Services adding features that allow users to perform Facebook-like functions

KEVIN J. DELANEY
BY KEVIN J. DELANEY AND VAUHINI VARA WALL STREET JOURNAL

E-mail providers are trying to steal some of social networking's thunder as fast-growing services like Facebook Inc. begin to encroach on their turf.

The biggest Web e-mail services -- including Yahoo Inc., Microsoft Corp. and Time Warner Inc.'s AOL unit -- are adding features that allow users to perform such sociable functions as tracking friends and creating personal-profile pages for others to see. At the same time, social networks such as Facebook and MySpace have upgraded their messaging services, enabling individuals to send e-mails to the outside world from their accounts, transmit video greetings to friends and make voice calls from their computers.

The developments could heighten competition between e-mail providers and social networks for the loyalty of users -- and the advertising revenue generated by usage. The latest moves also signal a wave of changes in features for e-mail, which is the most widely used Web application.

The prize is the loyalty of people like Anil Divvela, a 24-year-old student at Purdue University in West Lafayette, Ind.

Divvela grew up with e-mail but now spends less time on it, using Facebook as an e-mail replacement. He especially likes one Facebook feature: When he pastes a link to an interesting article in a Facebook message, Facebook automatically fetches the article's headline and any photos that ran with it and attaches them to the message. When he sends a link to an online video, the recipient can watch the video within the message without having to click the link.

Such changing habits could have implications for the Internet portals, which rely on e-mail for much of their traffic and to bring in consumers who will use their other Web services. And usage drives revenue because Internet companies generally base the pricing of advertising appearing alongside e-mail and social-networking services on the amount of traffic the Internet companies get.

The Internet portals have failed to achieve breakout success with their homegrown social networks, which let individuals create profile pages, communicate with friends and share photos and other digital content, at a time when consumers' social-networking use is booming. Yahoo, for one, released a social-networking and blogging service in early 2005 dubbed Yahoo 360 that fell short of expectations. Now, the e-mail providers are betting that they'll have more success by adding social-networking features to their e-mail services, which millions of people are already using.

In August, there were 542.9 million users of e-mail that is accessed primarily via Web browsers. That compared with 483.7 million social-networking users worldwide, according to comScore Inc. Including non-Web-based e-mail such as accounts that businesses provide to their workers, there will be 1.4 billion e-mail accounts in active use worldwide at the end of this year, estimates Radicati Group Inc., a Palo Alto research firm.

Yahoo executives describe the company's 250 million e-mail users globally as the "world's largest dormant social network." In recent years, the Sunnyvalecompany has added some features that allow individuals to see when friends who are also Yahoo users are online and to send instant messages to them without clicking over to Yahoo's instant-messaging software.

One experimental Yahoo service known internally as "Friend Finder" analyzes a user's e-mail traffic and indicates the friends with whom a user has strong e-mail connections.

"I have very little doubt that e-mail will be sexy again in a way that people will say, 'Holy Smokes, I didn't see this coming,' " says Yahoo Senior Vice President Brad Garlinghouse. He cites research from July indicating that only 20 percent of Yahoo e-mail users are My-Space users and just 10 percent are on Facebook.

While many of the new social e-mail features work only when a user's friends use the same e-mail provider, Garlinghouse says the features could eventually extend across e-mail services. e-mail providers would first have to agree to share some user information, such as personal profile data, and work out technical standards for doing so.

Microsoft, of Redmond, Wash., has added social-networking features in recent years that work with its Windows Live Hotmail e-mail and instant-messaging services. They allow its 300 million e-mail users worldwide to create individual profile pages with contact details and other personal information they can choose to display to their friends. Microsoft says there is no evidence social-networking services are crimping e-mail usage, noting that its user numbers increased from 285 million in July.

In the coming months, AOL e-mail users will be able to access their Facebook accounts or other Web sites through a special side panel created within AOL's Web mail service. AOL is also working to let its users personalize their accounts and connect with other users. For instance, when users hover their mouse over one of their buddies in an AIM instant messaging section of AOL e-mail, data about the member will pop up. AOL is also making its e-mail service accessible through social-networking sites and other Web pages so that users can preview and check messages without visiting AOL.com or its other email sites directly.

And Google Inc., which operates the Gmail email service and Orkut social network, is working on ways to tap into the social-networking wave, including through Gmail, say people familiar with the matter. One Google effort could involve analyzing the strength of Gmail users' connections with one another by tracking the frequency of their email and chat correspondence, these people say.

Rob Cassedy, 30, has used Yahoo as his primary personal email account for years, sending and receiving about 50 emails a day.

Recently the eBay Inc. employee signed up with social-networking services including Facebook and Hi5 Networks Inc., in part to better track what his friends are up to. But Cassedy says he'd likely prefer using social-networking features in his Yahoo email account.

"I'm much more likely to use the things that are incremental to what I already use rather than start using a new service," he says.

Google wants to provide outside Web developers with information about Google users' personal connections so that the developers can build Web-based services -- available via Google's personalized home page and possibly elsewhere -- that will make it easier for people to track their friends, these people say. Hypothetically, that could allow a Google user to see on her personalized home page a list of all the videos her friends have recently uploaded to YouTube or the public messages they have posted on Orkut.

Eventually such features could be integrated into Gmail, too, these people say. A Google spokeswoman declined to comment.

Some social-networking executives say what draws people to their services involves more than just email and messaging services with user profiles bolted onto them. Facebook believes using the connections between people as a backbone for other services, like photo sharing and event planning, is key, says Chamath Palihapitiya, a vice president at the Palo Alto start-up who previously ran AOL's instant-messaging business. Facebook users can indicate which of their friends are pictured in a photo they have posted, and Facebook automatically notifies those friends about the photo, for example. Users can also keep track of their friends' social calendars, alongside their own.

In August Facebook began allowing its users to send messages from their Facebook accounts to regular email addresses by typing the email address into the box where they normally type the name of a fellow Facebook user. Meanwhile, starting next month, MySpace users will be able to make Internet voice calls by clicking a button in the MySpace instant-messaging feature through a partnership with eBay Inc.'s Skype. A MySpace spokeswoman declined to comment for this story.

-------- Emily Steel contributed to this article.

AP-WS-10-18-07 1159EDT

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