Why Are the Largest Social Networking Services Sometimes Unable to Sustain Themselves? - MDPI

 
Why Are the Largest Social Networking Services Sometimes Unable to Sustain Themselves? - MDPI
sustainability

Article
Why Are the Largest Social Networking Services
Sometimes Unable to Sustain Themselves?
Yong Joon Hyoung 1, * , Arum Park 2 and Kyoung Jun Lee 1,2
 1    Department of Social Network Science, Kyung Hee University, Seoul 02447, Korea; klee@khu.ac.kr
 2    School of Management, Kyung Hee University, Seoul 02447, Korea; penellope007@gmail.com
 *    Correspondence: yong.hyoung@gmail.com
                                                                                                       
 Received: 11 November 2019; Accepted: 13 December 2019; Published: 9 January 2020                     

 Abstract: The sustainability of SNSs (social networking services) is a major issue for both business
 strategists and those who are simply academically curious. The “network effect” is one of the most
 important theories used to explain the competitive advantage and sustainability of the largest SNSs
 in the face of the emergence of multiple competitive followers. However, as numerous cases can
 be observed when a follower manages to overcome the previously largest SNS, we propose the
 following research question: Why are the largest social networking services sometimes unable to sustain
 themselves? This question can also be paraphrased as follows: When (under what conditions) do the largest
 SNSs collapse? Although the network effect generally enables larger networks to survive and thrive,
 exceptional cases have been observed, such as NateOn Messenger catching up with MSN Messenger
 in Korea (Case 1), KakaoTalk catching up with NateOn in Korea (Case 2), Facebook catching up with
 Myspace in the USA (Case 3), and Facebook catching up with Cyworld in Korea (Case 4). To explain
 these cases, hypothesis-building and practice-oriented methods were chosen. While developing our
 hypothesis, we coined the concept of a “larger population social network” (LPSN) and proposed
 an “LPSN effect hypothesis” as follows: The largest SNS in one area can collapse when a new SNS
 grows in another larger population’s social network. For the validity and reliability of our case
 studies, we used an evidence chain and case study protocol with a publicly-accessible LPSN index to
 determine which SNS is better for participating in or adding offline social networks to their platform.

 Keywords: network effect; larger population social network; social network; business sustainability;
 network sustainability

1. Introduction
     Some of the most powerful companies in the world are social networking services (SNSs) such
as Facebook or mobile instant messaging services like WhatsApp, Line, WeChat, and KakaoTalk.
They dominate countries or a wide range of continents. In Korea, KakaoTalk is so strong that even
the most dominant portal, Naver, never tries to compete with it, while Facebook or LinkedIn are so
strong on a global scale that nobody tries to defeat them. However, what if we can provide meaningful
information with which one can decide whether it is worth trying?
     We chose practice (rather than theory)-oriented research for our methodology because the
motivation for this study comes from working in the social networking service industry. Among the
three options for practice-oriented research, we chose the hypothesis-building (instead of the descriptive
or hypothesis-testing) method because we want to determine why and how the largest SNS can collapse
even with their network effects advantage. There are three traditional case study methods: exploratory,
descriptive, and explanatory. We chose explanatory for the purposes of this research, which includes a
case study (or case studies) aimed at explaining how or why certain phenomena came to be. Explanation

Sustainability 2020, 12, 502; doi:10.3390/su12020502                       www.mdpi.com/journal/sustainability
Why Are the Largest Social Networking Services Sometimes Unable to Sustain Themselves? - MDPI
Sustainability 2020, 12, 502                                                                        2 of 23

models and multiple case study methods are strongly recommended by Yin, which was a factor in our
decision to utilize them [1].
      These research results can provide valuable clues as to whether Facebook, LinkedIn, Line,
or KakaoTalk can be destroyed by a competitor in the future. Facebook, an SNS that was developed
relatively recently, defeated Myspace in the USA and Cyworld in Korea, which were the first SNSs in
those countries. Under what circumstances can a dominant SNS be destroyed by a newer entrant and
competitor? To answer this question, we developed an LPSN effect hypothesis as follows: If a leading
SNS does not have the majority of the offline social network universe using its platform, then it can
be defeated by a newer competitor who can obtain a larger social network population more quickly.
In other words, if the LPSN index (width rate × depth rate) of the first SNS becomes smaller than the
newer SNS’s index, the newer SNS can easily overtake the older one, where the width rate = the number
of users/local population, and the depth rate = the average number of first-degree friends in the
SNS/the Dunbar Number [2]. This hypothesis means that a company that eventually gains a larger
social network population or effectively replicates an offline real social network will enjoy the benefits
of the network effect.
      To verify this hypothesis in line with the explanation research method, we chose multiple case
studies. In addition, in line with our case study protocol, we chose four cases in which the newer SNS
overtook the older, dominant SNS, as follows:
      The first case study involves MSN messenger, which was once Korea’s largest PC instant messenger
service, being overtaken by NateOn in Korea [3]. The second one focuses on NateOn, after achieving
dominance, being overtaken by KakaoTalk, which was initially a mobile messenger service [4]. The third
focuses on when Myspace was overtaken by Facebook [5]. The fourth investigates Facebook overtaking
Cyworld, which was once the largest social network in Korea [6].

2. Literature Review
      The network effect has traditionally been used to explain the competitive advantage possessed by
market-leading companies, including SNSs. As a company’s size crosses the network effect threshold,
its network effect increases exponentially. As a result, the company can completely overtake its
competitors [7,8] and increase the switching cost of consumers [9]. The company can then enjoy
monopolistic profits [10]. If a company with market dominance enjoys the benefits of the network effect,
then late market entrants or established competitors will find it difficult to beat that company [11].
      However, sometimes online SNSs that already dominate the market have been defeated by later
entrants and competitors. Therefore, it is natural to ask why this happens in spite of the network
effect [3–6,12]. There is a dearth of research on this question, especially in the online SNS industry.
As a methodology for this study, we adopt a multiple-case study methodology, including four cases.
In each case, the first SNS is repulsed by the later one. There is a copious amount of literature on
existing network effects, but there is no specific and direct research on how a late SNS can defeat the
existing, largest one.
      The network effect means that a network’s value increases as its size increases. There are several
other definitions for network effect in economics literature. Katz and Shapiro describe the source of
positive consumption externalities as the “utility that a user derives from consumption of goods” which
“increases with the number of other agents consuming the (same) good” [13]. Katz and Shapiro newly
define network effects as “the value of (a) membership to one user (which) is positively affected when
another user joins and enlarges the network” [14]. Church et al. emphasize that “network effect exists
if consumption benefits depend positively on the total number of consumers who purchase compatible
products” [15]. Literally, all kinds of consumption with positive feedback on the supply and consumer
sides could be subsumed under the terms of the network effect and network externalities.
      Here we can briefly summarize the famous three Laws of Network Effect:

-      Sarnoff’s Law: David Sarnoff led the Radio Corporation of America (which created NBC) from 1919
       until 1970. It was one of the largest networks in the world during those years. Sarnoff observed
Sustainability 2020, 12, 502                                                                             3 of 23

       that the value of his network seemed to increase in direct proportion to its size—proportional
       to N, where N is the total number of users on the network. Sarnoff’s description of network
       value ended up being an underestimate for SNS types of networks, although it was an accurate
       description of broadcast networks with a few central nodes broadcasting to many marginal nodes
       (a radio or television audience).
-      Metcalfe’s Law: Metcalfe’s Law states that the value of a communications network grows in
       proportion to the square of the number of users on the network (N2 , where N is the total number
       of users on the network). The formulation of this concept is attributed to Robert Metcalfe, one of
       the inventors of the Ethernet standard. Metcalfe’s Law seems to hold because the number of links
       between nodes on a network increase mathematically at a rate of N2 , where N is the number of
       nodes. Although originally formulated to describe communication networks like the ethernet,
       faxing or phones, with the arrival of the internet, it has evolved to describe SNSs as well.
-      Reed’s Law: Reed’s Law was published by David P. Reed of MIT in 1999. While Reed
       acknowledged that “many kinds of value grow proportionally to network size” and that some
       grow as a proportion to the square of network size, he suggested that “group-forming networks”
       that allow for the formation of clusters (as described above) scale value even faster than other
       networks. Group-forming networks, according to Reed, increase value at a rate of 2N , where N is
       the total number of nodes on the network. Reed suggested a formula of 2N instead of N2 because
       the number of possible groups within a network that “supports easy group communication” is
       much higher than 1 so that the total number of connections in the network (the network density)
       is not just a function of the total number of nodes (N). In reality, it is a function of the total number
       of nodes plus the total number of possible sub-groupings or clusters, which scales at a much
       faster rate with the addition of more users to the network. Since most online networks allow for
       the formation of clusters, they will likely behave at least somewhat as Reed’s Law suggests and
       grow in value at a much faster rate than either Metcalfe’s Law or Sarnoff’s Law suggests.

     The range of networks effect that we mainly want to deal with in this paper is produced by SNS,
such as Myspace, Cyworld, Facebook, Whatsapp, Line, KakaoTalk, and WeChat. The effect is related to
Metcalfe’s Law or Reed’s Law. All of these services assume initial consent for connecting new people
online by using the real names used in daily life. This paper concentrates only on the SNSs that have
accumulated offline social network- and offline relationships-related data.
     This study focuses on cases in which network effect did not seem to be working, as each case
only included the largest SNS defeated by a newer one. All of the literature dealing with network
effects is based on the assumption that network effects have already been achieved and companies
use various tactics to firmly maintain it by maximizing the switching cost of the carrier or employing
a complementary strategy [16], such as integrating portal services [17], collaborating with partners
on an API [18,19], utilizing a CEO’s ability [20], adapting to environmental change, or providing
user satisfaction [21], none of which are pertinent to why network effects fail or continue to succeed.
These articles point out that network effects are extremely important, hard to break, and require a
variety of tactics to continue. But nowadays, there are more and more reports questioning network
effects and providing examples of the downfall of services that once had the largest networks [22–25].
     There is a misbelief that the emergence of a new technology paradigm means that the existing
network effects are almost inoperable. As the PC era transforms into the mobile era, with disruptive
innovations, those who once enjoyed such network effects have changed. There is also a new argument
that network effects alone are not enough. In the case of online marketplaces, it is difficult to grow
too quickly; or, if an SNS fails to build trust, network effects cannot be sustained [26,27]. Also, as an
existing network becomes saturated, it collapses due to leakage of personal information and stalking
from an overflow of content and excess of people [28].
     However, even in the above studies, we could not figure out why the first SNS, which enjoyed the
network effect, could fall even if they followed recommendations or overcame problems by providing
new service features. We later realized that this was because they only considered either external factors,
providing new service features. We later realized that this was because they only considered either
external factors, such as rapid environmental change or technological change, which are relatively
difficult to control, or superficial factors like user interface. Additionally, little research has been
undertaken to investigate why this exceptional phenomenon (i.e., latecomers overtaking the older
ones) transpires,
Sustainability 2020, 12, and
                         502 currently, available research only superficially touches upon the nature of           4 ofthe
                                                                                                                        23
social network [29,30].
       On the other hand, this study focuses on the verification of the hypothesis that, if any online SNS
such as rapid environmental change or technological change, which are relatively difficult to control,
cannot occupy most of the offline social network’s “large set”, it can fail at any time if another SNS
or superficial factors like user interface. Additionally, little research has been undertaken to investigate
continues to occupy the “large set” faster than the first. This is different from Tucker’s central
why this exceptional phenomenon (i.e., latecomers overtaking the older ones) transpires, and currently,
argument [25], which claims that network effects do not work well in comprehensive cases, including
available research only superficially touches upon the nature of the social network [29,30].
the marketplace, riding apps like Uber, SNSs, and music services. Rather, our study shows that
      On the other hand, this study focuses on the verification of the hypothesis that, if any online
network effects still work well, especially within the SNS industry, and that only those who properly
SNS cannot occupy most of the offline social network’s “large set”, it can fail at any time if another
understand the nature of the social network itself can sustain its network effect.
SNS continues to occupy the “large set” faster than the first. This is different from Tucker’s central
argument [25], which claims that network effects do not work well in comprehensive cases, including
3. Research Method
the marketplace, riding apps like Uber, SNSs, and music services. Rather, our study shows that
networkOureffects
              studystill
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                                                                                                  those who properly
knowledge        to define    and  solve problems     in an identified  practice,
understand the nature of the social network itself can sustain its network effect.and   this methodology    is intended
to provide the practitioner with useful knowledge. Dul and Hak divided the types of case study
3. Research
methods          Method
              into  descriptive research, hypothesis-building research, and hypothesis-testing research
[31]. Our
       Practice-oriented
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             defined     the problem
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hypothesis by conducting case study. Figure 1 shows our hypothesis building research framework.         that   could   the
context of four cases.

                                        Figure 1. Hypothesis building research
                                       Figure 1. Hypothesis building research.

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                                            SNS, one[33].
                                                        of the industries where the network effect occurs.
2.    We performed literature studies on factors that cause the network effect as well as those which
1.    The purpose of the case study in this paper is to determine which factors enabled latecomers to
      enable later participants to overtake first entrants because of the network effect.
      outperform earlier entrants despite the fact that the latter group was producing the network effect.
      We investigated cases where this phenomenon was observed with later participants. We have
      limited the research scope to SNS, one of the industries where the network effect occurs.
2.    We performed literature studies on factors that cause the network effect as well as those which
      enable later participants to overtake first entrants because of the network effect.
3.    Case Selection: The four cases analyzed for this study were chosen because they were examples
      of later participants outperforming first entrants.
Sustainability 2020, 12, 502                                                                                             5 of 23

4.        Case analysis tool: The unit of a case analysis is the number of users or unique visitors, the market
          share of each social network service, and the network effect strategy of each company.
5.        For the validity of case analysis and hypothesis-building, three researchers collected literary data
          on each case, compared this to determine the facts, and analyzed all information based on the
          verified data. In the analysis process, one researcher presented the analysis process and results of
          one case, and the other two researchers followed the same process and verified the triangulation
          method to determine whether the same result was reached.
6.        Implications: This study proves the hypothesis about which factors enable latecomers to outwit
          the first entrants. This knowledge can be used as a strategy for a later entrant to increase its
          market share when the earlier entrant’s network effect has occurred.

                                                  Table 1. Case study framework.

                       Case Study
                                                                                    Research
                       Sequence
     1.   Case study purpose                          Presenting the research purpose for the case study
     2.   Draw a hypothesis                           Drawing a hypothesis through literature research and data collection
     3.   Select cases                                Selecting cases that meet the set study objectives
     4.   Case analysis tools                         Presenting tools and protocols for case analysis
     5.   Case analysis and hypothesis building       Analyzing the selected cases
     6.   Present implications                        Drawing implications for case studies from an integrative perspective

    Among the methods presented by Bent [32], extreme and deviant case selection methods were
applied. This method is a useful method for acquiring information about specific cases.

4. Analysis of the Four Cases

4.1. MSN vs. NateOn
     From 2000 to 2004, MSN Messenger was the No. 1 online messenger in Korea and had hundreds
of millions of installers around the world. Most PC users installed MSN Messenger and used it for
business purposes as well as among friends. However, MSN’s market dominance was overturned by
latecomer NateOn as early as 2005.
     As seen in Figure 2, before 2003, MSN had a bigger LPSN than NateOn in the same PC space in
Korea. The number of PC-based MSN social network users in Korea was about 6 million, which was
much larger than that of PC-based NateOn social network users in Korea.
     Since 2005, NateOn integrated both the social network of Cyworld, i.e., NateOn_SN (Cyworld;
represented in Figure 3) and the cellular phone address book social network, i.e., NateOn_SN (Cellular),
into its PC-based social network, i.e., existing NateOn messenger, NateOn_SN (PC).
     With the integration, NateOn constructed a bigger LPSN than MSN in the PC space in Korea,
as depicted in Figure 3.
     In addition, NateOn replicated offline social networks more deeply. Although MSN’s global social
network was bigger than NateOn’s, MSN could not occupy the majority of the offline local social
networks in Korea. Therefore, it could not keep its No. 1 position in Korea.
     In August 2005, NateOn provided 100 free SMS messages every month and the button for “one-
step login” to Cyworld. The free SMS function was a great help in securing the installation base,
and the login linkage with Cyworld and the Cyworld notification functionality provided the main
driving force for continuous use of the NateOn messenger. By installing the NateOn Messenger, users
could download their cell phone address books into the PC messenger and then easily send text
messages to any friend in their address book with just one click in Messenger, which provided a strong
incentive to install the NateOn Messenger. SK Telecom (SKT), the NateOn Messenger operator, was
the number one cellular carrier company with a market share of over 50% at that time. The marketing
power of the monthly 100 free text messages for its 20 million cellular network subscribers was a
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                                         bigger  LPSN
                                                 LPSN
                                           million
                                        free             than
                                                        than
                                             text messages     NateOn.]
                                                              NateOn.]
                                                   users andfor wasitsstill
                                                                       20 growing.
                                                                            million  cellular >network      subscribers was a
    MSN_SN
 powerful
       MSN_SN
      MSN_SN         (local,
                     (local,
                    (local,    PC)
                                PC) >>> NateOn_SN
                                        NateOn_SN
                                        NateOn_SN    (local,
                                                      (local, PC)
                                                              PC)   or (MSN
                                                                        (MSN === 10M
                                                                    or (MSN       10M
                                                                                  10M  users
                                                                                        users >>> NateOn
                                                                                                  NateOn
                                                                                                  NateOn     === 0)
                                                                                                                 0)
                                                                                                                 0) at the time).
              weapon       forPC)
                                outpacing            (local,
                                              the number    ofPC)
                                                                MSN or  Messenger      users
                                                                                      users (about    6 million
  Cyworld, at that time, had 15 million users and was still growing.

                 Figure 2. MSN IM and NateOn IM offline Social Network Occupation map in 2003.
                 Figure 3.
                 Figure    MSN IM
                        3. MSN
                        2.     IM and
                                  and NateOn
                                      NateOn IM
                                             IM offline
                                                offline Social
                                                        Social Network
                                                               Network Occupation
                                                                       Occupation map
                                                                                  map in
                                                                                      in 2003.
                                                                                         2005.
                                                                                         2005.
                 Figure 3.
                 Figure 3.
                 Figure    MSN
                        3. MSN IM
                           MSN IM  and
                                IM and NateOn
                                   and NateOn IM
                                       NateOn IM  offline
                                               IM offline Social
                                                  offline Social Network
                                                          Social Network Occupation
                                                                 Network Occupation map
                                                                         Occupation map in
                                                                                    map in  2005.
                                                                                         in 2005.
                                                                                            2005.
     [After
       [After 2005:
       [Before      2003:NateOn
                  2005:     MSN had
                           NateOn    made    bigger
                                         bigger    LPSNLPSN thanthan   MSN
                                                                   NateOn.]     at Korea
                                                                                    Korea PC    space.]
                    Figure   2. MSNmade
                                      IM and  bigger
                                                NateOn LPSN     than
                                                           IM offline  MSN
                                                                        Socialat Network    PC  space.] map in 2003.
                                                                                            Occupation
    MSN_SN
       MSN_SN
        [After
       [Before
       MSN_SN     2005:
        [After 2005:
       [After          (local,
                    2003:
                   2005:    MSN
                        (local, PC)
                           NateOn
                           NateOn
                           NateOn    <
                                     >
                                     made
                                   had
                                 PC)made
                                     made[NateOn_SN
                                        NateOn_SN
                                              bigger
                                         bigger
                                      < [NateOn_SN LPSNLPSN
                                              bigger LPSN
                                              bigger   LPSN (local,
                                                         (local,
                                                            than   PC)
                                                                than  PC)
                                                                        or
                                                                       MSN
                                                                   NateOn.]
                                                             (local,
                                                                 thanPC)
                                                                than    MSN
                                                                       MSN ∪(MSNNateOn_SN
                                                                                at   =
                                                                            ∪ NateOn_SN10M
                                                                                    Korea
                                                                                 at Korea
                                                                                at  Korea PCPC  (local,
                                                                                              users
                                                                                                space.]
                                                                                                 (local,
                                                                                            PC space.]
                                                                                                 space.]  Cyworld)
                                                                                                      > NateOn
                                                                                                           Cyworld)  = 0)∪
                                                                                                                         ∪ NateOn_SN
                                                                                                                             NateOn_SN
    (local,
       MSN_SN
       (local,
        MSN_SN
       MSN_SN    Cellular)]
                        (local,
                       (local,
                  Cellular)]
                        (local,  PC)
                                 PC)>
Sustainability 2020, 12, 502                                                                                                                       7 of 23
Sustainability
Sustainability 2020,
               2020, 12,
                     12, xx FOR
                            FOR PEER
                                PEER REVIEW
                                     REVIEW                                                                                                       76 of
                                                                                                                                                     of 22
                                                                                                                                                        22
Sustainability 2020, 12, x FOR PEER REVIEW                                                                                                          6 of 22
the
4.2. number
     NateOn2020,
     NateOn
Sustainability
                one
                vs.   cellular
                 vs. KakaoTalk
                     KakaoTalk
                     12,
                                 carrier company with a market share of over 50% at that time. The marketing
                         x FOR PEER REVIEW                                                                            6 of 22
power
the      of the
     number     onemonthly
                      cellular100    freecompany
                                 carrier  text messages
                                                     with afor   its 20share
                                                             market      million  cellular
                                                                              of over  50% network     subscribers
                                                                                            at that time.            was a
                                                                                                          The marketing
      In 2006, NateOn completely outperformed
                                            outperformed MSN  MSN Messenger,
                                                                      Messenger, the previous
                                                                                        previous No. 11 market
                                                                                                           market player,
                                                                                                                    player,
powerful
power
the      of weapon
     number   the monthly for outpacing
                               100         the messages
                                     freecompany
                                          text  number    of MSN
                                                           afor      Messenger
                                                                 its 20  million   users (about
                                                                                  cellular network6 time.
                                                                                                    million   atmarketing
                                                                                                                 the was
                                                                                                       subscribers   time).a
in terms     of one
                 the  cellular
                      number     carrier
                                  of  installers  andwith    market
                                                       monthly
                 the number of installers and monthly visitors.
                                                                       share
                                                                    visitors. ofBefore
                                                                                 over  50%  at that
                                                                                        2010,  NateOn,    The
                                                                                                          represented      as
Cyworld,
powerful
power    of   at that
              weapon
              the      time,
                   monthly    had
                               100  15
                          for outpacing million
                                     free text   users and
                                           the messages
                                                number       was
                                                          offor
                                                             MSN   still
                                                                 its     growing.
                                                                     Messenger
                                                                     20  million   users (about
                                                                                  cellular network6 million   at the was
                                                                                                       subscribers   time).a
NateOn_SN (Korean,
NateOn_SN         (Korean,PC)  PC)in Figure  4, had
                                      in Figure   4, ahad
                                                       bigger  LPSN inLPSN
                                                            a bigger      the PCinspace  thanspace
                                                                                    the PC     KakaoTalk’s,    represented
                                                                                                      than KakaoTalk’s,
Cyworld, weapon
powerful      at that time,   had 15 million
                          for outpacing    the   users and
                                                number    of was
                                                             MSNstill    growing.users (about 6 million at the time).
                                                                     Messenger
as KakaoTalk_SN
represented              (local,
                 as KakaoTalk_SN mobile),  which
                                         (local,   was growing
                                                 mobile),   which in   thegrowing
                                                                     was   mobile space.
                                                                                     in the The  number
                                                                                            mobile         of The
                                                                                                      space.  NateOn_SN
                                                                                                                   number
Cyworld,
(Korean,      at that
             PC)  userstime,
                           washad12 15 million
                                    million  and users
                                                  the   and was
                                                       mobile   IM,still growing.had just started.
                                                                     KakaoTalk,
of NateOn_SN (Korean, PC) users was 12 million and the mobile IM, KakaoTalk, had just started.

                   Figure 2. MSN IM and NateOn IM offline Social Network Occupation map in 2003.
                    Figure 4. NateOn and KakaoTalk offline Social Network Occupation map in 2010.
                               NateOn
                    Figure2.4.MSN
                   Figure             and NateOn
                                   IM and KakaoTalk
                                                 IM offline
                                                    offlineSocial
                                                            SocialNetwork
                                                                  NetworkOccupation
                                                                          Occupationmap
                                                                                     mapinin2010.
                                                                                             2003.
                      FigureNateOn
                                 2. MSN IM       and    NateOn    IM offline        Social Network       Occupation      map in 2003.
  [Before
         [Before 2010:
         [Before      2010:
                      2003:    NateOn
                               MSN had      had
                                            had     bigger
                                                   bigger
                                               bigger         LPSN
                                                             LPSN
                                                          LPSN     than than
                                                                       than       KakaoTalk
                                                                                 KakaoTalk
                                                                             NateOn.]              atKorea
                                                                                                  at   Korea    PCspace.]
                                                                                                               PC     space.]
    NateOn_SN
         NateOn_SN            (local,   PC)    > [KakaoTalk_SN
                                                  [KakaoTalk_SN
                                              >bigger                       (local,    PC)   ∪∪ KakaoTalk_SN           (local, mobile)]
                                                                                                                                 mobile)]
        MSN_SN
         [Before      2003:  (local,
                         (local,
                               MSN  PC) PC)
                                          > NateOn_SN
                                        had                        than(local,
                                                          LPSN(local,        PC)    orPC)
                                                                             NateOn.]   (MSN    KakaoTalk_SN
                                                                                                  = 10M users > NateOn (local,      = 0)
    (NateOn
         (NateOn == 12M    12M (but(but locally
                                          locally saturated
                                                      saturated in   in PC)
                                                                         PC) >    > [(0   =
                                                                                          = KakaoTalk        PC   IM)   ++mobile      IM
                                                                                                                                       IMgrowing]
        MSN_SN          (local,    PC)   >  NateOn_SN
         [Before 2003: MSN had bigger LPSN than NateOn.]        (local,      PC)     [(0
                                                                                    or  (MSN KakaoTalk
                                                                                                  =  10M     PC
                                                                                                            users  IM)
                                                                                                                     >     mobile
                                                                                                                       NateOn       = 0)    growing]
        Since 2010,
         MSN_SN              KakaoTalk
                         (local,               has steadily(local,
                                    PC) > NateOn_SN                defeated  PC) or several
                                                                                        (MSNcompeting
                                                                                                  = 10M users    mobile     messengers
                                                                                                                     > NateOn       = 0)        in Korea,
         Since
   gaining     more2010, thanKakaoTalk
                                  42 million   hasmobile
                                                       steadily    defeated
                                                               users     in 2012,   several
                                                                                         whichcompeting
                                                                                                    accounts mobile         messengers
                                                                                                                 for a majority         of theinKorean
                                                                                                                                                    Korea,
   gaining     more      than     42   million      mobile
   population (reflecting most of the offline social network). users     in    2012,     which      accounts      for  a  majority      of  the    Korean
   population
         KakaoTalk  (reflecting
                            occupied most the ofmobile
                                                  the offline    social network).
                                                            messenger          market in a short period. On the other hand, the once
         KakaoTalk          occupied        the
   No. 1 PC messenger NateOn, which beat out MSN    mobile     messenger            market      in a short
                                                                                        messenger,               period.
                                                                                                          has been             On the
                                                                                                                        saturated           other
                                                                                                                                       in the         hand,
                                                                                                                                                  smaller-
   the  once     No.   1   PC    messenger         NateOn,
   population social network that is Korea PC space.            which         beat    out   MSN       messenger,       has  been      saturated      in  the
   smaller-population
         KakaoTalk is a social    mobilenetwork
                                              messenger  thatapp
                                                               is Korea        PC space.
                                                                      that allows         users to send free text/photo messages to any
         KakaoTalk         is  a mobile     messenger        app
   of their friends. Because of this strong benefit, users were     that     allows     users    to send
                                                                                             willing        free text/photo
                                                                                                        to send    “invitations”   messages
                                                                                                                                       to theirtofriends,
                                                                                                                                                     any of
   their accepted
   who    friends. Because
                         them. Thus,  of this   strong benefit,
                                             it spread      quickly users
                                                                        in such    were     willing
                                                                                       a viral         to send
                                                                                                  manner.          “invitations”
                                                                                                              Similar     to the 100   to free
                                                                                                                                           theirtexts
                                                                                                                                                   friends,
                                                                                                                                                         per
  who     accepted       them.      Thus,    it spread      quickly      in   such     a  viral   manner.
   month of NateOn, the free text messaging feature between friends has played a major role in quickly         Similar    to the     100  free   texts   per
   month    of   NateOn,        the   free  text    messaging       feature       between       friends
   creating an enormous installation base. On the other hand, NateOn PC Messenger also launched its        has   played    a  major     role   in  quickly
   creatingmessenger
   mobile       an enormous      quite installation
                                          late. Sincebase.        On thecompany
                                                            its parent           other hand,   SKT,NateOn
                                                                                                       Korea’sPC       Messenger
                                                                                                                    largest             also launched
                                                                                                                               telecommunications
   its mobile      messenger         quite    late.   Since   its  parent        company        SKT,    Korea’s
   company, made close to 1 billion USD per year in short text messaging sales at that time, it hesitated           largest   telecommunications
   company,
   to  strengthen made  itsclose
                              mobile to 1presence.
                                           billion USD        per year
                                                          In June      2013,  in KakaoTalk,
                                                                                  short text messaging
                                                                                                     which alreadysales athadthat40time,     it hesitated
                                                                                                                                       million      mobile
   to strengthen
   users,  started aitsnew    mobile      presence.
                                   PC version              In June 2013,
                                                      of KakaoTalk           IM KakaoTalk,
                                                                                   and overwhelmed   which already
                                                                                                               NateOn had          40 million
                                                                                                                            messenger        within mobile
                                                                                                                                                        just
   users,months.
   nine    startedFigurea new3. PC  MSN  version
                                           IM andof       KakaoTalk
                                                        NateOn    IM offline IM and Socialoverwhelmed
                                                                                            Network Occupation NateOn      messenger
                                                                                                                         map    in 2005. within just
   nine Amonths.
            smartphoneFigure 3.isMSN alwaysIM and       NateOnonline
                                                 connected        IM offline  andSocial     Network unlike
                                                                                      in real-time,      Occupation a PC.map
                                                                                                                           In in    2005. because it
                                                                                                                                addition,
 is a phone,
         [After     2005:
         A smartphone
                   it Figure NateOn
                      is utilizedis always
                                 3. MSN   made       bigger
                                                connected
                                           IMessential
                                       as an     and NateOn   LPSN
                                                               online    than
                                                                           and
                                                                  IM offline
                                                             product,       whereasMSN
                                                                                   in       at Korea
                                                                                       real-time,
                                                                                    SocialaNetwork       PC
                                                                                                      unlike  space.]
                                                                                                               a  PC.
                                                                                                         Occupation
                                                                                             PC is utilized      heavilyIn addition,
                                                                                                                         mapbyinonly2005. because
                                                                                                                                        some          it is a
                                                                                                                                                  workers
 phone, MSN_SN
             it  is       (local,
                     utilized
         [After 2005: NateOn
   and temporarily                as PC)
                                       an
                             by students   <
                                          made [NateOn_SN
                                           essential
                                                 and      product,
                                                     bigger
                                                        mostLPSN    (local,
                                                                people. whereas
                                                                         than    PC)
                                                                               In MSN   ∪
                                                                                        a
                                                                                    otherat NateOn_SN
                                                                                           PC   is  utilized
                                                                                               KoreaaPC
                                                                                             words,           (local,
                                                                                                                heavily
                                                                                                           PCspace.]     Cyworld)
                                                                                                                           by   only    ∪
                                                                                                                                        someNateOn_SN
                                                                                                                is a tool that exists apart from workers
 people,(local,
   and temporarily
         MSN_SN
         [After     Cellular)]
                    2005:    by
                          (local, students
                             NateOn  PC)   <
                                          made   and
                                               [NateOn_SNmost
                                                     bigger     people.
                                                              LPSN  (local,
                                                                         than   In
             whereas a smartphone is equivalent to the entity of a person. MobilePC)other
                                                                                   MSN  ∪    words,
                                                                                            NateOn_SN
                                                                                            at Korea     a
                                                                                                         PCPC   is a tool
                                                                                                              (local,
                                                                                                              space.]       that exists
                                                                                                                         Cyworld)
                                                                                                                         messenger           apart
                                                                                                                                        ∪ users
                                                                                                                                            NateOn_SN
                                                                                                                                                   usefrom
                                                                                                                                                         the
 people,
         Or   (MSN
             whereas
         (local,
         MSN_SN          =  6M
                            a
                    Cellular)]    users
                               smartphone
                          (local,          <  NateOn
                                                   is      users
                                                       equivalent  10M to    ∪
                                                                            the Cyworld
                                                                                   entity    ofusers
                                                                                                a       15M
                                                                                                   person.     ∪ cell
                                                                                                              Mobile   phone      users
                                                                                                                          messenger       20M)
                                                                                                                                          users    use   the
   PC version       of the    samePC)      < [NateOn_SN
                                        messenger        service (local,
                                                                    for reasons  PC) ∪such  NateOn_SN         (local, Cyworld)
                                                                                                as the convenience                      ∪ NateOn_SN
                                                                                                                            of continuous         use of    a
  mobile
   PC version
         Or   (MSN
         (local,    of  the
                         =  6M
                    Cellular)]sameusers messenger
                                           <  NateOn     service
                                                           users    for
                                                                   10M     reasons
                                                                             ∪  Cyworld  such   as
                                                                                               usersthe   convenience
                                                                                                        15M    ∪ cell  phoneof   continuous
                                                                                                                                  users   20M)     use  of  a
         Asmessenger’s
              a result, whereas   contacts,MSN   typing
                                                     only long     texts the
                                                            occupied          usingKoreaa bigPC-space
                                                                                                keyboard,      and network,
                                                                                                            social    sending files.which was much
   mobile
smaller Or  messenger’s
              (MSN
         In previous     =  6M    contacts,
                                  users
                              sections,    <     typing
                                              NateOn
                                            we social       long
                                                           users
                                                   hypothesized    texts
                                                                   10M       ∪using
                                                                                Cyworld a big   keyboard,
                                                                                               users    15M    and
                                                                                                               ∪ cell sending
                                                                                                                       phone       files.
                                                                                                                                  users   20M)
         As   athan    thewhereas
                  result,     offline, realMSN              networkthat
                                                     only occupied           thean
                                                                            (40        SNSPC-space
                                                                                   million
                                                                                   Korea       which
                                                                                               Koreanoccupies
                                                                                                           population  mostinoftotal),
                                                                                                            social network,          the offline
                                                                                                                                    which   NateOn,  social
                                                                                                                                              was much    by
   network
utilizing
smaller         universe
                the
         As athan     cell
                       thephone
                  result,      would
                             whereas     be
                              offline,address
                                          realthe
                                           MSNsocialfinal
                                                     only   winner
                                                      bookoccupied
                                                            network    in
                                                             (which includedexercising
                                                                            (40
                                                                             the million
                                                                                   Korea     the
                                                                                          over     everlasting
                                                                                                  20 million
                                                                                               Korean
                                                                                              PC-space              network
                                                                                                                 people,
                                                                                                           population
                                                                                                            social          more
                                                                                                                            in
                                                                                                                      network,   effect.   The
                                                                                                                                      thanNateOn,
                                                                                                                                  total),
                                                                                                                                    which     50%medium
                                                                                                                                              was of muchthe
                                                                                                                                                          by
   that
entire
utilizing betterthe  captures
           population)cell      and
                             phone  offline
                                       Cyworld’s
                                        address socialbooknetworks
                                                        first-degree
                                                             (which         can
                                                                            friend
                                                                          included  change
                                                                                       lists
                                                                                          over  as
                                                                                              (the
smaller than the offline, real social network (40 million Korean population in total), NateOn, by 20 technology
                                                                                                     only  one,
                                                                                                      million      and advances.
                                                                                                                 people, the  largest
                                                                                                                            more       As
                                                                                                                                      thanSNStechnology
                                                                                                                                              50%in  Korea
                                                                                                                                                     of  the
at innovation
entire
utilizing       themigrates
       thatpopulation)
             time,     with
                      cell       15from
                                and
                             phone          PCsusers
                                      million
                                       Cyworld’s
                                        address     tobook
                                                        cellphones
                                                            and
                                                        first-degree
                                                             (which      and
                                                                   growing),friend
                                                                          includedthenwas  smartphones,
                                                                                       lists
                                                                                          overable
                                                                                              (the   to
                                                                                                  20only   one,
                                                                                                      million  innovative
                                                                                                          overtake andMSN
                                                                                                                 people, themoremedia
                                                                                                                              largest than which
                                                                                                                                 Messenger’s
                                                                                                                                          SNS 50%    better
                                                                                                                                                     No.
                                                                                                                                                 in Korea
                                                                                                                                                     of  the1
at captures
position
entire          offline
                in thewith
       thatpopulation)
             time,         social
                          Korean     networks
                                      PC
                                 15 million
                                and        messenger
                                       Cyworld’s     is
                                                   usersessential
                                                             market.
                                                            and      in  order
                                                                   growing),
                                                        first-degree        friendwasto maximize
                                                                                       lists able       or sustain
                                                                                                     to overtake
                                                                                              (the only    one, andMSN network      effects.
                                                                                                                                 Messenger’s
                                                                                                                         the largest           However,
                                                                                                                                                     No. 1
                                                                                                                                          SNS in Korea
position        in  the   Korean      PC   messenger         market.
at that time, with 15 million users and growing), was able to overtake MSN Messenger’s No. 1
position in the Korean PC messenger market.
Sustainability 2020, 12, 502                                                                                                           8 of 23

Sustainability 2020, 12,
      In previous        x FOR PEER
                      sections,     REVIEW
                                we hypothesized                                                          6 of 22
                                                that an SNS which occupies most of the offline social network
universe would
Sustainability 2020, 12,be  the PEER
                         x FOR  final REVIEW
                                      winner      in exercising the everlasting network effect. The medium6 that          of 22
the number
better captures
Sustainability
                 one  cellular
                     offline
               2020, 12,
                                 carrier
                         x FORsocial
                                           company    with  a  market   share  of over  50%   at that time.
                                        networks can change as technology advances. As technology innovation
                                PEER REVIEW
                                                                                                            The  marketing
                                                                                                                        6 of 22
power
the
migrates offrom
    number    the  monthly
                 one
                   PCscellular
                          to    100    freecompany
                                 carrier
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                                            and  messages
                                                      with  afor  its 20innovative
                                                               market
                                                      smartphones,        million
                                                                        share      cellular
                                                                               of over        network
                                                                                        50%which
                                                                                    media               subscribers
                                                                                              at thatbetter
                                                                                                      time.            was a
                                                                                                            The marketing
                                                                                                            captures   offline
Sustainability 2020, 12, x FOR PEER REVIEW                                                                             8 of 22
powerful
power
the      of weapon
    number
social        the
        networks   monthly
                 one      for outpacing
                      cellular
                     is         100  infree
                                 carrier
                         essential           the
                                            text
                                           company
                                         order    number
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                                                  maximize     MSN
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                                                               market
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                                                                 sustain  million
                                                                        share       users
                                                                                   cellular
                                                                               of over
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                                                                                     effects. at    6 time.
                                                                                              network
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                                                                                              However,million
                                                                                                            Theatmarketing
                                                                                                          merely  the
                                                                                                        subscribers    time).
                                                                                                                       was
                                                                                                                  migration   a
Cyworld,
powerful
power
to       of
   the mobile at
              thethat
              weapon   time,
                   monthly
                   world  for  had
                                100   15
                              outpacing   million
                                       free  the
                                            text   users
                                                  number
                                                 messagesand
                                                           of  was
                                                               MSN
                                                             for    still
                                                                  its 20  growing.
                                                                      Messenger
                                                                          million   users
                                                                                   cellular(about   6
                                                                                              network million  at the
                                                                                                        subscribers    time).
                                                                                                                       was    a
merely    migration       to or
                             thenew
                                  mobiletechworld
                                             platform   will tech
                                                    or new    not be  sufficient.
                                                                   platform   willKeeping     the focusKeeping
                                                                                   not be sufficient.    on accumulating
                                                                                                                   the focus
Cyworld,
powerful
offline       at that
              weapon
         social        time,
                  networks     had    15
                          for outpacing
                                should    million
                                             the   users
                                                  number and   was
                                                           of MSN   still growing.
                                                                      Messenger     users (about 6 million at the time).
on accumulating          offline  social be   a higher
                                           networks    priority.
                                                      should   be a higher    priority.
Cyworld,
      As
       As seenat that
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                      Figure 5,had    15
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                                                              achieved aa bigger
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                  Figure 2. MSN IM and NateOn IM offline Social Network Occupation map in 2003.
                              NateOn
                   Figure2.5.MSN
                  Figure             andNateOn
                                 IM and  KakaoTalk offline Social
                                                   offline
                                               IM offline  social network
                                                           social network occupation
                                                                  Network occupation map
                                                                           Occupationmap  inin2013.
                                                                                      mapin   2013.
                                                                                               2003.
                  Figure 2. MSN IM and NateOn IM offline Social Network Occupation map in 2003.
     [After
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                            KakaoTalk        hadbigger
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     [NateOn_SN
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       growing)]
       MSN_SN (local, PC) > NateOn_SN (local, PC) or (MSN = 10M users > NateOn = 0)
  4.3. Myspace vs. Facebook
  4.3. Myspace vs. Facebook
        In 2007, Myspace was the largest SNS in the United States, as can be seen in Figure 6.
        In 2007,
  However,        in Myspace        was the largest
                      2013, its position                   SNS in thebyUnited
                                                  was overtaken                        States,
                                                                               latecomer        as can be seen
                                                                                             Facebook.       Unlikein Figure
                                                                                                                      Korea,6.the  However,
                                                                                                                                       United
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  States     itshad
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                         a bigger      overtaken
                                              in the by PClatecomer
                                                             space in 2013.  Facebook.
                                                                                   MyspaceUnlikedid Korea,   the United
                                                                                                    not occupy              States
                                                                                                                    more than     30% still
                                                                                                                                         ofhad
                                                                                                                                             the
  a bigger
  offline      LPSN
           social         in the PC
                      network           space
                                    space    andinfailed
                                                      2013. to
                                                             Myspace
                                                                 continue    did  not occupy
                                                                                building    up itsmore   than
                                                                                                    offline      30% network
                                                                                                              social  of the offline     social
                                                                                                                                  databases.
  network
  In the end,space evenand withinfailed
                                     the toPCcontinue       building
                                               space, Myspace           wasupdefeated
                                                                                its offline
                                                                                          bysocial    network
                                                                                               Facebook.          databases.
                                                                                                             Additionally,    as In
                                                                                                                                  thethe    end,
                                                                                                                                       mobile
  even within
  space  provides     thelarger
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                                   containers             was defeated
                                                   for fetching                 by Facebook.
                                                                    offline social     networks,Additionally,
                                                                                                    Facebook steadilyas thecollected
                                                                                                                              mobile spacemore
  provides
  of the offlinelarger     containers
                      social   networks    for  fetching
                                              using          offlineapp.
                                                       its mobile        social networks, Facebook steadily collected more of
  the offline
        In 2013   social
                     in the networks
                               United usingStates,itsmost
                                                        mobileusersapp. accessed their online SNSs through a PC rather than
        In 2013
  a mobile     phone in the    United
                           because     the States,
                                             mobile   most   users accessed
                                                         penetration        rate wastheir
                                                                                        notonline   SNSs
                                                                                             yet that   highthrough    a PCFacebook
                                                                                                               in the US.     rather than   hada
  mobile phone
  already    surpassed   because     the mobile
                               Myspace      in the US  penetration
                                                           in terms of    rate   was not
                                                                             monthly        yet that
                                                                                         active        high
                                                                                                  users,       in the
                                                                                                          largely   byUS.    Facebook
                                                                                                                        occupying           had
                                                                                                                                        offline
  already
  social     surpassed
         networks              Myspace
                          consisting         in the US in
                                         of university      andterms      of monthly
                                                                   high-school           activeFacebook
                                                                                    students.     users, largely    by occupying
                                                                                                              also had                  offline
                                                                                                                         a strong presence
  social
  in       networks
     foreign     countries   consisting      of university
                                through university          andand college high-school      students. Facebook also had a strong
                                                                               students abroad.
  presence     in foreign
        In Figure               countries through
                        7, Facebook_SN                       PC + mobile)
                                                 (Global,university          and college    students abroad.
                                                                                   means Facebook        used the global network and
                     Figure 3. MSN IM and NateOn IM offline Social Network Occupation map in 2005.
  used In      + mobile,
         PCFigure        7, Facebook_SN
                               Myspace_SN(Global,             PC means
                                                    (local, PC)     + mobile) thatmeans
                                                                                     MyspaceFacebook
                                                                                                 focused used    the global(i.e.,
                                                                                                            on domestic       network
                                                                                                                                    the USA)and
                     Figure 3. MSN IM and NateOn IM offline Social Network Occupation map in 2005.
  used PC
  social       + mobile,
          networks             Myspace_SN
                           rather   than global(local,ones PC)
                                                             and means        that Myspace
                                                                    it also focused      on PC focused
                                                                                                  networks  onrather
                                                                                                                 domestic
                                                                                                                       than(i.e.,
                                                                                                                              mobilethe ones.
                                                                                                                                          USA)
      [After 2005:  Figure NateOn
                               3. MSN   made
                                         IMglobal
                                              andbigger
                                                     NateOnLPSN       than MSN at
                                                               IM offline               Korea PC     space.]
  social networks          rather   than               ones and      it also Social
                                                                              focused Network
                                                                                         on PCOccupation
                                                                                                  networks map       in than
                                                                                                                rather  2005. mobile ones.
      MSN_SN
       [After      2005: (local,
                            NateOn PC)made
                                         < [NateOn_SN
                                                 bigger LPSN     (local,
                                                                      thanPC) MSN ∪ NateOn_SN        (local, Cyworld) ∪ NateOn_SN
                                                                                     at Korea PC space.]
      (local, 2005:
       MSN_SN
       [After      Cellular)]
                         (local,
                            NateOn PC)made
                                         < [NateOn_SN
                                                 bigger LPSN     (local,
                                                                      thanPC) MSN ∪ NateOn_SN        (local, Cyworld) ∪ NateOn_SN
                                                                                     at Korea PC space.]
     Or   (MSN
       (local,
       MSN_SN           =(local,
                           6M users
                   Cellular)]      PC)
the number one cellular carrier company with a market share of over 50% at that time. The marketing
already surpassed
Cyworld,      at that     Myspace
                      time,  had   inmillion
                                      the
                                        theUS in terms   of monthly    active users
                                                                              users,(about
                                                                                     largely6 by occupying
                                                                                                      at the offline
powerful
power    of weapon
              the        for
                   monthly    100 15
                             outpacing
                                  free text  users
                                            number
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                                                      offor
                                                         MSNitsstill growing.
                                                                 Messenger
                                                                20   million cellular network million
                                                                                                subscribers  time).a
                                                                                                             was
social   networks
Cyworld, weapon        consisting
              at that time,        of  university
                             had 15 million        and
                                             users and    high-school    students.  Facebook    also had  a strong
powerful                 for outpacing  the number    of was
                                                         MSNstill    growing.users (about 6 million at the
                                                                 Messenger                                   time).
presence in foreign countries through university and college students abroad.
Cyworld, at that time, had 15 million users and was still growing.
      In Figure 7, Facebook_SN (Global, PC + mobile) means Facebook used the global network and
used PC + 2020,
Sustainability mobile,    Myspace_SN (local, PC) means that Myspace focused on domestic (i.e., the USA)
                    12, 502                                                                                   9 of 23
social networks rather than global ones and it also focused on PC networks rather than mobile ones.

Sustainability 2020, 12, x FOR PEER REVIEW                                                                                                   6 of 22
Sustainability 2020, 12, x FOR PEER REVIEW                                                                                                   6 of 22
the   number one cellular carrier company with a market share of over 50% at that time. The marketing
Sustainability 2020, 12, x FOR PEER REVIEW                                                                                   6 of 22
power
the       of the
      number        monthly
                  one   cellular100    freecompany
                                   carrier   text messages
                                                       with afor     its 20share
                                                                 market       million   cellular
                                                                                    of over 50% network       subscribers
                                                                                                  at that time.             was a
                                                                                                                  The marketing
                   Figure 2. MSN IM and NateOn IM offline Social Network Occupation map in 2003.
powerful
power
the       of weapon
      number   the  monthly
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                        cellular
                     Figure       100
                                   carrier
                                  Myspace
                                              theFacebook
                                       freecompany
                                             text
                                            and
                                                   number
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                                                       with   of  MSN
                                                               afor  its
                                                                 market
                                                             offline
                                                                          Messenger
                                                                         20
                                                                     social   million
                                                                            share
                                                                              network
                                                                                         users (about
                                                                                        cellular
                                                                                    of over 50%
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                                                                                                        6in
                                                                                                  network
                                                                                                  atmap
                                                                                                     that million    atmarketing
                                                                                                                        the was
                                                                                                              subscribers
                                                                                                          time.
                                                                                                             2007.The       time).a
                     Figure
  Sustainability 2020, 12, x2.
                   Figure    FOR  Myspace
                              6.MSNPEER     and
                                      IMREVIEW
                                          and    Facebook
                                               NateOn   IM offline   social
                                                                     Social   network
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                                                                                         Occupationmapmapinin2007.
                                                                                                               2003.        9 of 22
Cyworld,
powerful
power          at that
          of weapon
               the       time,
                    monthly      had
                                  100 15
                           for outpacing  million
                                       free  text   users and
                                              the messages
                                                   number         was
                                                              offor
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                                                                          Messenger
                                                                         20              users (about
                                                                              million cellular          6 million
                                                                                                  network            at the was
                                                                                                              subscribers   time).a
                   Figure 2. MSN IM and NateOn IM offline Social Network Occupation map in 2003.
Cyworld,
powerful
 [Before
       [Before
        [Beforeat 2007:
                  that
                   2007:time,
               weapon
                   2003:   for   had
                           Myspace
                           MSN
                           Myspace had15
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                                       hadmillion
                                             bigger
                                        bigger
                                        had   biggerusers
                                              theLPSN
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                                                         than
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                                                               than   FBstill
                                                                         at   growing.
                                                                          Messenger
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                                                                                     PCspace]
Cyworld,
   #MSN_SN
        #of
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                                                                NateOn.]   ofgrowing.
                                                                           of
                                                                         (MSN  Facebook_SN
                                                                                   = 10M users(USA,
                                                                               Facebook_SN             PC)]
                                                                                                 > NateOn
                                                                                                (USA,   PC)]= 0)
  Where
        Where# #2003:
       MSN_SN
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                           MSN of
                               PC)of Myspace_SN
                                  Myspace_SN
                                     > NateOn_SN
                                   had               (USA,
                                                  (USA,
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                                                         than  =PC)
                                                          PC)PC)    =or
                                                                  110M 110M
                                                                NateOn.]  and and
                                                                         (MSN   # of # of Users
                                                                                   = Users
                                                                                     10M         >ofNateOn
                                                                                                    Facebook_SN
                                                                                           of Facebook_SN
                                                                                          users                =(USA,  (USA,
                                                                                                                 0) PC)]    = 30M
                                                                                                                               PC)]
       = 30M
       MSN_SN (local, PC) > NateOn_SN (local, PC) or (MSN = 10M users > NateOn = 0)

                  Figure 2. MSN IM and NateOn IM offline Social Network Occupation map in 2003.
                    Figure
                    Figure
                  Figure    7.
                         2.7.
                            MSNMyspace
                               Myspace and
                                       and
                                  IM and   Facebook
                                           Facebook
                                         NateOn     offline Social
                                                 IM offline social network
                                                            social network occupation
                                                                   Network occupation map
                                                                            Occupationmap  inin2013.
                                                                                       mapin   2013.
                                                                                                2003.
                  Figure 2. MSN IM and NateOn IM offline Social Network Occupation map in 2003.
 [After
        [After2013:
       [Before     Figure
                  2013:
                   2003:   FB
                            FB3.made
                             MSN  MSN
                                 made  hadIM   and LPSN
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                                                                          NateOn.]   atNetwork
                                                                                    at USA
                                                                                        USAPC    PCOccupation
                                                                                                       space.] map in 2005.
                                                                                                      space.]
 Myspace_SN
        Myspace_SN
       MSN_SN
       [Before     Figure
                   2003:      (USA,
                              3. MSN
                             (USA,
                       (local,
                             MSN         PC)
                                         >IM
                                        PC)
                                   PC)had      NateOn         mobile)]
                                                                                                                     map in 2005.
                                                                                                                              =mobile)]
                                                                                                                                0)
 Where
       [After
        Where    2005:
                   #  of   NateOn
                          Users      of  made     bigger
                                         Myspace_SN         LPSN
                                                             (USA,     than
                                                                        PC)   MSN
                                                                              = = (MSN
                                                                                20M   at  Korea
                                                                                        and    #  of PC   space.]
                                                                                                      Users   of  Facebook_SN
      MSN_SN
       [Before     Figure
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                             MSN     of
                                   PC) hadIM   and NateOn
                                         >Myspace_SN
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                                             bigger              IM
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                                                                                                      ofusers
                                                                                                          Users    ofmap      = 0) (Global,
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                                                                                                                      Facebook_SN
                                                                                                               > NateOn                         PC)
                                                                                                                                           (Global,
      MSN_SN
       [After
        = 1.3B   2005:
              = 1.3B   (local,
                           NateOn
                  and(local,
                         # of #UsersPC)   <
                                         made[NateOn_SN
                                                  bigger    LPSN   (local,
                                                                       than  PC)
                                                                              MSN  ∪  NateOn_SN
                                                                                      at  Korea      PC
                                                                                                    = 0.9B(local,
                                                                                                          space.]   Cyworld)      ∪  NateOn_SN
      PC)
       MSN_SN           and        PC)   >of
                                   of Users   Facebook_SN
                                                of Facebook_SN
                                            NateOn_SN                (Global,
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                                                                           (Global,
                                                                          PC)  or     mobile)
                                                                                   (MSN      == 0.9B
                                                                                                10M     users > NateOn = 0)
      (local, 2005:
       MSN_SN
       [After    Cellular)]
                       (local,
                           NateOn   PC)made
                                          < [NateOn_SN
                                                  bigger LPSN      (local,
                                                                       thanPC)MSN  ∪ NateOn_SN
                                                                                      at Korea PC space.] (local, Cyworld) ∪ NateOn_SN
        Before     2013,     Myspace        was thethe representative
                                                        representative          SNS in inusers
                                                                                           theUnited
                                                                                                  United     States.  Myspace      was    acquired
     Before
       Or   (MSN
       (local,
       MSN_SN     2013,
                 Cellular)] Myspace
                      =(local,
                          6M        PC)
Sustainability 2020, 12, 502                                                                          10 of 23

the SNS was used for illegal activities such as prostitution. This is an inevitable consequence of
emphasizing anonymous activities.
      It should be noted here that transforming an offline social network into an online one requires
strategy. The largest offline social network is society itself, and the best place to clone a society, if you
can weave a contact list to another contact list that follows an overlapped person, is the address book
on cell phone networks or mobile phones. Thus, with a mobile messenger service, it is relatively easy
to build a first-degree (friends) network by absorbing the mobile phone address book. However, it was
not easy to replicate the offline social network in the online or PC world, where the anonymous culture
is strong and true user identity is difficult to verify. Accordingly, Facebook founder Mark Zuckerberg
initially sent e-mail invitations to Harvard students whom he already knew. Because of this, Facebook
first consisted of mostly Harvard students and then expanded its invitations to other Ivy League
students. Later, it expanded again to the remaining college or university students in the world. In other
words, the SNS has grown by successfully transforming offline social networks into an online social
network. After taking control of most US college offline social networks and expanding the invitation
to international students, Facebook naturally entered the global market. The culture and habit of using
a real name might have initially been awkward for the online PC world’s anonymous name culture,
but after users were invited, they became used to the requirement. After this, Facebook opened to the
general public without requiring an invitation-only, so that follow-up subscribers naturally behaved
according to the existing culture and inertia.

4.4. Cyworld vs. Facebook
     Cyworld was officially launched in August 1999 after changing its name from PeopleSquare,
which was founded in 1998. SKT took over Cyworld in 2003 and invested in server infrastructure.
Cyworld grew rapidly, absorbing more than 51% of the Korea population, more than 25 million users.
It has grown to generate revenue of 100 million USD annually, mostly with digital item selling.
     By 2009, Cyworld was Korea’s largest SNS, as can be seen in Figure 8. In 2013, the LPSN shifted
from PC to mobile, but before that, even in the PC space, Cyworld had been overwhelmed by Facebook
(Figure 9). Cyworld was attacked from two directions as follows:
     First, Facebook, which had built up a steady network of offline social networks, connected Koreans
to the global network. Cyworld, on the other hand, simultaneously established branch offices in China,
Germany, the USA, and Japan, and built a separate social network database for each country without
connecting them.
     Ignoring the basic global expandability of offline social networks, Cyworld Korea was isolated
from the Cyworld China membership database, US users, and all other country users. As a result,
Korean Cyworld users living in Korea had to sign up to use American Cyworld to meet foreign
friends living in the US, and if a relative who had lived in Korea went to the United States to study,
he/she had to register again with Cyworld USA and had to be invited again. Korean Cyworld users
could not invite foreign friends who only spoke English to use their SNS because only Korean menus
were provided.
     This meant that it lost an enormous opportunity to acquire global social networks utilizing Korea’s
local network, which was already built into Cyworld at the time. More than 51% of the population
were using Cyworld, including most Korean celebrities. It also meant losing the opportunity to save
on significant marketing costs globally.
     How Facebook built up the largest social network to include 50% of the world population should
be summarized. As seen in interviews with the former Myspace CEO, Myspace introduced an SNS,
but only Facebook mastered it [29]. In short, Facebook insisted on the real-name system and never
looked back. This requirement reflects offline society, where we call our friends and family by their real
names. On this basis, Facebook executed the open API policy to more quickly acquire offline social
networks from each country.
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