Betting that the social networking niche of the online services market will become broader and more established, Emode.com has tripled its social networking members by buying competitor Ringo, Emode announced on Thursday.
Also on Thursday, Emode, which was founded in 1999, changed its name to Tickle and appointed Samir Arora as its chairman.
Web sites that offer social networking services let users post profiles of themselves and join online communities so they can contact and be contacted by others for a variety of purposes, such as dating, career networking, friendship or advice. These sites are often described as "viral" because their usage grows mostly through word of mouth and user referrals.
By acquiring Walnut Creek, California-based Ringo and its approximately 350,000 members, Emode is increasing its social networking rolls to more than 1 million people, said James Currier, Emode's founder and chief executive officer (CEO). The companies did not disclose financial details of the cash and stock deal, which has already closed. The deal, officially announced Thursday, puts Emode in second place in the social networking space in terms of members behind leader Friendster, Currier said.
Although social networking is an emerging and interesting phenomenon, it remains to be seen if it will evolve into a solid business model, analysts said. "I don't know that this is a market yet," said David Card, an analyst with Jupiter Research. At this stage, social networking is more of an online feature than a market around which a real business can be built, he said.
"Social networking is about a year old and it's very much in niche status, mostly that of younger people interested in connecting with others," said Charlene Li, a Forrester Research analyst. Yet providers of social networking services are attracting venture capital funding, mostly because these Web sites have found a new way to attract users, and thus have new opportunities to generate revenue, she said.
"It's interesting because it turns on its head the traditional media model, which is to post content and get people to come in and look at it," she said. Users of these sites come not to look at traditional media content but to hang out with friends and peers with whom they share interests, Li said. "The ability to leverage this and understand its value, to tap into these relationships as a foundation for bigger things, can be very interesting," she said.
The Ringo service, launched this year, will be progressively integrated with the Emode service until both are completely fused, Currier said. Ringo members are being notified of the acquisition via e-mail and through notices on the Web site, and have the opportunity to exit the service if they so choose, Currier said.
Emode, based in San Francisco, is a privately held company with 55 employees that has been profitable for the past six quarters, Currier said. In addition to the social networking services, it also offers a matchmaking service, to which about 2 million people now subscribe, he said. Emode also offers a variety of free and fee-based personality and vocational tests, which about 13 million users have taken.
Emode generates revenue from service subscription fees and, to a lesser extent, from advertising, Currier said. A one-month subscription to the matchmaking service costs $19.95, a price that drops if the user pays up front for a longer subscription, while a subscription to the premium testing service costs $12.95 per month. The social networking service is free for now.
Emode ranked as the 49th largest Web site in the U.S. in terms of unique visitors in September, according to comScore Media Metrix, a division of comScore Networks.