Roberto Rocha has an interesting article in today’s Gazette about Capazoo, a Montreal-based social networking website that wants to take on Facebook and MySpace.

What’s interesting about this project, unlike the thousands of other social networking sites, is that it’s starting big. Millions of dollars big. Before it even has 100,000 users, it’s going to flood the Web with advertising, spend millions on servers, and get as many famous people involved as possible to lure the young’uns on board. In other words, it’s going to use traditional marketing methods instead of the word-of-mouth methods that created Google, MySpace, Facebook, YouTube and everything else.

Their gimmick is a social currency (“zoops”) that people can exchange by “tipping” each other. Voluntary contributions toward people whose content you approve of.

I’ll reproduce here some of the concerns I expressed (and some new ones I’ve added) about the project on his blog:

Here’s my issues with Capazoo:

1. The name. It’s a random nonsense word like every other forgettable Web 2.0 startup. And it tells me nothing about what the site does.
2. Yet Another Social Networking Site. People assume they put up a website and they’ll get Facebook/MySpace-like success within months. That’s just not going to happen unless their site is much better or they have a distinct advantage with newcomers. Microsoft took advantage of the latter (leveraging its Hotmail and MSN services) to outseat ICQ in instant messaging. Google used the former to build its search engine and Gmail. I see neither as the case for Capazoo.
3. It’s bad enough for startups that social networks require a large critical mass before they can take off. Nobody wants to join a social network that none of their friends are in. But their virtual currency system requires an even larger critical mass before any content producer sees real money.
4. I got the same weird feeling as TechCrunch about tying virtual currency to referrals. It sounds like a pyramid scheme. And the value of a Zoop is about equivalent to the value of a Zimbabwean dollar.
5. Content creators getting money is great and all, but the entire payment process is based on tips. And those tips might be worth a penny or two. I don’t see even moderately popular people making a lot of money this way. And even if they did, wouldn’t they feel obligated to zoop all of their supporters?
6. What’s to stop someone from stealing a popular video off YouTube, putting it on their Capazoo page and profiting off it? How will they ensure originality of content? Any system that involves money will attract people who will try to game that system.
7. You have to pay them money in order to get money. Which means you have to make more money. Thousands of these “zoops” just to break even.
8. Deals with major content producers is a red herring that sadly a lot of people use. MySpace is good for listening to unsigned bands. Facebook doesn’t have any of these content deals (that I know of). Reprinting articles from wire services and major magazines is a gimmick, and isn’t going to overcome problems with the concept.
9. I don’t like the layout. Facebook took away MySpace people (including myself) because it has a simple uncomplicated layout. Capazoo goes back to a giant mess with no apparent structure.
10. The walled garden. I know Facebook uses this approach (requiring people to login to see anything), but that only works when the desire to see what’s behind the wall overpowers your frustration at having to register yet another account.
11. Their terms of use. They have the right to terminate your account and take all your zoops for any reason at their sole discretion. Capazoo claims non-exclusive, unlimited royalty-free rights to your content for anything they want. They’re not even required to inform you of changes or ask for your consent.
12. They don’t allow people under 16 to use the site. (At least not officially.) That’s going to cause problems if the site gets popular. They also allow only people 18 years or older to earn money. So the site seems to be completely pointless to a key demographic for these kinds of sites.
13. Even if it’s successful, what’s to stop Facebook and MySpace from stealing the currency idea? Revver was started up as a competitor to YouTube in much the same fashion. So YouTube began compensating its top contributors. YouTube is still king.
14. The entire premise is based on what I think is a faulty idea: That most users of social networking sites feel they should be compensated for the time they spend there and the content they provide. While there are some people who put up videos and blog posts and other stuff because they’re creative and want the world to see them, most people use social networking sites to comment on friends’ photos, see who’s broken up with whom, or communicate with old high school buddies they lost touch with. Nobody expects to get compensated for this.
15. And finally, like the others, I think it’s silly to start with such a huge organization before the product is off the ground. Computing gives companies the ability to start small even when they’re starting big. It’s foolish to squander such an opportunity.