||This article may require copy editing for grammar, style, cohesion, tone, or spelling. (November 2012)|
|Web address||cyworld.co.kr (Korea)
|Type of site||Social network service|
|Available language(s)||Korean, Chinese, English, German, Japanese, Spanish, Vietnamese|
Revenue is generated through the sale of dotori (Hangul: 도토리), or acorns, which can then be used to purchase virtual goods, such as background music, pixelated furniture, and virtual appliances.
Cyworld soon became wildly popular in its home market with 2005 claims that practically every South Korean in their 20s and 25 percent of the total population of South Korea were users. By 2006 its domestic user-base numbered 19 million, but this had dropped to 18 million by 2008.
Its reception in some overseas markets did not prove as enthusiastic, and by 2010 Cyworld ended its operations in Germany, Japan, and the United States. As of 2009, it continues to provide service to the Chinese and Vietnamese markets where it has subscriber bases of seven million and 450,000, respectively.
The idea for Cyworld was born in August 1999 by the ‘EC club’, a club in KAIST techno graduate school that took on online business transactions. The club members got the idea to create a social networking website while discussing topics for a research project. Though most club members abandoned the project after graduation, Dong-Hyung Lee remained to pursue the project, taking the role of CEO from December 1999.
The word 'cy' is a Korean word which means ‘between people’ underlining the networking aspect of the website and connoting a close relation between the website users. However, most misinterpret ‘cy’ as an abbreviation for ‘cyber’ due to its fortis; ‘sai’ corresponds to a more accurate pronunciation of a Korean word for ‘between.’ The original nature of the term 'cy' demonstrates Dong-Hyung Lee's vision for the site. He wanted to create an Internet community that allowed people to form close relationships rather than an Internet community where people seek information for business prospects.
Cyworld at its early stages was quite different from that of today. It was a website that showed a list of members from the same hometown or school. The address book for each member was updated automatically according to the personal information that the members were asked to fill out. It was not a cyber space where people could express themselves but rather a website that allowed people to gain means of contact so members could meet offline. Cyworld at its early stages was far from successful, once at a deficit of 1.5 billion won.
In the summer of 2002, Cyworld launched the "minihomepy" project. It was just about its last chance to turn things around before it had to shut down. CEO Dong-Hyung Lee put contents provider Ram Lee in charge of the project and it was an instant success.
Offering many methods of expressing oneself, the minihomepy had features such as the main picture, history, a profile, photo story, a story room, background music, a photo album, a diary, a bulletin board, video clips, decorating links, etc. One of the main reason for Minihomepy's success was people's dissatisfaction with the "individual homepages" that were prevalent in Korea at the time. While individual homepages were initially widely popular because they enabled people to express themselves online, the programming knowledge(e.g. HTML, FTP) required to create an individual homepage was daunting for most people. Though this part of the problem was partially resolved through homepage programming services such as High Home(하이홈), there still remained a significant issue: the means of communication between individual homepage users was absent. Individual homepages were like "stranded islands" in the vast sea called the Internet. And this desire for communication was solved by Cyworld's new interactive minihomepy feature. Minihomepies were easy to create and maintain. Due to the fact minihomepies had components like visitor logs and comments, provided means of contact as well as features such as diary and bulletin board that set the stage for individual expression; it was amicably received by the public. Members had to become Il-chons in order to gain access to each other’s minihomepies.
The service was officially launched in September 9, 2002. Cyworld transacted its own form of cyber money called dotori(means chestnut). As a vital component of minihomepy, miniroom is a decorative online room furnished with virtual furniture. The items for decoration of the minihomepy and miniroom could be bought through dotoris and people voluntarily spent good amounts of money on dotori as their minihomepy decoration was received to be another expression of themselves.
Cyworld gained further success when in November 2002, its competitor Freechal(which was another networking site for online communities) decided to charge its users 3000won per month. Freechal announced its plans to shut down communities operated by those who fail to pay the fee. This "pay-or-shut-down" policy prompted a horde of members to cancel their subscriptions and move to other free online-community hosts including Cyworld. On the other hand, Cyworld generated revenue from the sale of virtual goods(i.e. dotori) and it seems evident that this policy was more readily received by the Internet community.
Merger with SK Telecom
In August 2003, Cyworld was merged with SK Telecom, a Korean communication company and owner of the domain Nate. The rapidly increasing bulk of its member size was getting too difficult for Cyworld to manage and SK promised resources for further growth in the market. Cyworld still kept its brand name and service. It was incorporated into the SK community department but retained the domain's independence. The CEO of Cyworld Dong-Hyung Lee was appointed as the general manager of the Cyworld department and he moved on to be the CEO of Cyworld Japan in May 2005 until he left the company in December 2008 to pursue other business adventures.
The merger led straight away to significant market success. By the end of 2003, Cyworld gave rise to the term "cyholic"(means addict for Cyworld) and the term "cyjil" (jil is a Korean pun for action, so cyjil means doing Cyworld related activities). It was a sensation among the Korean public, more than tripling in monthly visitors(from 2million to 7million) from early 2003 to November 2003.
The success grew even further when Cyworld began to collaborate with Nate-on, which is SK owned number one online messenger service in Korea. The linkage was established in 2005, allowing Cyworld and Nate-on members to use both services simultaneously by logging into just one site.
In early 2007, Cyworld topped 20 million members for its services(roughly half the population of South Korea) giving rise to the term 'sa-chon era', meaning any two Cyworld members are likely to be Cyworld Il-chons if they go through 4 people. In 2009, Cyworld unified its domain with SK's Nate. This move was meant for "user convenience" as the two domains had over 17million overlapping members. No significant change was made to the site after the union, and in 2011, Cyworld had over 25 million members.
2011 data leakage and decline
As Facebook began its services in Korea in 2009, Cyworld slowly began to lose its status as the only popular SNS service in Korea. According to some research, Facebook's simpler design and function were more appealing and easier to use than Cyworld. And Cyworld did not offer global services, which made it undesirable for people who wanted to contact foreign friends. The introduction of Smartphones to the market was also a key factor in Cyworld's decline. Facebook and Twitter offered stronger interconnectivity with moblie platforms. Kakao Story, a SNS service exclusive for Smartphone users had the advantage over its rivals due to its connection with mobile service Kakao talk which has over 53 million members. Cyworld's inability to keep up with the trend made it fall behind in the market.
Cyworld's declining market share was further aggravated by the 2011 Data Leakage. In July 2011, Cyworld/Nate was hacked into by criminals who stole the personal information of more than 35 million users. Nate had 33 million users and Cyworld had 25 million, and combined, they had about 35 million members. The information for almost all of the Cyworld/Nate members was compromised. This means about 70 percent of the Korean population was exposed. The hackers accessed its system by using an Internet protocol address based in China. Because Cyworld/Nate requires its members to submit personal information for membership, the 2011 Nate Data Leakage was quite detrimental as the hackers had the members' resident registration numbers, phone numbers, and email addresses. Though SK communications insisted that the resident registration numbers and passwords were encrypted and are not likely to be abused even in the hands of the hackers, nobody gave the company the benefit of the doubt.
SK Telecom took measures trying to minimize the harm, but it was soon over flooded with lawsuits demanding compensation for the leakage. It yielded costly lawsuits for the company in a country with virtually no precedent in class action lawsuits. The public’s discontent with the data leak led straight to the plummet of stock prices. The company’s reputation was tarnished and Information-sensitive Koreans moved to other agencies of SNS after the leakage. This phenomenon was directly reflected in the plunging page views for Cyworld/Nate. Between March 2011 and April 2012, the monthly UV(Unique Visitors) and PV(Page View) for Cyworld dropped from 21.5million and 7.5billion to 16.5million and 1.7 billion, respectively. Statistics show that the fall in UV and PV became more dramatic after the July 2011 data leakage.
In September 2012, SK Telecom announced its decision to allow membership for Cyworld without obligating members to register resident registration numbers and name. Minimum personal information is to be asked of the members such as email address and nationality.
Believing that many US teenagers would use multiple social networks and seeking early access to a then-quickly growing market, Cyworld entered the US market in 2006. However, it lost the competition to Facebook in the US market and exited in February, 2010.
In 2006 Cyworld entered a joint venture with a German Deutsche Telekom subsidiary, T-online, and it launched its European version a year later. But strong competition, including StudiVZ and Skyrock, and a saturated market made for dismal future prospects, and by 2008 it had closed operations.
After its domestic success Cyworld began to venture to foreign markets. In 2005, it started its services in China and subsequently entered the Japan and Vietnam market. Cyworld lost out to Japan's Mixi and exited the Japanese market in August 2008. As of 2009, its operations in China and Vietnam were more optimistic where it had seven million and 450,000 members, respectively.
Becoming Il-Chon is how users in Cyworld can begin their interaction. The user can send Il-chon requests for another user to receive. If the request is accepted, the Il-chons can see the content of each other's minihomepy such as Diary and Photos that are not made available to those who are not Il-chons. One can also assign Interest-Il-chon to some of their friends. If Interest-Il-chon is assigned, the user is notified when his/her Interest-Il-Chon updates his/her homepage. The user can also see the friend's online status. Il-chon is originally a Korean word that denotes very close familial relations such as parent and child. Until Twitter and Facebook came out, the Il-Chon system was one of the most popular online social networking tools in Korea.
Minihomepy is essentially a cyber space allotted to each members of Cyworld. By using dotori, the user can decorate it as they see fit. Its features include the main background, history, a profile, photo story, a story room, background music, a photo album, a diary, a bulletin board, etc. allowing for self-expression. The dotori can be used to buy Background skin, miniroom interior, background music, banner, font. Most of the items have a time limit. Miniroom is a virtual room with a minime (avatar), a self-representational space that the users can decorate with virtual “items” purchased with their Dotori. There are also other special features called "Il-chon padotagi," links for surfing the minihompies of fellow Il-chons, and "random padotagi," links for surfing the minihompies of strangers.
It is an online community for Cyworld minihomepy users. Like in the minihomepy, dotori can be used to decorate the clubs. It is not very different from other online clubs in other websites.
Cyworld uses its own virtual currency called dotori (Hangul: 도토리), or acorns. One dotori costs 100 won, and they are used to purchase virtual goods. Prices vary from about 2 acorns for a wall painting or 6 acorns for a song that plays in your mini-room to 40 and above for a background for your homepage for a year. Dotori can be given to Il-chons, and dotori is often given to friends as birthday presents. The term Dotori was suggested by Dong-Hyung Lee in 2002. As the currency unit for Cyworld, Dotori is the main source of revenue for the company. In 2006, 80% of Cyworld's Korean income was generated from the sale of virtual goods.
Cyworld blog is not unlike blogs in other websites. Dotori is used for decorating blog as well. Cyworld blogs permit anyone to access its contents but the user can make it function as another version of minihomepy and allow only Il-chons to view. Wizets, photo logs, bulletin-boards are features of the blog. Cyworld blogs also have linkage with Nate-On..
Cyworld collaborates with NateOn, a widely used instant messenger service in Korea. If Cyworld users buy fonts with dotori in Cyworld, they can use those with NateOn, too.
Cyworld has had a significant influence on Korea's Internet culture. The popular use of the term "cyholic" is indicative of this. Self-expression is a desire that Cyworld can satisfy; Cyworld has provided a cyber space in which the user can readily express his/her feeling to Il-chons. It also has a peeping nature that allows the viewer of other's minihomepy to get satisfaction from learning about the other person’s life. Inversely reflecting the peeping nature, materials and diaries uploaded tend to be somewhat dissembling, if not pretentious, for the sake of sympathies from other users. Aside from such propensity and content of such article, it seems safe to remark that minihompies succeeded in functioning as social platforms through which users can express their personal traits and private thoughts. The minihomepy can be decorated and the decoration can be construed as an exhibition of the individual’s traits. Another unique feature of Cyworld is the number of visitors that is displayed on the upper-left side of the minihomepy. It shows two numbers called today (the number of visitors to the minihomepy on that day) and total(total number of visitors to the minihomepy) If the number of visitors is plenty, the visitor assumes the owner of the minihomepage is popular. Indeed, "What's his today?" was quite a popular phrase among Cyworld users as it is taken by many to be a sign of popularity. Interestingly, online tools that manipulate such ‘indicators of popularity’ mentioned above were produced: for instance, a service that offered to increase the customer’s today by 20 a day,
The diaries of celebrities were vastly popular, bringing about thousands of comments with each entry. Minihomepy began to function as an official way to peep into the celebrity’s life but for the celebrities, it was often used as a means to send out certain images for the public to see. Celebrities have employed their minihomepies as a marketing strategy, using them to enhance their image or to advertise the programs that they are in.
- Cyworld ready to attack MySpace money.cnn.com, July 27, 2006: 11:35 AM EDT
- E-Society: My World Is Cyworld businessweek.com, Sep 26, 2005
- Koreans Find Secret Cybersauce wired.com, 08.08.05
- Tapping into growing market for virtual goods seattlepi.com, November 2, 2009 9:56 p.m. PT
- Korean SNS Cyworld To Withdraw From U.S. and Taiwan telecomskorea.com, 2009/11/09
- Evolution of Social Network Service into Media -Cyworld Case- October 2008 Posted on ica-it.org, A SK Communications slide-show presentation from 42nd International Council for Information Technology in Government Administration Conference in Korea in 2008
- "Koreans cybertrip to a tailor-made world". The Age. 2005-05-09.
- "Will Cyworld Stop MySpace Juggernaut?". GigaOM. 2006-04-16.
- The high priestess of internet friendship ft.com, October 27, 2006
- SK Communications Decides to Close European Unit koreatimes.co.kr, 03-07-2008
- "Interview with the creator of Cyworld: The dream of a countryside boy". 22 July 2004. Retrieved 21 November 2012.
- "A social networking site begins its services". 31 August 1999. Retrieved 21 November 2012.
- "Without Ram Lee, there would be no 'cyjil'". 26 August 2004. Retrieved 21 November 2012.
- "Competitors Cyworld and Damoim form an alliance". 6 September 2002. Retrieved 21 November 2012.
- Kim, Nanha. "A study of the peeping desire in Korean-type Blog (focused on Cyworld Minihompy) written by Nanha Kim of The Graduate School of Ewha University". The Graduate School of Ewha University. Retrieved 21 November 2012.
- "Cyworld set to pass Freechal in community users". The Korea Herald. 29 October 2003. Retrieved 21 November 2012.
- "SK Communications merges Cyworld". 3 June 2003. Retrieved 21 November 2012.
- "Former Creator of Cyworld comes back with location-based SNS". 17 February 2009. Retrieved 21 November 2012.
- "Cyworld becomes wildly popular giving rise to the term "cyholic"". 12 December 2003. Retrieved 21 November 2012.
- "Cyworld and Nate-on launch linkage service". 10 August 2005. Retrieved 21 November 2012.
- "Cyworld tops 20 million users". 6 February 2007. Retrieved 21 November 2012.
- "Nate bulks up, combining main page with Cyworld". 27 August 2009. Retrieved 21 November 2012.
- Yoon, Ja-young (12 July 2011). "Personal info of 35 mil. Nate, Cyworld users feared leaked". Korea Times. Retrieved 21 November 2012.
- "Is homegrown Cyworld giving in to Facebook?". Korea Times. 12 October 2011. Retrieved 21 November 2012.
- "Mobile Internet sidelines Cyworld". Korea Times. 12 August 2012. Retrieved 21 November 2012.
- "Cyworld/Nate face more legal woes". The Korea Herald. 5 August 2011. Retrieved 21 November 2012.
- "Nate, Cyworld users pursue class action amid identity theft fears". Korea Times. 13 August 2011. Retrieved 21 November 2012.
- "Cyworld's PV declines to one fourth of the previous year". 24 April 2012. Retrieved 21 November 2012.
- "Cyworld, T World and 8 other services allow membership with no resident registration number and real name". Hankyung. 25 September 2012. Retrieved 21 November 2012.
- Social network sites battle to befriend US teenagers ft.com, December 20, 2006
- Korean site tackles might of MySpace ft.com, August 31, 2006
- Cyworld Opens German Site Last Week koreatimes.co.kr, 10-18-2007
- "SK Communications 'Cyworld' withdraws from US and Taiwan market". 6 November 2009. Retrieved 21 November 2012.
- "How consumers perceive, interpret, and Use the Cyworld". CAU. Retrieved 21 November 2012.
- "Write Diaries on Cyworld!". 21 April 2008. Retrieved 21 November 2012.
- "Celebrity Minihomepy Marketing:"News of private life for sale"". 11 July 2008. Retrieved 21 November 2012.
- Past Winners of the Award Infosys Official Site
- Wharton Infosys Business Transformation Award (WIBTA) Infosys Official Site