Popular social network Ning to move from free to fee

On RussianMaryland.Ning.com, a social network site with loads of information and images neatly tucked beneath a banner of the American flag, hundreds of people gather to discuss issues in the local Russian community, share photos of their children and join such groups as the Women's Club and Your Path To Success.

The site comes courtesy of Ning, an online social platform that offers free services to millions of users who create, design and manage their networks with everything from information to images to music to blogs.

But that's about to change. Ning is expected to announce today that it will phase out its free services and charge users who create networks a fee.

If users have to pay, RussianMaryland.Ning.com's creator, Tatyana Baytler of Columbia, is worried that the site she put up nearly two years ago may disappear.

"That is very upsetting," said Baytler, who was born in Russia but has lived in the Baltimore area since 1995. "We don't have any funds. It's a Russian community website, and nobody is really paying for anything. If they start charging for this, it will go away."

Other Maryland sites, such as those created for educational technology as well as for groups at Towson University, might also be phased out.

Even local network creators who are currently paying for Ning premium service, like the Baltimore Real Estate Investors Association, voice concern about Ning's move.

"We love the service, but we hope it doesn't price out individuals who aren't able to afford it," said Charles Blair, internet and social marketing consultant for the Baltimore Real Estate Investors Association. "Will it be cost-effective enough to keep [smaller] groups alive?"

The 5-year old, California-based company, which also generates revenue from ads placed on network creators' sites, expects to implement the new pay structure by summer. Currently, Ning premium users pay fees such as $4.95 for a domain name and $24.95 a month to remove ads from their sites.

Ning has more than 2 million networks with 44 million registered users; the company says that those who join a network will not be charged a fee.

Ning officials did not agree to an interview, but instead issued e-mail and phone replies to questions. They said that 80 percent of Ning revenue comes from the 5 percent of customers who use premium service, and added that premium networks drive 75 percent of Ning's monthly U.S. traffic.

Scott Steinberg, head of the high-tech firm TechSavvy Global, said that Ning's move indicates a social network landscape where "profitable is the new popular and trendy."

"As we've seen with Ning, a lot of these services launched [with] great fanfare and offer tremendous promise," Steinberg said, "but they also have to bow to basic laws of supply and demand, and this is a classic case of the 80-20 rule, where 20 percent of the customers make up 80 percent of the profits."

On the other hand, Steinberg said, sites such as Facebook are generating a profit, because in addition to offering social network services they offer options such as games and virtual goods for purchasing.

"Look at a game [on Facebook] like FarmVille, which has 80 million users, and then offers the ability to purchase within the games virtual goods all for different value-minded price points," Steinberg added. "Something like Ning, they provide services, there's advertising based revenue and there's market researching plans as well, so they can offer very highly targeted advertising. But Facebook is almost a self-contained ecosystem."

But Blair said that many organizations choose Ning as an alternative to Facebook.

"The power of Ning is that your message can be targeted toward a project, cause or market without any distraction," Blair said.

Baytler launched RussianMaryland.Ning.com to help serve the non-profit Russian Maryland Cultural Center, where she sits on the board of directors. Though the cultural center has its own website, the Ning site helps spread the word about its events as well as other happenings in the local Russian community.

Ning was created in October 2004, by Netscape Communications founder Marc Andreessen and Harmonic Communications co-founder Gina Bianchini, who also served as CEO before stepping down in March. The company received $119 million in investor funding. A 2007 blog post by Bianchini said that a $44 million investment that year was led by Legg Mason Investments.

Its name means "peaceful" in Chinese, and Ning promotes itself as "the social platform for the world's interests and passions online."

Currently, Ning offers premium site support for a minimum $10 a month. A domain name for a Ning network costs $4.95 per month. Increased storage and bandwith runs for $9.95 per month. Going ad-free on a Ning network costs $24.95 a month.

Ning's decision to end its free service was announced in mid-April via blog entries posted by CEO Jason Rosenthal, a former chief operating officer who replaced Bianchini. At the same time, he announced that Ning was laying off about 40 percent of its staff.

Rosenthal stated in the blog post that Ning network creators who want to discontinue their service will be offered a "migration path" and time to leave Ning. He added, "We will still continue to allow free trials and test networks on the Ning Platform."

Rosenthal wrote in his blog post that Ning will have pricing options that "will make sense" for such cash-strapped network owners as teachers, small non-profits and individuals. In another blog post, he said users will have at least 10 weeks to decide whether they want to keep their network on Ning.

He said Ning would offer details on its new fees via blog posts, e-mails and conference calls, but getting the word out still appears to be a problem.

"I was not aware there was going to be this change," said Judy Tomelden, executive director of the Maryland Society for Educational Technology, which launched its Ning network a few months ago. She said that Ning's move would "tremendously" affect the group, adding that it switched from Facebook because Facebook is blocked by many local school networks.

Barbara Bass, director of Towson University's Maryland Writing Project, said the group set up its Ning network about a year ago but rarely uses it, opting for its Facebook site.

Still, Bass said, "If there were to be a charge for either [Ning or Facebook], we wouldn't use them."

Baytler hopes that Ning allows some network creators to keep their sites for free, but she knows that's not likely.

"I don't think any of [the network members] will contribute to it," she said. "The site is almost two years old, and I'm pretty sure it will go away."

joseph.burris@baltsun.com

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