Must be in the vicinity
International growth by U.S. Web giants hinges on local focusNews this week that social networking site Facebook is preparing to translate its service into non-English languages highlights what arguably is the key strategic challenge facing all Web 2.0 warriors: how to turn national success into global domination.
Facebook founder and CEO Mark Zuckerberg has made it clear that expanding outside the English-language market is key to maintaining the company's dizzying growth rate. At a conference last week in New York, he called "global expansion and being able to handle it" the company's biggest challenge.
Certainly, the next-generation Web giants already have a worldwide reach. According to Internet ratings group comScore, of YouTube's 76 million unique visitors in July, fewer than a quarter originated from the U.S. About one-third of MySpace and Facebook users are based outside North America.
But break down the numbers territory by territory, and the U.S. hold looks less certain.
In France, the Skyrock Network — an extension of a local youth-oriented radio station — is the country's leading social networking site, with 9.4 million unique visits in August, four times more than MySpace in France.
In the U.K., independently controlled Bebo.com leads the pack. In Japan, the site of choice is Mixi.jp. In Germany, Facebook clone StudiVZ.de is the territory's No. 2 social networking site, close behind MySpace.
"Social networking sites are founded on their ability to allow Internet users to communicate quickly and informally with one another," said Delphine Gatignol, comScore's business development manager for France. "The dominance of Skyrock Networks in France is a strong indication that language is a key factor."
Adam Berrey, vp marketing and strategy at Internet services group Brightcove, added: "Not all content is local but a lot is. News, jokes, politics — these all arise out of an everyday experience that is happening in a specific place in a specific language. This can give an advantage to local companies, which really know their community."
For U.S.-based Web 2.0 companies, then, going global means more than just translating content. To attract international traffic, a site needs to adapt its service to the local culture.
"A lot of times U.S. companies have struggled in not getting the cultural aspects right," said Travis Katz, GM of international operations at MySpace. "Being culturally relevant matters a lot. We're in 20 countries, and we hire people (abroad) who are cultural tastemakers who are very deep into music, film, fashion, video, comedy. We try to take their advice and feature content that is cutting-edge."
The most extreme example of this for MySpace is Japan, where the company "completely changed everything" about its local site — jp.myspace.com — to better suit Japanese tastes.
"It's the most extremely different culturally from the U.S. taste," Katz said, adding that the changes were needed to serve the Japanese users, many of whom access MySpace from mobile devices.
The strategy seems to be paying off. According to comScore, MySpace has 20 million unique users in Europe and is expanding rapidly in the Asia Pacific region.
Bob Ivins, executive vp international markets at comScore, attributes the relative success of sites like MySpace to their ability to cater to local markets.
"These sites are founded on their ability to allow Internet users to communicate quickly and effectively with one another," he said. "As MySpace.com's European success shows, language is an important factor. Being able to develop local-language pages has allowed them to attract traffic from a number of European countries."
This is in sharp contrast to Facebook. Although recent figures from Nielsen// NetRatings had Facebook outpacing MySpace in such English-speaking countries as the U.K. and Canada, Facebook is all but unknown in non-English-speaking territories.
That might change as Facebook starts an aggressive international rollout. But the big national players aren't standing still, either. Increasingly, U.S. companies aren't facing a series of small local competitors but rather groups of pan-national companies.
Skyrock has launched versions in English, German, Spanish and Dutch, with others to follow.
StudiVZ.de operates portals in Italy, France, Spain, Poland and Latin America. Almost half of the 18.2 million users who tap into Bebo.com every month do so from outside the U.K.
Arguably the most successful of the non-U.S. Web 2.0 companies is Dailymotion. The Gallic video-sharing site claims to be the world's No. 2 behind YouTube and is now among the top 50 most-visited sites worldwide, with about 38 million unique visits in May.
Dailymotion launched in March 2005 — ahead of YouTube — and remains independent from mainstream media groups, though it is reported to have been in talks over a minority stake with a number of potential partners, including Viacom. "That gives us the freedom to sign deals with whoever we like," said Martin Rogard, Dailymotion's director of content. The company recently raised $34 million in fresh capital and inked a deal with eBay to host sellers' videos.
But for both U.S. and European companies, China presents the greatest challenge.
A combination of state restrictions and a vast local market have made it difficult for foreign companies to get a foothold in the Internet space. Even leader Google trails China's Baidu.com search portal in the territory.
There are more than 100 local challengers to YouTube, including Todou.com (the largest video sharing site in China) and Ku6.com, and a similar number of social networking sites such as Facebook-style Xiaonei.com ("on campus" in Chinese) and Linkedin copy Wealink.com that have duplicated the look and functionality of their Western counterparts.
Ku6 sales manager Lili Li said that while net users in Japan are similar to those in the West, China is a special case.
"China is different. It is still learning and developing and learning from the more developed countries, and the market is in its infancy," Li said. "There are so many challengers in China because it is a huge market. Local players know their own market."
While Li said Ku6 has no plans to expand internationally, some Chinese startups already are seeking customers outside China with English-language Web sites.
The U.S. startups won the first Web war: Despite the rare exception like China's Baidu, Google, Yahoo, eBay and Amazon dominate the world's virtual space. But the worldwide battle is still raging, and despite their early lead, U.S. companies are not certain of victory.
"It is very much an open field," Brightcove's Berrey said. "The huge Web 2.0 companies today didn't even exist two to three years ago. There's a lot of competition out there, and a lot could change in the next couple of years. The die has not yet been cast."
Scott Roxborough reported from Cologne, Germany; Charles Masters reported from Paris. Alex Woodson in New York, Leo Cendrowicz in Brussels and Richard Trombly in Beijing contributed to this report.