Launched in 2003, Gaia Online is an anime-themed online hangout geared toward 13- to 25-year-olds. With more than 6 million unique monthly users and over 1 billion messages posted in its forums, Gaia has the second largest message board on the Web, falling only behind Yahoo Inc. (Nasdaq: YHOO).
The company recently raised $11 million in a third round of funding to finance the completion of its massive multiplayer online game, set to launch at the end of the summer.
Internet Evolution spoke with Gaia's CEO, Craig Sherman, about the secret to Gaia's monetization success, its future plans, what individuals gain from creating an avatar, and how virtual online hangouts are changing the way teens grow and interact.
Internet Evolution: Most social networks are hitting a roadblock when it comes to monetizing content. How has Gaia been able to make money?
Craig Sherman: It was all purely organic. People donated to the site because they loved it so much, honestly. And then the founders gave virtual items back to them as a gift. The moment they did that our sales tripled, our donations tripled. Then we hit on one of the two parts of our business model, which is virtual goods. We sort of cracked the nut in that category of virtual goods. Virtual goods and virtual micro-transactions are extraordinarily big in China, Korea, Japan, and growing really quick in Europe. In the States they're just starting to grow fast. But I think you need a world to do it -- it doesn't make as much sense inside a social network. They don't see it as successful in the U.S. social networks.
So that's one part of our business. The other is the advertising model. We're just being really careful to pick sponsors that are a good fit for our audience. And we put a huge amount of investment in trying to create an experience that, whichever brand it is, adds functionality to the experience for the user. Which -- surprise, surprise -- means the brand is doing really well also. So, we're really lucky. In short we have two models -- virtual goods and sponsorships -- that are both doing well and growing very fast. It's one of the reasons I think we're fundamentally different from the social networks.
IE: Has hacking been an issue for the Gaia community? If so, how often, and what measures do you take to prevent hacks and protect your community?
Sherman: I think like every site in this space we have hacking issues, and we have people who are dedicated internally to regularly focusing on trying to manage it. But there isn't any one specific example that's sort of dramatic. It's more like an ongoing thing.
IE: What have been the most and least successful aspects of Gaia?
Sherman: Most successful aspects are, number one, the community. Which means both the users' extremely enthusiastic involvement in both feedback and among each other in creating content and connections... and the tools we've built behind those.
The least successful aspect of the experience... Frankly, in an effort to listen to our users and build what they ask for, as a company, we've built many things too fast. And as a result, there were a lot of parts of the site until relatively recently that were either broken, like literally broken, or they appeared to be broken from the user perspective because some aspect of the UI or the finish wasn't good enough because we had rushed to get something out and jumped onto the next project. It's sort of the cost of being super creative and super fast in response to users -- you don't build each of the products as perfectly as you could. So, as a company we've invested over a third of our resources over the last two years in rebuilding parts of the site.
Gaia was a very cool place to hang out with great art. Since the VC money started rolling the issues and glitches with the site have escalated. It is supposed to be PG 13 but apparently they have no idea what a filter is as some of the message boards would make any adult blush.
Cybering has really been an issue in the last year as well.Not a place I would let my 13 year old hang out anymore. Then there are issues with each “enhancement” that is done.The last big boo-boo was in July and there are still hundreds of users who do not have trades or the market passes enabled, that is if they were not banned. This all due to some bad code that was rolled out and no fault of any of the users. Users are screaming for the site to be fixed, from towns, to the inventory system, to gifting being down for months now. What happens?New stuff is rolled out while all the problems fester. Not sure how Mr. Sherman can say that it is a community when half of it does not work and the only real things users see are new ads and sponsors while the functionality that has been there stays broken. The other things users see are global changes to make it look like a clone of other sites.
Actually, I'd just like to say, I've been playing Gaia for several years now, and I've seen the way things are going. DOWNHILL. Craig Sherman is destroying what was once a great hangout for teens and anime role-players.
Not only is he permenantly changing the interface over and over, he asks for our opinions, then ignores them completely. There are hundreds of broken items that players are screaming to get fixed, and yet, he's adding newer things, trying to make it into a crappy knock off of Facebook.
As a player, I hate the new interface. I've joined a petition with over 200 signatures to change it back, and I'll bet you anything, nothing is going to change.
I think that in the case of Gaia's forums, as with any forum, Pareto's Principle would apply. In the past 15 years, I've visited thousands of forums, and on virtually every one, 20% of members make 80% of the posts, more or less. Big-Boards lists Gaia as the largest forum in their top 100 rankings, and I tend to agree with them. I think a lot of people would be surprised at the amount of posting done by some teens in a day's time.
We're very choosy as to who we list in the Teen chat category, and Gaia is one of the few sites we feel is a good, safe place for teens to chat and socialize. One small suggestion Craig. Put your Safety link up top, and make it more prominently displayed.
- People will fight over Kool-Aid if you make it a commodity. (in resonse to drinking kool-aid)
After getting over my initial hesitancy of exploring beyond user creation, I am now hesitant that delving further will get me hooked. I was glued to my desktop throughout the whole WoW trial - I didn't renew...It's different than WoW, however I do see the world wide appeal.
I COMPLETELY agree with ubiquity first then revenue..will follow. Userbase(exponent)=LEVERAGE
IF the Company can afford to stay alive until the revenue floodgates open.
I don't think Google(YouTube) will have any 'troubles' AFFORDING taking 'hits'(yes the pun is intended) until punchbuggying back with cha-ching.
Ubiquity first, Revenue Later, HA..I like that ALOT -
But then again, who is profitable in this web 2.0? we just keep drinking the Kool Aid.
Even YouTube - the picture that shows up when you look for "web 2.0" in the dictionary - has failed to profit from their massive investment. Although, according to Google's CEO Eric Schmidt one definition of an Internet URL is "Ubiquity first Revenue Later."
How ubiquitous? keep saying not yet until you are profitable.
I guess I can buy that. But if that number is anything like accurate you would think that there would be a way to monetize that nutty level of chit-chat, even if the users are low value teenage-types.
If you assume all 5 million unique visitors participate in the forum, each would have to post 200 messages to reach 1 billion posts. (over 5 years, I guess that is possible, but that assumes 100% participation)
"The company recently raised $11 million in a third round of funding to finance the completion of its massive multiplayer online game"
Or did it raise the money to simply stay alive?
Craig, is Gaia profitable? Sounds like it may not be. Hard to see how you could have that many users (and 1 billion messages posted in five years... A BILLION!) and fail to make money.
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