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05/20/2010

Clemens Riedl's staff had rented what he describes as a "real East German bar" in Berlin for an evening of talking, drinking and dancing. The managing director of the German online social networking platform StudiVZ wanted to get his employees revved up and "on course."

The mood at the event was good -- much better, in fact, than the company's actual situation. The various VZ social networks -- which include the college student-oriented StudiVZ (the name refers to Studentenverzeichnis, or students' directory), SchülerVZ, which is aimed at school students, and MeinVZ, a platform for non-students -- have strayed from the course that once enabled them to become a favorite of young German Internet users within only a few years.

The number of supporters is stagnating quickly. The VZ networks say that they have 16.6 million registered members in Germany. But US rival Facebook is growing and growing. It now has more than 400 million members, and although only an estimated 9 million are in Germany, the growth curve points sharply upward.

In addition, Facebook members spend more time in their network and interact with other users more intensively. The US-based online community has grown its reputation from a network for students into a global community meant for everyone under the sun, while StudiVZ oozes about as much charm as a technical college during summer break.

'I Am Cancelling My Membership'

All it takes to understand VZ's problems is to read the messages that its users send to their friends in the network before they leave the community. For example, 25-year-old Julia Risch, who was spending a few months in Australia, wrote: "I am now the proud owner of a university degree and have no longer been a fan of StudiVZ for some time now. I am cancelling my membership. You can reach me on my mobile phone or on Facebook."

The network is now running up against a number of obstacles:

• The name of the network clearly identifies its target group, namely students, which was originally part of its recipe for success. But now that the network has expanded into other user groups, the name has become a problem. Many students simply lose interest in using StudiVZ when they graduate.
• The technology: VZ is considered technologically outmoded. It is significantly slower than Facebook in terms of introducing additional applications, and popular games like "Farmville" are not available at all.
• The lack of internationality: It is difficult to make international friends through VZ, because fundamentally it remains a German-language network. An attempt to expand into other countries was a failure. This is, however, less of a problem for school students, with whom SchülerVZ remains very popular.
• Data privacy: After various high-profile incidents, sometimes referred to internally at VZ as "PR crises," involving changes in the terms of use and external attempts to gain access to user data, many users created pseudonyms. This makes it difficult for members to be found by others. Julia Risch, for example, changed her online name to "Julia R."

Strong Brand

The operators have found a solution for the name problem that is as radical as it is simple. "In addition to the three existing brands, we will also develop a strong umbrella brand," says Michael Brockhaus, CEO of StudiVZ's parent company Holtzbrinck Digital.

The massive Georg von Holtzbrinck publishing group, which owns Holtzbrinck Digital, also plans to beef up the networks' technology. This step is overdue, but it is not, however, innovative. At the same time, the company is trying not to make its technology too complicated. "We want to be clear as well as easier to understand and use," says VZ boss Clemens Riedl. He hopes that this will enable the social networking site to reach target audiences for which Facebook is simply too complex.

Executives at Holtzbrinck, on the other hand, tend to see the future of the network in its local appeal. They want to attract school and university students by offering event calendars and virtual scheduling. Regional newspapers or associations can purchase "special profiles" and include links to their own sites, and regional concert promoters can announce tour dates. Using services like these, VZ could obtain more detailed local information, which it could market through targeted advertising or other services.

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• Part 1: Facebook LOL as Germany's StudiVZ Loses Ground
• Part 2: Data Privacy Concerns