White Paper

Challenge 2.0: Social Networking

Drives New Requirements

Prepared by

Aditya Kishore
Senior Analyst, Heavy Reading

www.heavyreading.com

On behalf of

www.level3.com

December 2007
Introduction
Social networking is exploding. In October 2007, Alexa found that 7 of the top 10 most visited
Websites globally were Web 2.0 sites. A month earlier, ComScore reported that MySpace, with
more than 55 million unique visitors, is still growing at a healthy rate of 23% year over year. Over
the same time period, Facebook increased its number of unique visitors by 129% and Bebo grew
83%. But the fastest growth came from Imeem, which boasted year-over-year growth of 1,590%.
That's an astounding 16 times the number of unique visitors the site had last September.

Nor is this phenomenon restricted to the U.S.: Research by the Oxford Internet Institute in March-
April 2007 showed that 17% of U.K. Internet users have created a profile on a social networking
site. In India, 51% of online urban adults use social networking sites and sites such as Orkut and
Facebook now account for 44% of time online, with more than 11 million Indians getting hooked
on them, according to the India Online 2007 survey. Home-grown sites such as GoYaar are also
emerging in India, to tap into the potential of social networking. In China, sites such as Zhanzuo,
Xiaonei, Yeejee, ChinaRen Xiaonei, and 5Q are attracting millions of members from the younger
generation. And Morgan Stanley research has determined that Brazil has the highest usage of
social networking sites in the world.

Data from U.K. regulatory body Ofcom, presented in Figure 1, illustrates that people all around
the world are using the Internet for social interaction.

Figure 1: The Increasing Popularity of Social Interaction Using the Internet

Source: Ofcom ICMR, 2006

What's Driving This Growth?

A number of factors have converged to push social networking past the Gladwellian "tipping
point." These factors include:

1. Online Multimedia: The digitization of media content has made the Internet a viable
channel for the distribution of all types of media. According to the February-April 2007
wave of the Pew Internet & American Life Project Tracking Survey, 57% of online adults
have used the Internet to watch or download video, and 19% do so on a typical day. And
according to a joint study conducted by Arbitron and Edison Media research in 2006,
weekly Internet radio and video audiences have each increased 50% over the last year.
This familiarity with online media consumption is also facilitating the creation and sharing
of personal digital media – an important driver of social network usage.

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 2. Broadband Access: More than half of all U.S. households now have broadband, and a
substantial base of households are now using broadband around the world, as demon-
strated by data from the OECD, presented in Figure 2. Broadband speed encourages
online activity, and the always-on access and faster downloads improve the Web experi-
ence for users. Broadband subscribers are likely to spend more time online than dialup
subscribers, and are also more likely to view multimedia content.

Figure 2: Global Broadband Subscribers

Source: Organisation for Economic Co-operation and Development, 2006

Excluded for scale: Japan (25,755,080 subscribers); U.S. (58,136,577 subscribers)

3. Digital Media Production Tools: The ubiquity of digital cameras and cameraphones is
also helping the growth of social networking. Nokia alone sold 140 million cameraphones
in 2006. Social networks facilitate photo sharing by making it easy to upload them to your
profile page; that's why 1.7 billion photographs are stored on Facebook and 60 million are
uploaded weekly. Similarly, digital camcorders and videophones facilitate video creation,
and video editing tools such as Apple's iMovie are enabling post-production capabilities
previously limited to professional suites. More than 65,000 videos are posted to YouTube
every day, and many social networking sites also allow members to embed videos.

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 4. Development of New "Web 2.0" Technologies: New capabilities such as AJAX and
RSS facilitate faster interactivity by speeding the response time from the Web page. RSS
allows easy syndication of content posted on one site to another, while AJAX enables
Websites to update specific content within a Web page without reloading the entire page.
These technologies give Web-hosted content a speed and responsiveness that was pre-
viously available only on desktop applications.

5. Steady Stream of New Applications: Today, Facebook has more than 40 million mem-
bers, compared to 9 million last year. One important driver of its growth has been the fact
that it has opened up to third-party application developers. Now members can bite or be
bitten by vampires, show places they have visited on a map, poke their friends online,
and use more than 6,000 other third-party applications. While the rational argument for
these applications may be unclear, consumers enjoy using them and they have proven a
useful value-add to the online experience of a social networking site.

Recognizing the impact of these applications, in November, 2007, Google announced the
launch of a new platform, OpenSocial, to support similar applications across a number of
social networking sites. Based on the widely-used HTML and JavaScript, as well as the
Google gadgets framework, OpenSocial includes a set of common APIs for building so-
cial applications across many websites. The initial sites supporting OpenSocial include
the Google-owned Orkut, Bebo, Engage.com, Friendster, hi5, Hyves, imeem, mixi,
MySpace, Ning, Orkut, Plaxo and Six Apart. It also includes professional networks such
as LinkedIn, Salesforce.com and XING, among others. The availability of this common
platform for application development will further accelerate new applications and drive
new growth in social networking.

6. Online Interaction Becoming the Norm: People have always had things to say, and
have wanted to share their opinions with friends, acquaintances, and even perfect
strangers. Witness the famous Speaker's Corner in London's Hyde Park, where ordinary
citizens with have for years stood up to speak, while others have stopped by to listen.
Consumers have been using Internet applications such as email and instant messaging
for social communication and interaction, but social networking takes this to a new level.
These sites further simplify the process of communication, particularly to groups.

7. Commercial, Personal, and Industry Value: Social networking is not only valuable for
friends to keep in touch, or for purely recreational use. Sites like LinkedIn are a valuable
resource for recruiters and industry professionals, and large companies such as Ernst &
Young are creating sponsored pages on Facebook targeting prospective hires. Similarly,
Match.com, eHarmony, and other dating sites are using social networking as a tool for
single people to find companionship. Social networking is proving an effective community
tool for a number of purposes.

Supporting Meteoric Growth Creates New Challenges

However, the capabilities of social networking sites are also creating new and unique technology
requirements. Providers of such sites need to be aware of the significant challenges posed by
Web 2.0, including:

• Rich Media Files: Social networking sites are heavily dependent on creating personal
profiles and sharing personal content. Thus, social networking sites must be capable of
supporting photo and video sharing – a critical driver of membership and usage. With 5-
megapixel cameraphones now on the market, the resolution of photos and videos posted
to Websites is increasingly extremely high, resulting in very large file sizes. For example,
CNET reported that the bandwidth consumed by the 54 million downloads of the popular
"Evolution of Dance" video was equivalent to Internet traffic for an entire month in 2000.

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 • Multiple Formats: User-generated content is like an electronic version of the Wild West.
Users are contributing content in a variety of formats, but the social networking site must
be able to upload and display the media at high quality. Thus, social networking sites
must be able to adapt or support a variety of file formats, catering to the breadth of con-
sumer preferences. User-generated content may also require social networking sites to
support third-party applications, generating further support requirements.

• Large Volumes of Content: As discussed earlier, one of the significant attractions of a

social networking site is the ability for users to share personal content online. This results
in massive volumes of rich media content needing to be stored, yet quickly accessible.

• Interactivity and Time Spent: Social networking sites experience higher levels of inter-
action. Firstly, visitors to social networking sites typically spend more time on them than
on most other kinds of sites. According to Compete Inc., MySpace accounted for nearly
12% of all time spent online by U.S. Internet users in December 2006. ComScore reports
that Facebook visitors spent a total of 15 billion minutes on the site between October
2006 and 2007, an increase of 631% year-over-year. And Nielsen found that sites such
as Facebook and Bebo were likewise driving high usage times in the U.K.

Figure 3: Time Spent on Social Networking Sites

Source: Nielsen//NetRatings, 2007

Visitors to social networking sites also tend to click-through to more pages, thereby generating a
higher number of page views. This is due to the nature of the sites, where different messages,
blogs, posts, photographs, and videos are all pulled together on one page in thumbnail or sum-
mary form, requiring users to click through to view them in full.

Where It Hurts Most

As a result of these factors, social networking sites can experience significant growing pains. The
primary challenges at the root of all their problems is managing scale in an unpredictable envi-
ronment, often featuring meteoric and non-linear growth. There are three main areas where site
performance can be compromised:

1. Speed and Uptime: Large media downloads slow Website performance, and sites must
maintain media quality, as pixelated photos or interruptions in video streams can frustrate
viewers. In the case of social networking sites, this works both ways – speedy uploads
are equally important, given the volume of user-generated content. And of course, site
uptime and availability are critical, as with any other Website. The viral nature of social
networking can also drive sudden and unpredictable spikes in traffic, where a massive
group of online users try to access one particular piece of content. This phenomenon,
known as a "flash crowd," can put an unbearable strain on support infrastructure.
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 2. Distribution: Another challenge resulting from essentially the same problem is control-
ling distribution costs while in the growth phase. Sites must be able scale economically
while still catering to non-linear user growth and sudden and unpredictable flash crowds.
This creates significant challenges, and costs can spiral out of control very quickly.

3. Storage: Social networking sites must be able to support large libraries of rich media
files, including high-resolution photos and video. The volume of this content grows rapidly
as membership grows; even existing users are likely to store increasing amounts of con-
tent as their involvement with the site deepens, driving non-linear storage growth. For ex-
ample, in May 2007 Facebook had 1.7 billion photos using 160 terabytes of storage, with
an extra 60 terabytes available. More than 60 million photos were being added per week,
requiring up to 5 terabytes of additional storage. The site was serving more than 3 billion
photos every day, with more than 100,000 images requested per second at peak times.

Pioneers like Facebook and MySpace have already had to battle through many of the challenges
that social networking poses to Website uptimes and performance. Figure 4 lists the various
challenges MySpace faced, and the various architectural reinventions it had to go through.

Figure 4: The MySpace Experience

LAUNCH TO 1 MILLION ACCOUNTS

• ColdFusion Web App Environment running on Windows

• Dual-processor Dell Web servers with 4 gigabytes of memory
• Microsoft SQL Server database
• Added Web servers with growth in membership and usage, as needed
• At 500,000 accounts added two additional database servers; one server used as master
copy, two using replicated data to retrieve data required to support application

1-2 MILLION ACCOUNTS

• "Vertical partitioning" strategy to solve I/O capacity bottleneck on database servers

o Separate database servers for different functions: blogs, user profiles, login, etc.
o Add new database server for every new feature
o Added SAN instead of directly attaching storage to database servers

3 MILLION ACCOUNTS

• "Scale-out" approach adopted: Distributed architecture, where multiple distributed serv-

ers are architected to function as one. Required as vertical partitioning strategy breaks
down: Even individual apps require too much from a single server.
• Split user base into groups of 1 million and stored data on separate SQL servers, though
still use single database to manage login

10+ MILLION ACCOUNTS

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 • Switch from ColdFusion to Microsoft's C# running under ASP.NET; as a result, cut server
requirements by 40%
• Move from existing SAN architecture as I/O capacity got swamped, to virtualized storage
architecture where entire SAN is used as a giant storage pool by "striping" volumes
across thousands of disks as needed
• Added caching tier of servers between Web servers and database servers to reduce
database lookups
• At 26 million accounts, switched to SQL Server 2005 to fully exploit 64-bit processors, in-
creasing memory leverage first from 4 gigabytes to 32 gigabytes, then on to 64 gigabytes
Source: MySpace; Heavy Reading Analysis; "Inside MySpace.com," David F. Carr, Baseline,
January 16, 2007

Leveraging Third-Party Vendors to Support the Cycle of Growth

Given that the growth cycle for social networking sites is unpredictable, managing the technology
requirements from startup to millions of users is a particularly challenging task. As described in
Figure 5, there are new requirements for a young social networking site at every stage of growth.

Figure 5: Managing Non-Linear Growth Through Effective Infrastructure Selection

STARTUP GROWTH MATURITY

Very cash-constrained
Evolving business model;
Video applications and flash
CRITERIA

Turnkey solutions
BUYING

need to manage to near-

crowds drive performance and
term cash constraints Unique end-to-end SLA support
reliability requirements
Extremely fast growth: Reporting requirements
Nationwide service coverage
>100% per year
Bundled service pricing
Evolvable network architecture
Limited congestion and optimal
REQUIREMENTS

A network that can grow Network lifecycle management

performance
very rapidly
MARKET

Collocation migration Solid understanding of segment

Success-based, competi- requirements
tive pricing "Scale out" decision to distribute
resources to optimize end-user Single point of accountability
Experienced provider for
experience across locations and Low latency for content
support and expertise
spread risk for disaster recovery
Single point of accountability
PRODUCT NEEDS

Colocation services IP transit

IP transit CDN
IP transit
CDN Colocation services
Managed hosting
Implementation services Implementation services
Professional services Professional services
Source: Level 3 Communications Inc.

Third-party vendors have been an important resource to help social networking sites navigate
their growth cycle. For example, rather than trying to create a massive storage and serving infra-
structure of its own, a site can use a third-party content delivery network (CDN) to support its
growing audience and deliver high performance. This would also allow the site to pay only for
what it needs, rather than make a massive up-front gamble for a theoretical user base that might
never materialize. In addition, third-party vendors can offer software and tools that have already
been developed and proven in the field, and provide the benefit of their experience in developing

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such systems. Nor do these economic advantages end at some stage of growth – most major
media sites use CDNs extensively today, long after aggregating large online audiences.

While third-party vendors help most Websites manage performance, social networking sites face
certain unique requirements from a technology perspective. These are the critical components
that a complete site solution must be able to support, both today and in the near future. The criti-
cal components for a solution supporting social networks are:

• Segmented Viewing Support: All content is not equal, at least in terms of the number of
people who will choose to access it. Certain media assets are relevant for entire regions
with millions of viewers. Others – such as a picture of an individual member – are only
viewed by a handful of close friends and family. Thus, while the total user base for a site
may be substantial, there will be certain media assets that are only requested by small
segments. As a result, managing storage, distribution, and caching will require predictive
analysis and expertise. In many cases, this is more important for social networking sites
than traditional performance requirements such as download speeds. While there obvi-
ously needs to be a baseline level of performance for any asset on the site, storing a sin-
gle picture of a member in hundreds of servers around the world is unnecessary. Third-
party CDNs can bring this expertise to a small startup and help determine where the me-
dia asset should be stored, based on the group that will be most likely to request it.

• Hierarchical Caching: Beyond the breadth of audience appeal, there are other factors
that could influence the popularity of a media asset, such as user recommendations or
how recently it was posted. A vendor can help sort assets and cache them in hierarchical
tiers and improve cache-hit ratios – an important requirement. Thus, new media that is
more likely to be requested can be given a higher priority, while older media may be
moved to a lower tier. Some sites also use a user-generated social recommendation ap-
proach, where users rank content and content is pushed higher or lower in the list based
on their ratings. Vendors must be able to support this requirement, and adjust rapidly
where needed. Comprehensive real-time or near-real-time tracking tools should be in
place to allow for dynamic reallocation of these assets to a more appropriate tier if usage
patterns change. If an asset is being requested frequently, it must be pushed to the edge
and replicated more widely, so as to ensure rapid downloads for requesting members.

• Origin Offloading: The more content stored on a CDN, the lower the infrastructure in-
vestment on storage and bandwidth capacity for the social network itself. In the past,
CDN-based media propagation was based on pulling content in real time from the site's
own servers, and then storing a copy on the CDN for future requests. But social network-
ing sites are increasingly offloading content prior to it being requested, or doing regular
updates to push content onto the CDN proactively, rather than wait for it to be requested;
this alleviates the buildup of requests off their own infrastructure. Given the unique re-
quirements of social network site usage, this is a particularly important attribute and will
have a considerable and direct impact on operational costs.

• Authentication, Measurement, and Usage Tracking: Tracking and measurement are

critical components for the sustained success of a social network. Sites need to know
where the demand and usage is coming from, and for what assets, in order to optimize
their site for the end-user experience. This could be even more critical for sites with a
syndication model, such as YouTube. The viral model can backfire quickly if there isn't
enough insight into who is linking to the site's content, and how to control and manage
access. As social networks look to advertising to monetize their service, tracking and
measurement as well as authentication and control will become critical for profitability.

• Mobile Interactions: We anticipate social networking will develop into a significant mo-
bile activity. Most major social networks can be accessed via a mobile phone today, and
MySpace recently launched an advertising-led mobile version of its Website. As consum-
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 ers download and upload their content via mobile devices, there will be a need to man-
age these capabilities for both wireline and wireless environments. Social networking
sites launching today should be evaluating infrastructural decisions to support these ca-
pabilities.

Summary and Conclusions

Social networking sites are growing at a breakneck pace already, and the primary drivers of
growth are actually still gathering strength. Broadband penetration is increasing, familiarity and
usage of online media is growing and the network effect is making social networking more attrac-
tive. Thus, many of the infrastructural challenges discussed previously will only become more
significant for social networks.

Infrastructure drives performance, which is particularly valuable for social networking sites, as
they are mostly advertising-sponsored. Ad-sponsored sites constitute an "easy in, easy out"
model: Consumers are more likely to sign up and experiment with the site, but are also more
likely to move on if it does not perform to expectations, since they have made no investment to
stay engaged with it. As a result, high performance becomes even more important for ad-
sponsored sites, as their revenues are directly tied to metrics such as membership, visitor traffic,
page views, and time spent.

At the same time, a social networking company needs to be able to manage costs effectively,
particularly in the face of unpredictable non-linear growth. The right selection of infrastructure
vendors will therefore be critical for cost-effectively supporting performance, which will in turn
drive advertising revenue, profitability and the company's valuation. Effective use of third party
vendors can allow a social network to navigate not only the challenges of non-linear growth but
also the unpredictable inflection points in that growth trajectory, where membership can double or
triple suddenly without warning.

Social networks evaluating third party solutions should keep the following points in mind:

ƒ Vendors must have the experience and expertise to support the social networks needs.
The network should be able to look to the vendor for advice on distribution needs for dif-
ferent types of assets. Vendor experience can help provide insight into hierchical cach-
ing, origin offloading and segmented viewership support decisions, as well as a host of
other decisions that social networks will need to take.

ƒ Vendors should be able to offer a comprehensive solution-set to support the eco-system

of social networking technology needs. A vendor with a comprehensive set of capabilities
will allow for a pre-integrated solution that works, and a single point of contact to take re-
sponsibility for the functioning of the service.

ƒ Vendors must be able to scale rapidly. Given the unpredictable and non-linear growth
patterns of social networks, vendors will need to be able to scale very quickly in response
to demand. Bandwidth, in particular, will be a critical requirement as rich media distribu-
tion on the Internet becomes increasingly mainstream.

ƒ Vendors must be able to cost-effectively support social networks at different stages of

their lifecycle. A small start-up network is going to have a different set of criteria from a
major, established, multi-million subscriber network. A vendor must be able to demon-
strate capabilities for the entire range of social networking sites.

ƒ Vendors must have a global footprint. Social networks gain members from around the
world, and must be able to provide performance regardless of the geographic origin of
the member. Vendors must have the global presence required to support these needs.

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Social networking is certainly growing explosively, and offers an important market opportunity.
Given a strong support infrastructure, a social network can provide high performance without
breaking the bank. And it can do so consistently throughout its lifecycle, reducing member churn
and maximizing usage and revenues at various stages of growth.

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About Heavy Reading

Heavy Reading is the research and consulting division of Light Reading, the world's largest tele-
communication news and information destination. Light Reading leads all telecom media in terms
of traffic, content, and reputation, and reaches every level of the telecommunications pyramid:
service providers, equipment manufacturers, and the business/financial community.

With a monthly audience in excess of 400,000 unique visitors, Light Reading is easily the largest
online telecommunications publication in the world. In fact, Light Reading's monthly readership is
greater than the audited circulation of its all its print competitors combined. More info at
www.lightreading.com and www.heavyreading.com

About the Author

Aditya Kishore has more than 12 years' experience in consumer media. His coverage areas at Heavy Read-
ing include digital media technologies and services, and their distribution over broadband networks.

Prior to Heavy Reading, Kishore was the Director of Global Media and Entertainment at the Yankee Group.
He was responsible for managing and coordinating media research across Yankee Group analyst teams in
North America, Europe, and Asia. Kishore began his career in television news, then spent three years in
advertising, working with a range of leading consumer brands, including Nestlé, Samsung, and McDonald's.
He also developed a number of digital video and Web projects for various New England broadcast stations
and independent producers, including interactive video projects with the PBS network series Frontline.

Kishore holds a B.A. in economics from Delhi University, India, and a Master's in television and New Media
from Emerson College, Boston. He is based in the U.K and can be reached at Kishore@heavyreading.com

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