Lala and Peerflix: A case study in building a social Netflix

Myspace has transformed and dominated online social networking. Netflix has revolutionized the movie rental market. So what happens when you mix one part MySpace with two parts Netflix? You get two interesting social commerce plays – Peerflix and LaLa.

Peerflix serves as marketplace for p2p trading exclusively for DVDs. For instance, I unfortunately own The Beach and I would love to trade it for a copy of Little Miss Sunshine. As a member of Peerflix, I can find a member who owns Little Miss Sunshine and make a trade. Similarly, Lala provides a marketplace for me to trade my CDs.

At first glance it appears Peerflix is significantly more popular compared to LaLa and building a relatively popular service. However, as you pull back the layers you’ll find the majority of Peerflix traffic is generated through online ads. Conversely, LaLa has taken a conservative approach, slowly cultivating its beta users. Since its emersion from beta stage in March 2006, Lala only receives ~30,000 unique visitors per month.

Where LaLa shines is its ability to convert the traffic it receives. Specifically, 21% of LaLa visitors sign up for the service, whereas Peerflix only converts 1% of its traffic into registered members.

Despite LaLa attracting a tenth of the traffic Peerflix receives, its focus on creating a communal experience for its members has created an engaged and quality member base that exceeds that of Peerflix. Lala extends its functionality beyond pure trading to additional content, such as streaming radio, and successfully creates a sense of community with its members. In addition, LaLa asks it members to market the service themselves and provides a nice referral incentive.

Community is where Peerflix falls short. Peerflix’s offering is focused almost exclusively on DVD trading functionality and little is done to create a sense of community. We like the intention of both services, but applaud LaLa for its careful and successful execution. Now if I could only get rid of this Willennium CD.

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