Cyworld is a social networking site, not big, and attempts to go abroad have failed in both Europe and Japan. Currently, they don’t even have an English interface. However, Cyworld got my attention because of their business model, and the generated revenue they receive from it.

While the majority of the social communities get their income primarily from ads, Cyworld demonstrates that a online community can run it’s business better then Facebook, solemnly with E-commerce activities.

The business model works like this: Anyone can register a Cyworld account for free, but extra’s such as a colorful skin, or some background music will cost money. My friend bought me a theme song for my startpage for about one dollar. Since their music service started in 1999, the site sold about 160 million songs, making it the second-biggest music store in the world behind iTunes. This could be because of the enthusiastic user base. More then half of the South Koreans own a Cyworld page, and they are very active. In 2006, Cyworld had more video uploads then Youtube.

Cyworld proceeded to about $200 million in revenue last year. While Facebook generated about 150 million revenue last year. In comparison, Cyworld has only 20 million active users, were Facebook has 60 Million.

Thus, Cyworld is small but generates more income then Facebook. This could be because the South Koreans spend more time online. If you ask me, I prefer social sites to create income from E-commerce activities, rather then social ads or banners. What do you think?

I created a account on Cyworld, add me at http://tinyurl.com/3lq9ne I got online with some help of Jay Fraser, who created a guide in English.