“Tweeting’s so yesterday,” declared a headline in China Daily from June of last year, an obvious pronouncement in a country with Twitter blocked and only 10 million of its one-billion-plus population on microblogs. The story featured Sina Weibo, a new microblog platform from a company better known for its news portal, and talked about how the Twitter/Facebook-inspired site compared favorably to its American counterparts and that celebrities had taken to it. It was a headline that turned out to be a harbinger of incredible growth to come.

Weibo grew to 50 million members by October, 100 million by February, and recently blew past 200 million according to its most recent Q2 financial results. PC Magazine calls it “serious competition” to Twitter, American celebrities – including Tom Cruise, Bill Gates, and several NBA players – already have accounts, and an English version is due to launch in the next few months.

Sina wasn’t the first to copy Twitter in China, but they will be the first to overtake the original’s user base, repackage what was a Western cultural import and then retransmit its similar-but-superior form back to its country of origin. Will Twitter soon be “so yesterday” for the rest of the world too?

Origins

Following the sensitive 20th anniversary of the Tiananmen Square protests, which Twitter and its earliest domestic knockoffs were made temporarily inaccessible, and the Xinjiang riots in 2009, which left them indefinitely blocked, Sina Weibo launched at the perfect time a month later to quickly fill the microblog vacuum.

Weibo outmaneuvered Twitter from the get-go. It wasn’t just that Twitter never had a Chinese interface and those that wanted to post via SMS had to send their messages overseas, but the speed and direction at which Sina innovated. That direction was, and continues to be, toward full-blown social networking platform.

Product

Followers, hash tags, mentions, @ replies, as well as its 140-character restraint were all copied from Twitter (although it’s important to note that the higher information intensity of Chinese allows users to say about 3x more than English within that restraint), but Weibo went further, becoming less a clone and more a supercharged Twitter/Facebook hybrid, bolting on:

  • In-message comments
  • Embeddable image, sound, and video attachments
  • Richer profiles
  • Gamification elements with medals and weipoints
  • Groups
  • Account analytics tool
  • Instant communication
  • Emoticons
  • Group buying
  • Location based services
  • Polling
  • Apps
  • Marketplace
  • It’s own currency called the weibi

Twitter, on the other hand, originally inspired by the shortspeak of taxi dispatch communication, prides itself on minimalism and remains reluctant to change.

Both microblog platforms have mobile apps (Weibo already has one in English) and HTC features a stand-alone button for both platforms on select handsets. The biggest coup, however, came when Apple announced deep integration of Twitter into iOS 5. Since Twitter is blocked in China, it’s yet to be seen if this feature will be disabled on Chinese iPhones or if Apple will swap in the local variant, Sina Weibo. Outside China this means Twitter has a bigger moat to defend itself.

HTC Handsets with Twitter and Weibo button

HTC released separate handsets with Twitter and Weibo stand-alone buttons.

There’s one additional feature, of course, which Weibo has and Twitter doesn’t have: a behind-the-scenes automatic filtering system and hundreds of censors working 24 hours a day devoted to expunge objectionable material.

Government Regulation

Deutsche Bank during the Mideast uprisings downgraded Sina on fear of “tightening government regulation”. Reuters, too, in a story covering the recent Wenzhou train crash, said “Chinese officials, Internet operators, media and citizens are all players in an online contest over how far microblogs will be allowed to challenge the censorship demanded by the Communist Party.”

This fear is overblown. Sina has a decade of experience handling sensitive content and working with the government. Keso, one of China’s top IT bloggers, outlines three reasons why Sina Weibo won’t be shut down:

  1. People need an outlet for their views and emotions, and a visible one is safer than an invisible one.
  2. Sina Weibo is controlled by people the government trusts, and the risks from shutting Weibo are greater than the risks from not shutting it.
  3. The government can use Weibo to its advantage.

(Note: a previously-published version of this article inadvertently removed attribution to Bill Bishop’s DigiCha blog, in a post on why Sina Weibo will not be shut down. We take attribution very seriously, and we apologize for quoting Bill’s translation without attribution.)

Last but not least, Charles Chao, CEO of Sina, has an ace up his sleeve that other microblog platforms do not: his close friend, and former Sina CEO, is the son-in-law of Chinese Premier Hu Jintao.

Sina knows how to successfully navigate the sea of censorship that is China, but expansion outside China, no matter how superior their product, will depend on a delicate balance between compliance back home and convincing users overseas that foreign government influence isn’t something to worry about. “When it comes to exporting Weibo, the problem is not functions but values,” said Evan Osnos spot-on in an article in The New Yorker.

English speakers will likely not jump at the chance to have their microblog muzzled by the Chinese government and instead opt to use the platform already with network effects and, as blogger and activist Ran Yunfei hails Twitter, “a headquarters for the retention of data and truth.”

Weibo will become the Singapore of microblogging networks – it’s clean, it works, it borrows heavily from the West, but maintains strict control. And feels stifling to anyone not a native.

The same walled garden that China has built to keep questionable foreign Internet companies out will in turn hobble its own Internet companies from reaping open fields abroad.

Monetization

At the Global Mobile Internet Conference in Beijing last April, Sina CEO Charles Chao expressed six ways to monetize Weibo:

  • Targeted advertising
  • Social games
  • Real-time search
  • Value-added services
  • E-commerce
  • Data analysis

For the time being, however, Chao is gunning for growth over profits. “Our priority right now is more focused on product and trying to make the platform bigger,” he told CNN.

Goldman Sachs predicts that by 2012 Sina Weibo will have revenue of $21 million. EMarketer analyst Debra Aho Williamson reports that Twitter ad sales could hit $250 million in 2012.

Twitter rakes in most of its revenue from targeted advertising such as sponsored tweets, sponsored trending topics and promoted accounts, while Weibo has advertising and applications as its two main streams. However, even if Weibo surpasses Twitter in user count, which it will, the majority of its users will still be in China and not worth as much to marketers. Twitter, on the other hand, has access to global online ad dollars.

A final difference to note is Sina’s embrace of the developer community to foster a vibrant Weibo ecosystem, as opposed to Twitter’s more measured approach with the developer community. Last November, Weibo launched a $30 million fund with IDG and Sequoia for developers to create third-party applications for Weibo. There are already over 1,000 mobile apps on the Weibo platform.

Could Weibo Take Market Share From Twitter?

Weibo’s additional functionality has been a driver of its growth and could potentially make it an attractive alternative to Twitter. However, with any new social network, including Google+ today, there is a chicken-and-egg problem of users not going there until there are compelling people to connect to. Weibo will benefit from American celebrities already using its network, but those same celebrities are also on Twitter, unlike the Chinese celebrities where Weibo was the only place to find them microblogging.

Content providers will likely embrace Weibo as just another distribution outlet, and will likely use the greater functionality to provide things on Weibo that they aren’t able to do on Twitter, which will also drive people to test the new social network.

But greater functionality could be a double-edged sword, as many people may find Weibo just a mashup of Facebook and Twitter, two services they are already happy with.

In any case, Weibo is coming, and people will try it. Whether or not it takes off and presents a credible threat to Twitter’s microblogging dominance outside of China remains to be seen, but it could certainly happen. At the very least, Weibo will likely force Twitter to think more deeply about its product, which will be good for the Twitter ecosystem.


A version of this report also appeared in Wedbush Securities’ The Second Internet newsletter.

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