company's original user base — those that showed up before the site turned into an elaborate contest. "I could just tell they were looking for attention," he says. "They wanted to be celebrities. The best way to give them that was through competition."