SiteTalk and OPN to target US market?
When we last checked in with SiteTalk, they’d ditched the Unaico name and reinvented themselves as “The Opportunity Network”. Both The Opportunity Network (OPN) and SiteTalk are still chugging along today, with news from the company last month indicating a new push into the US market.
If you’re wondering why SiteTalk had previously abstained from the US market, CEO Frank Ricketts explained the situation earlier this year at a SiteTalk event. Ricketts revealed that three years ago he ‘blocked the USA market for the OPN business opportunity:
We are a scam, we are illegal, we are running a pyramid system everywhere around the world. You can read that in Google.
So if we are a scam, we’re a pyramid, we’re illegal – what’s the problem with not being in North America? Why not do this in North America as well?
The reason is because one aspect of our business, that our legal adviser said that the authorities would probably say it’s 70% ok, but 30% maybe not.
And in the most important market in the planet, we decided that that risk was too high.
When I reviewed The Opportunity Network in late 2013, I identified a complete lack of retail activity within the business. It’s likely that 100% of the commissions being paid out of affiliate money is the root problem of the “30%” Rickett’s mentions above.
Another potential red-flag is the virtual stock exchange SiteTalk ran under their Unaico brand. Early investors were promised shares in a SiteTalk IPO, which eventually manifested itself as a listing on the Cyprus Stock Exchange’s “Emerging Companies Market”.
SiteTalk is listed under the stock code “STC” and company name “Global Digital Systems PLC”, with a current share price of €0.248 EUR per share.
In any case SiteTalk has persisted and appear to have gained a significant following in China of all places. At the time of publication Alexa estimate that 37% of SiteTalk traffic originates from China, and ranks SiteTalk as the 648th most visited site in the country.
Evidently though being popular in China hasn’t reaped the economic rewards SiteTalk’s owners might have previously thought it would.
A “statement of comprehensive income” filed on March 31st 2014 reveals SiteTalk generated €723,553 EUR in revenue. That sounds alright until you consider “sales” and “other expenses” during the same period set SiteTalk back €3,816,365 EUR.
The end-result is a 19th December 2012 to 30th September 2013 net loss of €3,092,812 EUR.
Obviously not looking for a repeat performance this year, this is likely to the be primary reason for SiteTalk’s recent push to enter the US market. Currently the percentage of US traffic visiting SiteTalk is so insignificantly low that Alexa do not track it. The smallest recorded percentage by country is Venezuela, who account for 0.5% of SiteTalk’s global traffic.
Nonetheless earlier this year, via a series of press-releases, SiteTalk announced to the world its plans for the US.
This began with the launch of SiteTalk Music in January,
SiteTalk Music is a music streaming service that will allow SiteTalk Members to stream any of approximately 20 million music titles directly from SiteTalk.com, for a flat monthly fee of €9.95 (or the equivalent in other countries).
“This is an incredible, modern music streaming service that will allow our Members to access a vast collection of titles, anytime, anywhere they happen to be using SiteTalk,” said Managing Director Frank Ricketts.
“Whether your taste is Lady Gaga, Led Zeppelin or Lena Andersson, we’ll have it at SiteTalk Music. It’s a fantastic collection.”
Then, on the 6th of February, SiteTalk announced it had signed a memorandum of understanding with Imogo Mobile Technologies:
SiteTalk has entered into an MOU with US technology development company Imogo Mobile Technologies. Once the definitive agreement is finalized, Imogo will become an integral part of SiteTalk’s global growth plan.
The partnership will grant Imogo license rights for the United States marketing and distribution of SiteTalk. The agreement may also include licensing of the brand name, domain name, goodwill, technology, code and intellectual property developed and associated with SiteTalk.
The Definitive Agreement is expected to be signed on or before May 2, 2014, subject to legal due diligence by Imogo’s legal counsel and Imogo obtaining all requisite internal corporate approvals (which shall include a shareholder approval by Imogo).
“Imogo is very excited about joining forces with SiteTalk,” said Imogo President and Founder, Stewart Irvine. “Together, we can take this unique Social and Business Networking Platform to a global stage.”
A month later, Stewart Irvine was appointed to the SiteTalk Board of Directors:
Mr. Irvine has a distinguished career as a leader and innovator in the mobile technology, e-commerce and computing industries. He is the founder and CEO of Imogo Mobile Technology and Go-Page, two exciting players in mobile and cloud computing sectors.
In addition to the revamping of the SiteTalk website and company app (both to be released later this year and presumably developed by Imogo), the “gimmick”, as Ricketts described it in his Slovenia presentation, SiteTalk are hoping to lure US users of SiteTalk in with is their “Star Club”.
Star Club is SiteTalk’s loyalty reward program, which rewards participating Members for their activities on SiteTalk.com. SiteTalk is the only Social Networking Platform with a loyalty reward program that truly rewards Members for their activities and time spent on the website.
If I didn’t know any better, I’d suggest this “loyalty program” is what resulted in SiteTalk’s “sales” losses for the period 2012 – 2013. Otherwise I’m at a loss as to how company sales can result in a €2 million EUR expense.
The basic idea behind the Star Club is that users of SiteTalk are rewarded points for doing stuff on the SiteTalk network, for a price:
Members will have the option to purchase a Junior Star Club membership for a monthly subscription of €15 in addition to the full €35 Senior Star Club Membership program.
The Star Club system allows all SiteTalk Members to accumulate points for various activities at SiteTalk. Points can be earned for one-time activities like signing up and completing a user profile.
Members can earn continuous activity points also, simply by being active on the SiteTalk website.
Once they’ve got Star Club points,
Star Club Members’ accumulated points may be redeemed for SiteTalk “C” credits that can be used for purchasing SiteTalk Deals, SiteTalk Bids, playing SiteTalk Games, for sending virtual gifts to friends, and more.
And of course note that
Users must log in at least once in any 28 day period, or their points and credits will expire.
Putting two and two together, the general thrust of the concept seems to be to continue to pump SiteTalk investor funds into the plan, and hope that eventually the point activity will translate over into real revenue for the company.
Sort of like, “hey here’s some points to play around with” and then having users return to spend actual money.
While I’ll try to keep up with how SiteTalk’s planned US expansion goes over the course of the year, my prediction remains practically unchanged from when I first reviewed Unaico back in April 2011:
The main problem I see it with Unaico/SiteTalk’s business model of combining all these additional features with a social network is that the people using the network are in it for the money, as opposed to socially connected with eachother.
As it stands now, you have early investors who are hoping to see a return on their Cyprus shares, The Opportunity Network affiliates who are hoping to generate commissions via the company’s MLM business opportunity, and lastly SiteTalk users that are purely there for the love of the site itself.
The problem is that last category has failed to materialize in any significant number for nearly half a decade now.
When it comes to MLM social network companies, the inevitable comparisons to Facebook are usually hovering around. And it’s these comparisons (“Facebook doesn’t pay you” rah rah rah etc.) that perfectly explain why no MLM social network company has thus far gained any traction.
People use Facebook because of what the site offers, and because when it popped up – there was no other site like it. As close as SiteTalk might get itself to Facebook clone status, at the end of the day imitation is not innovation.
I’ve seen some pretty big numbers (15 million) attached to SiteTalk social network membership, and with 37% of the company’s traffic originating out of China, I’m not disputing SiteTalk might be providing a legitimately innovative user-experience there.
But guess what’s not available in China? Facebook.
That’s the thing about running an online business in China. Initially you have a leg-up due to the restrictive nature of the market. That is of course until you start to demonstrate some real profitability and a workable business model.
Then some business tycoon, backed by the Chinese government *wink wink, nudge nudge*, launches its own competitor (RenRen in the case of Facebook), and that’s the end of you.
Oh and should SiteTalk take off in the US (or gain even the slightest traction), I’m not sure how that’s going to play off with their Chinese userbase. Chinese authorities generally frown upon any social platform that allows their populace to interact with Americans directly.
So either SiteTalk are going to have to kowtow to Chinese censorship rules (if they haven’t already, and which will kill the site in the US), or shut out their Chinese users.
At 37% of the company’s current user-base (not sure what the percentage of revenue is), that’s a pretty big gamble either way. Especially considering the historical statistics of MLM social networks.
Ultimately SiteTalk, due to its Unaico history, is always going to find itself trying to deliver value to its shareholders and OPN affiliates first, leaving non-affiliate end-users second. Unfortunately that means all you end up with is yet another MLM social network filled with affiliates – and they’re trying to make money, not spend it.
As I understand it the virtual shares component of Unaico is no longer open to the general public (meaning it’s a closed club of early affiliates). That’s always going to be an issue but if they’ve truly cleaned up the more problematic components of OPN’s compensation plan, then let’s see how this plans out.
With millions of EUR in investment funds up in the air and corporate agreements in place to push the mobile aspects of SiteTalk, they probably have the best shot at making something with an MLM social network yet.
Footnote: The presentation Frank Ricketts gave at a “SiteTalk Day” earlier this year can be viewed in full over at Vimeo (restrictions implemented by the uploader prohibit me from embedding the video here directly).