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September 26, 2006

Microsoft spinout Wallop launches social networking service

Posted by David Hunter at 11:59 AM ET.

Back in April, Microsoft did a “spinout” of some Microsoft Research social networking technology to a startup called Wallop as part of their IP Ventures program. Aside from the basic novelty of Microsoft selling off unused technology for a share in the resulting company, it raised a few eyebrows since Wallop competes with Microsoft’s own social networking initiatives like Windows Live Spaces as well as the biggies like MySpace.

Well, whatever the wisdom of dividing the field, Wallop launched its service in beta today:

Wallop, a company spun out of Microsoft and backed by veteran venture capital firms, today launched its beta product, a breakthrough innovation in the social networking space with a unique business model. Wallop, an invitation-only network, for the first time combines a social networking site with a marketplace, enabling an entirely new way to self-express and enhance a person’s increasingly important online image. Central to Wallop’s business model will be Adobe® Flash developers and designers who will sell their personal creations on Wallop’s marketplace. Now Flash experts, who have been responsible for many of the most innovative Web concepts, can make money doing what they love without any of the business hassle.

Wallop’s marketplace model empowers users to further enhance their online image by purchasing ready-made, interactive forms of self-expression, or what Wallop calls “Mods” from Flash developers and designers who are members of the Wallop Modder Network (WMN). Thanks to this rapidly growing group of Modders, Wallop’s marketplace is populated with original Flash content, such as interactive characters, stylistic backgrounds, graphical features and games, ready for purchase by the broad market of Wallop consumers.

More than four years of research at Microsoft combined with Wallop founders Karl Jacob and Sean Uberoi Kelly’s vision for leapfrogging existing social networks, led Wallop to focus on the larger trend of self-expression online with the simplicity people experience in the real world.

I view it as a spiffier version of the pervasive MySpace “enhance your profile” business, presumably without the cheesecake (or maybe not). If this sounds a little wacky, read Michael Arrington’s discussion of the Wallop business model at TechCrunch:

Unlike the other social networks, Wallop CEO Karl Jacob says he has no plans to ever put advertising on the site. It just lessens the user experience, he says. Instead, Wallop wants a piece of the $3 trillion per year U.S. market for self expression items (clothes, furniture, beauty supplies, etc.). As sites like Cyworld have shown, people are willing to spend money for online expression items, too (Cyworld brings in a reported $300,000 per day in microtransactions to its users).

So Wallop has created a marketplace for “self expression” items on the site. Flash developers can create items and sell them to users. Music clips, animated widgets, artwork, avatars, clothing for avatars, etc. will all be for sale. Wallop handles payments and DRM, and takes 30% of the sale price. The rest goes to the seller.

At the moment, membership in Wallop is by invitation only from someone who is already a member or by asking for an invitation at http://www.wallop.com/.

Update: Best line – “Wallop, the social network where you pay for pretty.”



Filed under Alliances, Coopetition, IP Ventures, Microsoft, MySpace, Patents, Social networking, Technologies, Windows Live, Windows Live Spaces

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