Sina wrestles with microblog revenue plan When Charles Chao, chief executive of Sina Corp, a Chinese internet company, presents 2011 earnings this month, investors will want to hear when the company will finally start generating revenues from Sina Weibo, its wildly popular microblog. But the request is likely to fall on deaf ears. Since its launch in August 2009, China's version of Twitter has racked up more than 250m registered users and acquired a dominant role in setting the country's news agenda and forming public opinion, as its speed has at times put government censors on the defensive. But Mr Chao argued a year ago that Sina - which also operates China's second-largest online news portal - would have to consolidate its lead in the microblog market and cement user loyalty before trying to make money out of it. He has pushed back his monetisation timetable twice since then, and is expected to do so yet again this month. Sina staff say the government's requirement that all Weibo users must register with their real identities will probably delay the company's revenue-generating plan to the second half of this year. "That will create a lot of negative sentiment with investors," says Alicia Yap, an analyst at Barclays Capital. The post-New Year rally will not be sustainable. Such concerns were reinforced this week, when government officials said Weibo users who fail to register under their real names by March 16 will no longer be allowed to post messages. Local media have reported that only 3m new users have registered on Sina Weibo over the past month - down from about 20m in earlier months. The company's share price already reflects some of these concerns. Following a series of government moves for tighter censorship of social media and falling profitability because of the soaring cost of marketing Weibo, Sina shares have lost 54 per cent since their peak of US$142.83 on April 19 last year. That is not to say Sina has been idle. "The company has been working hard to lay the ground for monetisation, and it is moving closer," says Dong Xu, a social media expert at Analysys, the internet research firm in Beijing. That includes hiring engineers to strengthen its skills in developing applications and to adjust its platform to new needs. Unlike Tencent, China's largest internet company by revenues and Sina's main rival in the social space, Sina is essentially a media company. Advertising accounted for 77 per cent of its 2011 revenues of US$484m, according to Morgan Stanley estimates. Investors hope the company can build a business beyond advertising, including social games and virtual goods, similar to Facebook of the US, which last week started the process for its long-awaited stock market debut by filing papers for a $5bn initial public offering. Such a model would resemble Tencent, whose broad spread of revenue streams and only light dependence on advertising has made it much less vulnerable to cyclical swings when advertising falls. Sina's management has taken steps to prepare for that, including the launch of an enterprise version, a gaming platform and a virtual currency. But that is all at an experimental stage and observers are, if anything, growing more sceptical about some areas of monetisation. "So far, most things are free," says Xu Zhiming, founder of Kuaishubao, an online bookstore that uses Sina Weibo for order management and customer relations. For gaming, Sina has also yet to see a cent of revenue, because it has made the platform free of charge for the first year. And even if it were to start charging, analysts" expectations are very low. While Tencent's services dominate outside China's largest cities among younger people with lower education levels, Sina's user base consists largely of-collar users in the country's largest cities. "The core Sina Weibo user crowd are not gamers," says Mr Dong of Analysys. That would leave Sina with advertising. The two main areas of potential here would be China's soaring e-commerce market and highly-targeted ads similar to what can be seen on Facebook. Many Chinese e-commerce sites have already linked up to Weibo, but Sina has yet to demand a revenue share for that. The biggest disappointment for industry experts has been lack of progress in targeted ads. "In theory, Sina has an incredible asset with all this user data, but they don't appear to know how to analyse those data," says an advertising agent in Beijing. Despite healthy advertising demand in general, that weakness in reading the data impedes progress, especially in the current political climate in China. "Brands worry that they could be tied to re-tweeted messages that might be sensitive," says Ms Yap. All these things are much less of a problem for Tencent. Although it has a microblog of its own, the Shenzhen-based company sees the service mostly as a tool to wear down Sina and make sure Sina doesn't challenge Tencent's lead in social networking in China. Says a Tencent executive: "We have no plans to monetise our microblog. We don't need to.