Taking social networks abroad – Why MySpace and Facebook are failing in Japan

Sized at an estimated $5.6 billion in 2007, Japan boasts one of the biggest online advertising markets in the world – a huge potential just waiting to be tapped by foreign social networks. The world’s two largest social networks, MySpace and Facebook, barely register in Japan. As the Google Trends for Websites chart above shows, local social network Mixi is outpacing both in Japan. On Alexa, Mixi is ranked the No. 6 most popular site in Japan, compared to No. 95 for MySpace (Facebook doesn’t even make it into the top 100). MySpace and Facebook are trying – but why are they failing?

Complacency and failure to adopt to cultural differences

Social networks have become integrative elements of modern American youth culture over the last years, shaping social patterns and changing the ways that people communicate. When taken abroad, these services have to deal with a large number of cross-cultural peculiarities by their very nature.

Societal and cultural gaps are particularly evident in the case of Japan. Market entry in this country with a “What works in the US must also work over there”-attitude is going awry for both Facebook and MySpace. It’s not a stereotype that communication tends to be nonverbal in Japan. The society generally puts more emphasis on the community rather than on the individual. Also, security plays a major role in many aspects of Japanese life.

These cultural distinctions largely explain why social networks from abroad have a hard time winning over Japan’s 90 million web users. Mixi, the country’s biggest social network, positioned itself as a tool for communicating at a distance through diaries and communities to meet like-minded members. It doesn’t primarily exist to make new friends (poking is restricted) or as a platform for public self-presentation.

A perfect example of a cultural misconception: Mark Zuckerberg recently said in Tokyo one of Facebook’s unique selling points is the usage of real names and photos in profiles. This may be true but it’s exactly what Japanese web users usually try to avoid. And they already have a high-trust, invitation-based social network anyway: Mixi.

Lost in Translation (Without Mobile, You’re Dead)

MySpace opened a Tokyo office in 2006, three years after launch in the US. It took Facebook four years to initiate a user-generated translation of their site. Too late – in the meantime Mixi developed into a $1 billion-listed company without the slightest competition from abroad.

Facebook’s hands-off approach especially leaves a lot to be desired. The quality of the site’s translation is amateurish in parts (at least in the initial version), a challenge MySpace’s local team was at least able to master. In addition, due to relatively weak English skills, most of the Facebook applications are pointless in the eyes of Japanese users. Without apps that make sense, Facebook is crippled. Facebook is also missing the function Japanese consumers deem fundamental in a social network: blogging. This paradox may be the site’s biggest drawback in blog-crazy Japan.

Perhaps an even bigger problem is that both Facebook and MySpace fail to offer an optimized version for Japanese handsets. Millions of Japanese are accustomed to using one thumb, a dialpad and a jog dial on their phones when accessing the web during their commutes to school and work. In this country, the mobile web is bigger than the PC web.

Success factors in Japan: Get in fast, show some respect, and find a local partner

Offering a country-specific version before a local copycat beats you to it is an obvious key factor for success, and not only in Japan. But being relatively complex entities, social networks face a trade-off between additional risks and potential gains in the course of localization. Overdoing the adoption to local tastes might compromise the big idea and infrastructure of the site (i.e. in the form of cluttered interfaces or fragmentation into culturally and linguistically walled “mini-networks”).

Practical experience from the Japanese web industry has shown that partnering up with a local company is the best way to diminish these dangers (see Yahoo Japan, the No. 1 site in the country, which is a joint venture run by Softbank). Japan has embraced just five American web brands which decided to go solo and none of them is a social network: Wikipedia, Google, YouTube, Twitter and Amazon.

MySpace’s establishing of a physical presence in Japan was received as a sign of long-term commitment, a move which melds with the local mentality. But in Japan, maintaining your autonomy comes with a price: It’s no secret that it usually takes foreign companies years to build up brand identity, trust, industry connections and general market knowledge.

The same is true for complex web products such as a social network – if the company behind it really means it. Currently it seems Facebook and (to a lesser degree) MySpace chose to start working the Japanese market with a minimum of resources. But in most cases, remote management is perceived in insular Japan as second-rate treatment. Apart from M&As, cooperating with an established local partner seems to be the best shortcut option conceivable. It’s almost impossible to win in Japan without close interaction with end users, press, developers, potential employees and advertisers.

But the Japanese market isn’t lost yet for MySpace and Facebook, despite Mixi’s dominance. If millions of Americans don’t mind registering to multiple social networks, why should the Japanese? Growth potential, especially for Facebook, also exists in the realm of connecting professionals online, which may be the reason why LinkedIn is currently pondering a market entry in Japan. In that specific field, they and designated partner Digital Garage (which helped Twitter build traction and earn money in Japan), see practically no competition in this country.

MySpace has clarified that they entered the Japanese market via a joint venture with Softbank and have a local office in Tokyo with 75 employees. Further, MySpace says they have an “aggressive, localized mobile product in Japan.”

(Editor’s Note: Serkan Toto is a TechCrunch contributor based in Japan).