What’s Up With Ning?

It’s been a year since self-service community provider Ning announced that it would be eliminating free accounts and moving to a pay-to-play model.

So where are we a year later?

First, some disclaimers and caveats:

1.) I manage Delphi Forums, which — while very different from Ning — could be seen as a competitor. But Ning is a lot bigger, and given the amount of funding and attention Ning has received, I doubt Delphi is even a blip on their radar screen.

2.) I have not engaged in any real journalism here and have no information about Ning beyond what my trusty research assistant, Mr. Google, has been able to dig up.

Back in August, I blogged about this and expressed skepticism about some comments Ning CEO Jason Rosenthal made in a Forbes blog post. In that Forbes blog post, Mr. Rosenthal said that Ning hosted some 315,000 communities: 300,000 free and 15,000 paying, adding that the free communities accounted for only 25% of traffic. Just last week, Mr. Rosenthal was quoted in the Wall Street Journal’s Digits blog as saying that more than 50,000 free communities eventually became paying customers. In addition, he says 25,000 new communities signed on as paying customers over the past year. Revenue for the year, Mr. Rosenthal was quoted as saying, will be up by about 400%.

Not bad.

Here’s the part I don’t get:

If free communities only accounted for 25% of traffic, 50,000 free communities eventually became paying customers, and they added 25,000 communities on top of that, Ning shouldn’t have seen much of a drop in traffic in the past year. But they have. Granted, I don’t know what Mr. Rosenthal is referring to when he talks about “traffic.” (Page views? Unique visitors? Total visits?) But when I look up ning.com on Compete and Alexa, both sites show significant drops in traffic over the past year.

Lacking more specifics from Ning, I don’t know what to make of these numbers. But here’s my guess:

I’ll bet Ning lost a lot of the “long tail” communities: small communities built around a shared passion that bring people back day after day. Individually, these types of communities may not amount to much. But together, they probably accounted for a good chunk of traffic. These types of communities would presumably be reluctant to pay for community tools when there are free options available.

I don’t doubt Mr. Rosenthal when he says Ning’s revenue for the year will be up about 400%. That business is likely coming from the larger brands and media companies that use Ning. And, at the end of the day, it’s revenue — not traffic — that makes or breaks a business. So in that regard, Ning’s decision worked out well.

That’s my theory. What do you think is going on with Ning? Please add your comments.

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