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Cyworld Creating And Capturing Value In A Social Network Case Solution

Solution Id Length Case Author Case Publisher
1918 660 Words (3 Pages) Sunil Gupta, Sangman Han Harvard Business School : 509012
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Cyworld original means for collecting revenues were through virtual gifts. This model was fast becoming obsolete, and the company’s profits started to turn into losses with new and bigger social networking websites dominating the South Korean market. The paid items consisted of virtual gifts and music. The company’s revenues can increase by offering to sell music which these users can then listen and share. The only problem is that item sales were the founding source of value creation for Cyworld, and this avenue was losing its interest among users.

Following questions are answered in this case study solution

  1. How is Cyworld different from Facebook and MySpace? How are these social networking sites different from other large websites such as Amazon, Yahoo, or YouTube?

  2. What should be Cyworlds business model: paid items, mobile networking, or advertising? Should Cyworld explore any other areas of opportunity?

Case Analysis for Cyworld Creating And Capturing Value In A Social Network Case Solution

1. How is Cyworld different from Facebook and MySpace? How are these social networking sites different from other large websites such as Amazon, Yahoo, or YouTube?

Cyworld started off as an independent social networking company by some college students. It was bought by SK communications in 2003 and grew exponentially until 2007. Both these companies were South Korean. Cyworld generated its revenues by selling virtual gifts on its website, where people would buy gifts to decorate their home page or gift them to a friend. The proposed change suggested a shift from this model as even major US social networking players like Facebook and MySpace were not employing advertising based models to generate revenues.

Cyworld was not like Facebook and MySpace. It was focusing on solely social networking with very limited advertisements. Their focus was not shifting from their core concept. The value proposition of the company was suggested to change, and some sort of a hybrid was suggested which would combine the elements of Facebook with websites such as YouTube and ITunes. Under the new changes, media platform and blogs were incorporated into the websites where users can share pictures, music and videos. The original concept of a small, clean community had changed for Cyworld.

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