Can Korea’s Cyworld sell its acorns in US?

Korea’s social network cult Cyworld is ready to enter the US market, and Business 2.0 has given an excellent analysis of its chances.

It’s worth reading the full article, especially to understand the varied and creative ways that Cyworld makes its money:

• There are 18 million Cyworld members, or more than a third of the country’s entire population. And 90 percent of all Koreans in their 20s, like Kwon, have signed up
• Using the site is free, but if you want to decorate your mini-homepage and mini-room, you choose from tens of thousands of digital items – homepage skins, background music, pixelated furniture, virtual appliances
• These are bought with “dotori,” or acorns, and you have to buy the acorns with real money.
• Virtual goods are cheap – typically less than $1 apiece
• This year Cyworld expects to contribute $140 million in sales, with acorns accounting for 70 percent.
• That means Korean consumers will shell out more than $100 million this year for Cyworld virtual inventory.
• There are about 400,000 items on the site today
• Cyworld splits about 30-50% of the revenue, depending on items, with the graphic design shops and license holders that actually create the virtual goods
• 1/3rd of that revenue is for music, where Cyworld has pioneered another new business model. For 50 cents you can stream a song on your homepage to anyone who visits.
• Last year’s most popular track, by a group called Sweetbox, sold 1.5 million times. Cyworld sells 6 million songs a month, making it one of the most successful digital-music stores on the planet.
• Cyworld is also increasingly bringing in revenue from mobile services. There are 2.6 million customers who have signed up to access Cyworld via cell phone for free, paying only upload charges. 90 percent of all images uploaded in Korea go to Cyworld.
• There are banner ads on its homepage and on the pages of the most popular of Cyworld’s 1 million clubs, which are considered public territory.

So will Cyworld succeed in US? The business model may not smoothly fit the US market, but one insight offers an opportunity:

On MySpace, they can be glamorous party creatures. On Facebook, they can be students. And on Cyworld, the bet goes, they can be themselves. “Everyone in our focus groups has a MySpace page,” Streefland says, “but it doesn’t necessarily satisfy them. They think of MySpace as the stadium. But Cyworld is the slumber party.” The consumers who reacted most positively to Cyworld in focus groups were female high school juniors and seniors.

For me, it comes down to how much of Cyworld’s success can be attributed to certain Asian values of status and hospitality. Many argue that young Koreans are prepared to spend real money on virtual dotori because they feel a genuine social pressure to adorn their mini-room with musical and visual gifts for their visitors. Will the Kids of America feel the same need to please their guests?