The faith of Networking sites like PlanetAll

Introduction PlanetAll was founded in 1996 by Warren Adams and Brian Robertson with the vision of bringing people together face to face using the web. PlanetAll's webpages were launched on November 12, 1996. PlanetAll started out as a contact management sevice site where people could register and keep track of time, friends, colleagues, jobs and even themselves. Pretty nicelly summed up in one of their slogans; “Never loose touch with the things that matter most to you”. PlanetAll based it's service on the following features: Address Book: PlanetAll's address book aimed to automatically update when your contacts changed their job, email, phone numbers or address' and instantly notify you of the changes. It would even notify your contacts if you were to do any of the same changes. Affinity Groups: PlanetAll allowed you to create groups of contacts and send messages to everyone in thos groups, notify you whenever members of your groups joined the system and even receive common information like alumni news and class notes. Crossing Paths: PlanetAll would automatically notify you when your contacts were coming to town or when your travel plans overlapped with your friends' plans. Reminders: If you or your friends had registered a birthday or important meeting, you would all be reminded a couple of days in advance. News: Receive information like news, horoscopes, jokes and factoids of your selection with the click of a button. Calender: Members could register their own travel plans, birthdays, appointments and reminders. PlanetAll would use this information to notify you and your friends in advance of an upcomming event.

With all this information registered by all it's members, PlanetAll could also offer a feature called “Friends of Friends” which aimed to help members job search and “network” in particular groups, companies and cities.

Lo205 E-Business, spring 2003 page 1 of 7 Author Ole Øyvind Hove PlanetAll's key success factors prior to its purchase by .com When offering a service that basicly gives you information about other registered members, the only way to make the service better is to get more people to register. In other words, you need members fast, and lots of them! The founders of PlanetAll knew this and they therefor started to quickly build a comprehensive database of members to give the PlanetAll consept the “fuel” that made it a powerful networking solution. The timing was also important, being one of the first companies that focused 100% percent on online networking, PlanetAll got a great advantage. During the first one and a half months after they got online, PlanetAll managed to be elected as iWorld's Site of the Day (16. Nov. '96), Yahoo!'s Pick of the Week(25. Nov. '96), appear on First TV online television show on newyearseve and win the 1996 New Business of the Year Award at the Excellence on Business Awards Banquet. After four months of business, PlanetAll's economical situation showed a debt of $200,000, but after a reassessment of the company, they decided to stick to it and raised money to putt themselves out of debt within three months. With all the positive publicity and a healthier economy, all within half a year after they started surely must have been tempting to anyone looking for companies in the “new economy” in which they could invest. During the nineties, many more people began to work with information technology on a daily basis and used the for gathering information. They saw that PlanetAll could meet their demand for an easy way to keep track of contacts, friends, jobs and appointments. As times were changing fast and the world economy grew faster than ever, people could change jobs and addresses overnight. PlanetAll, having one of the most comprehensive solution at that time, got lots of attention and the founders of the company did their homework well and gave the public the features and feedback that made PlanetAll such a popular site. I would summarize PlanetAlls key success factors with these few pointers: 1. They were at the right place at the right time. The market was new and growing fast, and when they started, it lacked a good solution to easily keep track of friends, contacts and appointments. PlanetAll provided an online 24-7 automated solution to meet this demand. 2. They knew their objectives, and followed them through. They knew what it took to make PlanetAll a success, -they needed a stable service, with many members. So instead of charging the members, they made it free of charge. This, in the end, gave PlanetAll an impressive 1.5 million members. 3. They focused on their online service and image. They managed to stay focused on the one thing they could do, and made the features of their site well-known and reputated. They avoided trying out things that might backfire and give them bad publicity. 4. Good public relationship. They started at the right time, with the right solution, they did the right thing and said the right words. This gave venture capital and investment communities confidence in PlanetAll's consept and investors therefore gave them economical support. More than $10.3 million had been invested in the company before Amazon.com bought PlanetAll for more than $100 million in august 1998.

Lo205 E-Business, spring 2003 page 2 of 7 Author Ole Øyvind Hove Are networking sites viable as stand-alone companies? Networking sites have the caracteristics that the more people that register, the better the networking site becomes. But in order to get that many people registered, the service have to be free of charge. And that leaves company earnings to advertising, targeted ads based on members© interests and affiliate programs. When PlanetAll started, the marked was still young and no proper networking solution met the demands of the public. The time was therefore perfect when PlanetAll started it©s business in 1996 and met the public demand of a 24-7 automated contacts manager. Today, it©s different story. There©s a jungle of different networking sites which tries to grab a piece of the marked. Making it almost impossible for a single company to stand out from the crowd and achieve the same position as PlanetAll achieved being the first proper 24-7 automated contacts management solution provider. I Therefore believe that the time when networking sites were viable as stand-alone companies are over. Today, the demand for these kind of services are covered by companies© intranet and instant messaging(IM) solutions like AOL Instant Messenger(AIM), Mirabilis© ICQ and Microsofts© MSN Messenger. These instant messaging soultions also provides a wast number of different plugins, and direct peer-to-peer communication, making networking a more personal event. The goal is no longer to make people meet in person, but to expand their network and communicate live with IM through the internet. Mirabilis, who was the first to successfully meet the demand of intercommunication between internet users with their ICQ, reached 200 million download milestone on CNET Networks© Download.com on June 6, 2001. Today it©s estimated that about 90,000 new users join ICQ every day, and they currently have over 150 million registered users worldwide, from more than 243 countries. Such high numbers of registered users gives the owners of such companies an enormous economical opportunity in selling targeted ads based on it©s members© interests. The real value actually beeing the wast number of registered users, the community. At the moment there are three main competitors, ICQ, MSN and AIM. Two of these being owned by AOL Time Warner(ICQ and AIM). Based on the above, I therefore believe that the time when networking sites were viable as stand-alone companies are over. Simply because there©s no ªglueº to keep members participating when they can©t intercommunicate, discuss and share opinions. Current networking solutions are therefore usually integrated as a part of a . This keeps the members interested in being a part of the community and networking solution. These virtual communities with integrated networking capabilities are and will be provided as a part of internet sites, intranets and/or instant messaging solutions. I believe that in the near future, we will see more virtual communities with instant messaging solutions integrated with intranets, mobilephones, handhelds and other roaming wireless solutions. Peope will always be available and online without having to sit infront of their computers all day. This will presumably give the original PlanetAll idea of getting people to meet in person a new boost.

Lo205 E-Business, spring 2003 page 3 of 7 Author Ole Øyvind Hove PlanetAll – A virtual community or a community enabler? “A virtual community is a community of people sharing common interests, ideas, and feelings over the Internet or other collaborative networks. A possible inventor of this term and one of its first proponents was Howard Rheingold, who created one of the first major Internet communities, called "The Well." In his book, The Virtual Community, Rheingold defines virtual communities as social aggregations that emerge from the Internet when enough people carry on public discussions long enough and with sufficient human feeling to form webs of personal relationships in cyberspace.” (whatis.techtarget.com) Also defined as a ªglobal villageº in cyberspace by the author Marshall McLuhan.

PlanetAll©s website consisted of an automated calender, a reminder and an address book, and gave members the possibility to search for friends or colleagues and to stay in touch. But PlanetAll didn©t give it©s members a common interest, to discuss or exchange ideas about.I would say that PlanetAll wasn©t a virtual community when Amazon.com bought it, since there was no sharing of common interests, ideas or feelings. When Amazon.com bought PlanetAll they already had a huge online bookstore, but there was no virtual community based on it©s customers. Buying PlanetAll, on the other hand, enabled Amazon.com to create a virtual community called ªFriends & Favouritesº based on it©s online bookstore. The members© opinions and recommendations of books and films, sold by Amazon.com, are now shared and discussed online as a common interest along with Ideas and feelings about the different books and films. Members can search for registered friends and get their recommendations or wishlists which contains books and films selected by each member. In addittion, members get related news-mails with special offers and favourable pricing. In short terms; Amazon.com bought PlanetAll as a community enabler in order to create a virtual community based on common interests for books and films. Like the theater community archetype.

Lo205 E-Business, spring 2003 page 4 of 7 Author Ole Øyvind Hove After Amazon.com purchased PlanetAll, what were the resulting value drivers for each company? Amazon.com, having created a virtual community with the help from PlanetAll, could now easily take advantage of their new customer-database which resulted in better targeted and associated advertising. The virtual community also gave the customers a degree of trust and community that previously was unavailable for online stores. This effectivly built faithful followers for Amazon.com. In addition to the purchase of PlanetAll, Amazon.com also bought other companies that increased their market shares and expanded onto the European market. By 1999, Amazon.com©s market capitalization equaled the combined values of profitable bricks-and-mortar rivals Barnes & Noble and Borders Group, even though their combined sales were far greater than the upstart©s. Amazon.com was becoming an attractive community which offered it©s members choise, trust and stability. Amazon.com did this by allowing it©s customers to compare different products, and suggest different books or films associated with the items previously bougth by fellow customers with the same interests. They helped the customers with decision support through access to reviews and recommendations by fellow customers. They offered a scalable website which could handle huge peeks in traffic with stability and provide a wast number of products with favourable prices. Market trends analysis made them able to give the right offer to the right person at the right time, ªliveº. In short terms: Decision support, immediate response, targeted market campaigns and a stickiness for repeating traffic and purchases. Despite this, later spree and sporadic purchases of not so successful websites and communities in combination with the .com-fall and global decline in world economy forced the Amazon.com share price back to the start-price and below with an all-time low autum 2001. During the last one and a half years, the stock price has slowly regained itself and is currently about $25 dollars.

PlanetAll took great advantage in the wast number of people visiting Amazon.com, potentially introducing millions more to discover the value and convenience of PlanetAll©s services. "It means that our growth will only accelerate even faster, which for customers is really good because that means there will be more people in the system they can stay in touch with," Warren Adams, PlanetAll cofounder and president, "It really just means a lot more resources to move us as quickly as we can.º In addition to this, the recommendations and wishlists added to PlanetAll©s integrated part of Amazon.com gave the users a virtual community which they could identify with and share information, ideas and feelings with. In short terms: Scalability, human intercommunication, decision support, scalability, secure and private and a common interest making it a virtual community with more active membres(stickiness).

Lo205 E-Business, spring 2003 page 5 of 7 Author Ole Øyvind Hove Did PlanetAll identify a potentially profitable market segment as part of Amazon.com? I think yes, because PlanetAll enabled Amazon.com to create a virtual community based on the common interests for books and films. This gives Amazon.com an advantage of additional information for analyzing customer-product relationships and it enables them to pick up on trends faster, thus enabling them to meet demands not previously know. Since members now share their opinions and recommendations, they infact also act as targeted ads towards selling the recommended books and films to the other members. Customers who are hesitating to buy books or films online, may be persuaded by recommendations because they are written by fellow customers, which they can identify with, giving them a feeling of presonal trust and community. Customers automatically trust a fellow customer more than the salesman, thus giving Amazon.com new customers from the sceptical segment of the market. In addition, PlanetAll can i.e. Remind their members of their mothres© birthday and simultaneously recommend books or CD©s as gifts. It also ªstealsº customers from Amazon.com©s competitors which don©t have a virtual community based on interest for the companies© products. "Online shoppers are extremely habitual," says Genni Combes, an analyst with Hambrecht & Quist. "If a site can integrate the functions of a user©s day-to-day life, it©s a much more compelling place to return to."

References

The WayBackMachine (http://Web.archive.org)

YAHOO! FINANCE (http://finance.yahoo.com)

HOOVER'S Online – The Business Information Authority (http://www.hoovers.com/co/capsule/3/0,2163,51493,00.html)

Whatis?com (http://whatis.techtarget.com/definition/0,,sid9_gci213295,00.html)

The Red Herring (http://www.redherring.com/mag/issue60/wild.html)

Boston Business Journal (http://albany.bizjournals.com/boston/)

The Business Review (http://columbus.bizjournals.com/albany/stories/2002/08/12/focus2.html)

“Virtual Politics Identity and Community in Cyberspace” by David Holmes

ªIntroduction to e-commerceº by Rayport and Jaworski, McGraw-Hill

“Electronic Commerce - A Managerial Perspective” by Turban,Lee,King,Chung

http://www.cmgi.com/news/prdata/CMG_Ventures_II_Announces_Sale_of_ PlanetAll_to_Amazoncom_ANDOVER_MA_August_4_199.shtm

Lo205 E-Business, spring 2003 page 6 of 7 Author Ole Øyvind Hove Appendix:

Snapshot 1: PlanetAll's website before it was purchased by Amazon.com

Snapshot 2: PlanetAll's website after it was purchased by Amazon.com

Lo205 E-Business, spring 2003 page 7 of 7 Author Ole Øyvind Hove