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Cyworld is a South Korean phenomenon - it's a social networking site which is ridiculously popular over here and will soon be launching in Germany.

The site launched in 1999 but only really became popular after it was bought by SK Communications in 2003 - a division of SK Telecom. The firm has 200 staff.

Users of Cyworld set up their own homepages - called minihompy - and link them to friends' sites a bit like MySpace.

But the finances of the site are incredible. Apart from the 22bn monthly page impressions, the site also sells digital items so users can decorate their pages.

The basic page is free, but decorating it costs cash. A background, or skin, for instance, costs about a dollar a week. Background music for your page will cost about 30 pence. The site brings in about 200m Won a day or about £115,000. Sales of digital items account for 78 per cent of revenue, while 10 per cent comes from mobile services - you can check and update your site from your phone, and adverts make up the remaining 12 per cent.

The reach of the site is enough to give your average marketeer a heart attack - 92 per cent of Korean 20-somethings have a minihompy.

The site operates in China, Japan and Taiwan and is opening in Germany and the US this year. It has a million users in China since launching in April.

The company is looking for a partner in Germany because it accepts that cultural differences are important - initial trials have shown German women did not react well to the more "cutesy" aspects of the site. The company is looking for a German firm with a similar open and liberal corporate culture. We were told an agreement has almost been finalised.

Cyworld has had offers from other telcos, including France Telecom, because of the huge data traffic it creates. The site, and related instant messaging service NateOne, uses a data centre housing 3,000 servers. The network manager told us they knew what was going on in the real world by looking at the traffic. World Cup matches involving Korea sees traffic disappear - until half time when there is a huge peak.

Cy means relationship in Korean and that's the most important part of the site - once a certain number of relationships are formed, users stay loyal. ®

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