Five reasons it all went wrong for Bebo

So, Bebo's up for sale or closure, just two years after its $850m acquisition by AOL. What went wrong?


1. MONEY

It doesn't make any. "Social networking sites all have this problem," says Nate Elliott, principal analyst with Forrester Research. "They cannot figure out how to make money. Even Facebook claims only to break even." Social networking sites encourage users to post images, video, music and more, all of which costs money to host on servers. The hope is that sheer volume of users will prove appealing to advertisers, which has not proved to be the case (see below).

2. USER DISTRIBUTION

On the face of it, Bebo is still a popular site. It is particularly strong in Europe, with over 1 million active users in Ireland and 6 million users in the UK. It has only 10 million users in the United States, however, compared with Facebook's 100 million. This uneven distribution of users makes Bebo's rivals more useful as a way of keeping in touch with people around the world.

3. PARENTAL CONCERN AND USER EXPERIENCE

Bebo was designed to appeal to 13- to 24-year-olds by its founder Michael Birch, which created its own problems. As tales of paedophile internet stalking created panic in the media, parents became reluctant to allow their offspring unfettered access to the site. In addition, one of the most frequent complaints from Bebo users was the amount of dubious spam e-mail and messages they received.

4. ADVERTISING

In common with other social networking sites, Bebo failed to attract advertisers, who are reluctant to associate themselves with user-generated content. Advertisers prefer to pay to create their own microsites to build relationships with their audience, and will look to get the most bang for their buck, which - again - is not available via Bebo, owing to uneven global penetration.

5. IT BELONGS TO 'THE MAN'

Many internet users - particularly those of Bebo age - like to think of themselves as being free of the offline corporate society. Cultivating an independent, free-thinking image is an essential ingredient for internet success, as evidenced by the success of Google and the problems Microsoft has faced in making inroads online. Part of the reason for Facebook's phenomenal success is its perceived independence. When a corporate giant such as AOL takes over, it can, for many users, act as a deterrent, an uncomfortable reminder of the corporate nature of the modern world they are trying to escape online.

--By Nigel Kendall,April 07, 2010