On Sina Weibo’s 3rd Birthday, Monetization Worries

August 28th marks the third year since Sina Weibo first launched in public back in 2009. In those three years, its user growth has been more than three times faster than Tencent’s QQ chat software, which ended its first three years with over a hundred million users. Sina Weibo has 368 million. But Weibo hasn’t lived up to expectations that it would become Sina’s (NASDAQ:SINA) biggest cash cow — at least, it hasn’t yet. In honor of the site’s third birthday, TechWeb has a long article reviewing its history and assessing its prospects.

The service was conceived at a meeting in May of 2009 in Chengdu, inspired by the rapid growth of Twitter and the desire to channel Sina’s large userbase into an interactive product. Although Sina’s executives likely wouldn’t admit it, the site was also inspired by Fanfou and other Chinese microblogs, which had been launched years earlier and were still in operation at the time Sina’s executives convened the Weibo meeting. A month later, though, those independent microblogs would all be shut down as the result of government censorship. Twitter and other overseas microblogging services were blocked. China was suddenly without a single microblogging service, and Sina could step unimpeded into the newly-created void.

Sina’s growth was immediate; no surprise given that there were many microblog addicts in China who hadn’t been able to get their fix since June. Within 66 days of the service’s August launch, it had broken a million users. Within eight months, ten million; within 14 months, 50 million. By the end of 2010, the site had broken the 100 million user barrier it took Tencent’s QQ three years to reach. Today, the count sits at more than 368 million, although only about 36.5 million of those are daily active users, according to Sina’s latest SEC filings. Needless to day, Sina’s stock price soared along with its user count.

Of course, along its journey, Sina Weibo has also had a tremendous effect on Chinese society. The sheer speed at which information travels — combined with the amplification effect that occurs when millions of users are angry all at once — has put Weibo in the middle of a number of recent important incidents from last year’s high speed rail crash to the infamous “My dad is Li Gang!” incident. As Kaifu Li put it, “Weibo has changed everything.”

Despite these accomplishments, weibo has struggled to define itself. Techweb’s Zhang Rui writes “the value of a social media service is information; the value of a social network is user relationships.” Weibo is obviously a powerful tool for spreading information, but that can be difficult to monetize effectively. And in a country where information often has to be tightly controlled, its value is diminished. As its userbase grows, Sina is forced to employ an increasingly large army of censors who patrol its pages for illegal information.

Sina Weibo does fill the role of a social network for some, but it hasn’t yet managed to replace Renren or China’s other more ‘traditional’ social networks. Weibo’s upcoming new design looks to take another step in Renren’s direction by allowing people to share to specific social circles, much like Google Plus’s Circles feature. Whether this will really increase user interactivity and make the service more of a place to chat with friends and less of a broadcast platform has yet to be seen. But the transition from a social media platform to a social networking platform isn’t likely to be an easy one.

But Weibo’s biggest problem is the same as it has always been: whence come the profits? It seems like a service with so many users ought to be rolling in dough, but Sina has struggled to monetize Weibo both directly and indirectly through a march of products (like Weibo Games) that have universally underwhelmed. Weibo has become a platform for all kinds of things (games, search, chat, Pinterest clones, groups, etc.), but none of them seem to be able to make Sina much money.

Internet analyst Wei Wuhui put it thusly:

[Sina] trying everything isn’t because it plans to transform Weibo into a platform, it’s what one does when searching in all directions trying to figure out where the profits are.

Internet expert Wang Yuquan agrees:

Sina Weibo’s biggest flaw is that it doesn’t understand tech products well enough. Sina still hasn’t been successful in taking 400 million users and turning that into something that actually has value.