Challenge 2.0: Social Networking Drives New Requirements

White Paper

Prepared by

Aditya Kishore Senior Analyst, Heavy Reading

www.heavyreading.com

On behalf of

www.level3.com

December 2007 Introduction Social networking is exploding. In October 2007, Alexa found that 7 of the top 10 most visited Websites globally were Web 2.0 sites. A month earlier, ComScore reported that MySpace, with more than 55 million unique visitors, is still growing at a healthy rate of 23% year over year. Over the same time period, Facebook increased its number of unique visitors by 129% and Bebo grew 83%. But the fastest growth came from Imeem, which boasted year-over-year growth of 1,590%. That's an astounding 16 times the number of unique visitors the site had last September.

Nor is this phenomenon restricted to the U.S.: Research by the Oxford Internet Institute in March- April 2007 showed that 17% of U.K. Internet users have created a profile on a social networking site. In India, 51% of online urban adults use social networking sites and sites such as Orkut and Facebook now account for 44% of time online, with more than 11 million Indians getting hooked on them, according to the India Online 2007 survey. Home-grown sites such as GoYaar are also emerging in India, to tap into the potential of social networking. In China, sites such as Zhanzuo, Xiaonei, Yeejee, ChinaRen Xiaonei, and 5Q are attracting millions of members from the younger generation. And Morgan Stanley research has determined that Brazil has the highest usage of social networking sites in the world.

Data from U.K. regulatory body Ofcom, presented in Figure 1, illustrates that people all around the world are using the Internet for social interaction.

Figure 1: The Increasing Popularity of Social Interaction Using the Internet

Source: Ofcom ICMR, 2006

What's Driving This Growth? A number of factors have converged to push social networking past the Gladwellian "tipping point." These factors include:

1. Online Multimedia: The digitization of media content has made the Internet a viable channel for the distribution of all types of media. According to the February-April 2007 wave of the Pew Internet & American Life Project Tracking Survey, 57% of online adults have used the Internet to watch or download video, and 19% do so on a typical day. And according to a joint study conducted by Arbitron and Edison Media research in 2006, weekly Internet radio and video audiences have each increased 50% over the last year. This familiarity with online media consumption is also facilitating the creation and sharing of personal digital media – an important driver of social network usage.

2. Broadband Access: More than half of all U.S. households now have broadband, and a substantial base of households are now using broadband around the world, as demon- strated by data from the OECD, presented in Figure 2. Broadband speed encourages online activity, and the always-on access and faster downloads improve the Web experience for users. Broadband subscribers are likely to spend more time online than dialup subscribers, and are also more likely to view multimedia content.

Figure 2: Global Broadband Subscribers

Source: Organisation for Economic Co-operation and Development, 2006 Excluded for scale: Japan (25,755,080 subscribers); U.S. (58,136,577 subscribers)

3. Digital Media Production Tools: The ubiquity of digital cameras and cameraphones is also helping the growth of social networking. Nokia alone sold 140 million cameraphones in 2006. Social networks facilitate photo sharing by making it easy to upload them to your profile page; that's why 1.7 billion photographs are stored on Facebook and 60 million are uploaded weekly. Similarly, digital camcorders and videophones facilitate video creation, and video editing tools such as Apple's iMovie are enabling post-production capabilities previously limited to professional suites. More than 65,000 videos are posted to YouTube every day, and many social networking sites also allow members to embed videos.

4. Development of New "Web 2.0" Technologies: New capabilities such as AJAX and RSS facilitate faster interactivity by speeding the response time from the Web page. RSS allows easy syndication of content posted on one site to another, while AJAX enables Websites to update specific content within a Web page without reloading the entire page. These technologies give Web-hosted content a speed and responsiveness that was previously available only on desktop applications.

5. Steady Stream of New Applications: Today, Facebook has more than 40 million members, compared to 9 million last year. One important driver of its growth has been the fact that it has opened up to third-party application developers. Now members can bite or be bitten by vampires, show places they have visited on a map, poke their friends online, and use more than 6,000 other third-party applications. While the rational argument for these applications may be unclear, consumers enjoy using them and they have proven a useful value-add to the online experience of a social networking site.

Recognizing the impact of these applications, in November, 2007, Google announced the launch of a new platform, OpenSocial, to support similar applications across a number of social networking sites. Based on the widely-used HTML and JavaScript, as well as the Google gadgets framework, OpenSocial includes a set of common APIs for building social applications across many websites. The initial sites supporting OpenSocial include the Google-owned Orkut, Bebo, Engage.com, Friendster, hi5, Hyves, imeem, mixi, MySpace, Ning, Orkut, Plaxo and Six Apart. It also includes professional networks such as LinkedIn, Salesforce.com and XING, among others. The availability of this common platform for application development will further accelerate new applications and drive new growth in social networking.

6. Online Interaction Becoming the Norm: People have always had things to say, and have wanted to share their opinions with friends, acquaintances, and even perfect strangers. Witness the famous Speaker's Corner in London's Hyde Park, where ordinary citizens with have for years stood up to speak, while others have stopped by to listen. Consumers have been using Internet applications such as email and instant messaging for social communication and interaction, but social networking takes this to a new level. These sites further simplify the process of communication, particularly to groups.

7. Commercial, Personal, and Industry Value: Social networking is not only valuable for friends to keep in touch, or for purely recreational use. Sites like LinkedIn are a valuable resource for recruiters and industry professionals, and large companies such as Ernst & Young are creating sponsored pages on Facebook targeting prospective hires. Similarly, Match.com, eHarmony, and other dating sites are using social networking as a tool for single people to find companionship. Social networking is proving an effective community tool for a number of purposes.

Supporting Meteoric Growth Creates New Challenges However, the capabilities of social networking sites are also creating new and unique technology requirements. Providers of such sites need to be aware of the significant challenges posed by Web 2.0, including:

• Rich Media Files: Social networking sites are heavily dependent on creating personal profiles and sharing personal content. Thus, social networking sites must be capable of supporting photo and video sharing – a critical driver of membership and usage. With 5- megapixel cameraphones now on the market, the resolution of photos and videos posted to Websites is increasingly extremely high, resulting in very large file sizes. For example, CNET reported that the bandwidth consumed by the 54 million downloads of the popular "Evolution of Dance" video was equivalent to Internet traffic for an entire month in 2000.

• Multiple Formats: User-generated content is like an electronic version of the Wild West. Users are contributing content in a variety of formats, but the social networking site must be able to upload and display the media at high quality. Thus, social networking sites must be able to adapt or support a variety of file formats, catering to the breadth of consumer preferences. User-generated content may also require social networking sites to support third-party applications, generating further support requirements.

• Large Volumes of Content: As discussed earlier, one of the significant attractions of a social networking site is the ability for users to share personal content online. This results in massive volumes of rich media content needing to be stored, yet quickly accessible.

• Interactivity and Time Spent: Social networking sites experience higher levels of interaction. Firstly, visitors to social networking sites typically spend more time on them than on most other kinds of sites. According to Compete Inc., MySpace accounted for nearly 12% of all time spent online by U.S. Internet users in December 2006. ComScore reports that Facebook visitors spent a total of 15 billion minutes on the site between October 2006 and 2007, an increase of 631% year-over-year. And Nielsen found that sites such as Facebook and Bebo were likewise driving high usage times in the U.K.

Figure 3: Time Spent on Social Networking Sites

Source: Nielsen//NetRatings, 2007

Visitors to social networking sites also tend to click-through to more pages, thereby generating a higher number of page views. This is due to the nature of the sites, where different messages, blogs, posts, photographs, and videos are all pulled together on one page in thumbnail or summary form, requiring users to click through to view them in full.

Where It Hurts Most As a result of these factors, social networking sites can experience significant growing pains. The primary challenges at the root of all their problems is managing scale in an unpredictable environment, often featuring meteoric and non-linear growth. There are three main areas where site performance can be compromised:

1. Speed and Uptime: Large media downloads slow Website performance, and sites must maintain media quality, as pixelated photos or interruptions in video streams can frustrate viewers. In the case of social networking sites, this works both ways – speedy uploads are equally important, given the volume of user-generated content. And of course, site uptime and availability are critical, as with any other Website. The viral nature of social networking can also drive sudden and unpredictable spikes in traffic, where a massive group of online users try to access one particular piece of content. This phenomenon, known as a "flash crowd," can put an unbearable strain on support infrastructure.

2. Distribution: Another challenge resulting from essentially the same problem is control- ling distribution costs while in the growth phase. Sites must be able scale economically while still catering to non-linear user growth and sudden and unpredictable flash crowds. This creates significant challenges, and costs can spiral out of control very quickly.

3. Storage: Social networking sites must be able to support large libraries of rich media files, including high-resolution photos and video. The volume of this content grows rapidly as membership grows; even existing users are likely to store increasing amounts of content as their involvement with the site deepens, driving non-linear storage growth. For example, in May 2007 Facebook had 1.7 billion photos using 160 terabytes of storage, with an extra 60 terabytes available. More than 60 million photos were being added per week, requiring up to 5 terabytes of additional storage. The site was serving more than 3 billion photos every day, with more than 100,000 images requested per second at peak times.

Pioneers like Facebook and MySpace have already had to battle through many of the challenges that social networking poses to Website uptimes and performance. Figure 4 lists the various challenges MySpace faced, and the various architectural reinventions it had to go through.

Figure 4: The MySpace Experience

LAUNCH TO 1 MILLION ACCOUNTS

• ColdFusion Web App Environment running on Windows • Dual-processor Dell Web servers with 4 gigabytes of memory • Microsoft SQL Server database • Added Web servers with growth in membership and usage, as needed • At 500,000 accounts added two additional database servers; one server used as master copy, two using replicated data to retrieve data required to support application

1-2 MILLION ACCOUNTS

• "Vertical partitioning" strategy to solve I/O capacity bottleneck on database servers o Separate database servers for different functions: blogs, user profiles, login, etc. o Add new database server for every new feature o Added SAN instead of directly attaching storage to database servers

3 MILLION ACCOUNTS

• "Scale-out" approach adopted: Distributed architecture, where multiple distributed servers are architected to function as one. Required as vertical partitioning strategy breaks down: Even individual apps require too much from a single server. • Split user base into groups of 1 million and stored data on separate SQL servers, though still use single database to manage login

10+ MILLION ACCOUNTS

• Switch from ColdFusion to Microsoft's C# running under ASP.NET; as a result, cut server requirements by 40% • Move from existing SAN architecture as I/O capacity got swamped, to virtualized storage architecture where entire SAN is used as a giant storage pool by "striping" volumes across thousands of disks as needed • Added caching tier of servers between Web servers and database servers to reduce database lookups • At 26 million accounts, switched to SQL Server 2005 to fully exploit 64-bit processors, increasing memory leverage first from 4 gigabytes to 32 gigabytes, then on to 64 gigabytes Source: MySpace; Heavy Reading Analysis; "Inside MySpace.com," David F. Carr, Baseline, January 16, 2007

Leveraging Third-Party Vendors to Support the Cycle of Growth Given that the growth cycle for social networking sites is unpredictable, managing the technology requirements from startup to millions of users is a particularly challenging task. As described in Figure 5, there are new requirements for a young social networking site at every stage of growth.

Figure 5: Managing Non-Linear Growth Through Effective Infrastructure Selection

STARTUP GROWTH MATURITY

Very cash-constrained

Evolving business model; Video applications and flash need to manage to near- Turnkey solutions crowds drive performance and term cash constraints reliability requirements Unique end-to-end SLA support

BUYING Extremely fast growth: Reporting requirements CRITERIA Nationwide service coverage >100% per year Bundled service pricing Evolvable network architecture

Limited congestion and optimal A network that can grow performance Network lifecycle management very rapidly Collocation migration Solid understanding of segment Success-based, competi- requirements tive pricing "Scale out" decision to distribute Single point of accountability MARKET resources to optimize end-user Experienced provider for experience across locations and Low latency for content

REQUIREMENTS support and expertise spread risk for disaster recovery Single point of accountability

Colocation services IP transit IP transit CDN IP transit CDN Colocation services Managed hosting Implementation services Implementation services Professional services Professional services PRODUCT NEEDS PRODUCT Source: Level 3 Communications Inc.

Third-party vendors have been an important resource to help social networking sites navigate their growth cycle. For example, rather than trying to create a massive storage and serving infrastructure of its own, a site can use a third-party content delivery network (CDN) to support its growing audience and deliver high performance. This would also allow the site to pay only for what it needs, rather than make a massive up-front gamble for a theoretical user base that might never materialize. In addition, third-party vendors can offer software and tools that have already been developed and proven in the field, and provide the benefit of their experience in developing

© HEAVY READING | DECEMBER 2007 | WHITE PAPER | CHALLENGE 2.0: SOCIAL NETWORKING 7 DRIVES NEW REQUIREMENTS such systems. Nor do these economic advantages end at some stage of growth – most major media sites use CDNs extensively today, long after aggregating large online audiences.

While third-party vendors help most Websites manage performance, social networking sites face certain unique requirements from a technology perspective. These are the critical components that a complete site solution must be able to support, both today and in the near future. The critical components for a solution supporting social networks are:

• Segmented Viewing Support: All content is not equal, at least in terms of the number of people who will choose to access it. Certain media assets are relevant for entire regions with millions of viewers. Others – such as a picture of an individual member – are only viewed by a handful of close friends and family. Thus, while the total user base for a site may be substantial, there will be certain media assets that are only requested by small segments. As a result, managing storage, distribution, and caching will require predictive analysis and expertise. In many cases, this is more important for social networking sites than traditional performance requirements such as download speeds. While there obvi- ously needs to be a baseline level of performance for any asset on the site, storing a single picture of a member in hundreds of servers around the world is unnecessary. Third- party CDNs can bring this expertise to a small startup and help determine where the media asset should be stored, based on the group that will be most likely to request it.

• Hierarchical Caching: Beyond the breadth of audience appeal, there are other factors that could influence the popularity of a media asset, such as user recommendations or how recently it was posted. A vendor can help sort assets and cache them in hierarchical tiers and improve cache-hit ratios – an important requirement. Thus, new media that is more likely to be requested can be given a higher priority, while older media may be moved to a lower tier. Some sites also use a user-generated social recommendation approach, where users rank content and content is pushed higher or lower in the list based on their ratings. Vendors must be able to support this requirement, and adjust rapidly where needed. Comprehensive real-time or near-real-time tracking tools should be in place to allow for dynamic reallocation of these assets to a more appropriate tier if usage patterns change. If an asset is being requested frequently, it must be pushed to the edge and replicated more widely, so as to ensure rapid downloads for requesting members.

• Origin Offloading: The more content stored on a CDN, the lower the infrastructure investment on storage and bandwidth capacity for the social network itself. In the past, CDN-based media propagation was based on pulling content in real time from the site's own servers, and then storing a copy on the CDN for future requests. But social networking sites are increasingly offloading content prior to it being requested, or doing regular updates to push content onto the CDN proactively, rather than wait for it to be requested; this alleviates the buildup of requests off their own infrastructure. Given the unique requirements of social network site usage, this is a particularly important attribute and will have a considerable and direct impact on operational costs.

• Authentication, Measurement, and Usage Tracking: Tracking and measurement are critical components for the sustained success of a social network. Sites need to know where the demand and usage is coming from, and for what assets, in order to optimize their site for the end-user experience. This could be even more critical for sites with a syndication model, such as YouTube. The viral model can backfire quickly if there isn't enough insight into who is linking to the site's content, and how to control and manage access. As social networks look to advertising to monetize their service, tracking and measurement as well as authentication and control will become critical for profitability.

• Mobile Interactions: We anticipate social networking will develop into a significant mobile activity. Most major social networks can be accessed via a mobile phone today, and MySpace recently launched an advertising-led mobile version of its Website. As consum-

ers download and upload their content via mobile devices, there will be a need to manage these capabilities for both wireline and wireless environments. Social networking sites launching today should be evaluating infrastructural decisions to support these capabilities.

Summary and Conclusions Social networking sites are growing at a breakneck pace already, and the primary drivers of growth are actually still gathering strength. Broadband penetration is increasing, familiarity and usage of online media is growing and the network effect is making social networking more attrac- tive. Thus, many of the infrastructural challenges discussed previously will only become more significant for social networks.

Infrastructure drives performance, which is particularly valuable for social networking sites, as they are mostly advertising-sponsored. Ad-sponsored sites constitute an "easy in, easy out" model: Consumers are more likely to sign up and experiment with the site, but are also more likely to move on if it does not perform to expectations, since they have made no investment to stay engaged with it. As a result, high performance becomes even more important for ad- sponsored sites, as their revenues are directly tied to metrics such as membership, visitor traffic, page views, and time spent.

At the same time, a social networking company needs to be able to manage costs effectively, particularly in the face of unpredictable non-linear growth. The right selection of infrastructure vendors will therefore be critical for cost-effectively supporting performance, which will in turn drive advertising revenue, profitability and the company's valuation. Effective use of third party vendors can allow a social network to navigate not only the challenges of non-linear growth but also the unpredictable inflection points in that growth trajectory, where membership can double or triple suddenly without warning.

Social networks evaluating third party solutions should keep the following points in mind:

Vendors must have the experience and expertise to support the social networks needs. The network should be able to look to the vendor for advice on distribution needs for different types of assets. Vendor experience can help provide insight into hierchical caching, origin offloading and segmented viewership support decisions, as well as a host of other decisions that social networks will need to take.

Vendors should be able to offer a comprehensive solution-set to support the eco-system of social networking technology needs. A vendor with a comprehensive set of capabilities will allow for a pre-integrated solution that works, and a single point of contact to take re- sponsibility for the functioning of the service.

Vendors must be able to scale rapidly. Given the unpredictable and non-linear growth patterns of social networks, vendors will need to be able to scale very quickly in response to demand. Bandwidth, in particular, will be a critical requirement as rich media distribution on the Internet becomes increasingly mainstream.

Vendors must be able to cost-effectively support social networks at different stages of their lifecycle. A small start-up network is going to have a different set of criteria from a major, established, multi-million subscriber network. A vendor must be able to demon- strate capabilities for the entire range of social networking sites.

Vendors must have a global footprint. Social networks gain members from around the world, and must be able to provide performance regardless of the geographic origin of the member. Vendors must have the global presence required to support these needs.

Social networking is certainly growing explosively, and offers an important market opportunity. Given a strong support infrastructure, a social network can provide high performance without breaking the bank. And it can do so consistently throughout its lifecycle, reducing member churn and maximizing usage and revenues at various stages of growth.

About Heavy Reading

Heavy Reading is the research and consulting division of Light Reading, the world's largest tele- communication news and information destination. Light Reading leads all telecom media in terms of traffic, content, and reputation, and reaches every level of the telecommunications pyramid: service providers, equipment manufacturers, and the business/financial community.

With a monthly audience in excess of 400,000 unique visitors, Light Reading is easily the largest online telecommunications publication in the world. In fact, Light Reading's monthly readership is greater than the audited circulation of its all its print competitors combined. More info at www.lightreading.com and www.heavyreading.com

About the Author

Aditya Kishore has more than 12 years' experience in consumer media. His coverage areas at Heavy Read- ing include digital media technologies and services, and their distribution over broadband networks.

Prior to Heavy Reading, Kishore was the Director of Global Media and Entertainment at the Yankee Group. He was responsible for managing and coordinating media research across Yankee Group analyst teams in North America, Europe, and Asia. Kishore began his career in television news, then spent three years in advertising, working with a range of leading consumer brands, including Nestlé, Samsung, and McDonald's. He also developed a number of digital video and Web projects for various New England broadcast stations and independent producers, including interactive video projects with the PBS network series Frontline.

Kishore holds a B.A. in economics from Delhi University, India, and a Master's in television and New Media from Emerson College, Boston. He is based in the U.K and can be reached at [email protected]