RICH PICKINGS:The velvet rope of cyberspace
The rich might not be in a rush to sign up to Facebook or MySpace, but a new generation of very exclusive social networking sites is making the burden of affluence easier to bear.
But until recently, there were very few places for the rich to congregate online in their own little community. And it is hard for wealthy entrepreneurs to feel truly at home unless they can be sure their fellow network members understand 'what it’s like' to inherit a fortune, sell your business for millions or deal with a margin call.
Fortunately, a number of overseas social networking sites have come to the rescue of these rich social networkers in the last 12 months. British sites such as Peers, Family Bhive and Pi Capital and US sites including ASmallWorld, Diamond Lounge and Affluence.org are providing places for wealthy people to interact in the (relative) privacy of a member-only network.
At a time when fortunes are evaporating around the world, these sites have been able to provide members with a chance to share sob stories, swap advice and recommendations about investment products and advisors and even mobilise action groups to take on dud banks or advisors.
As Sir Paul Judge, a businessman and philanthropist in London who is a member of family Bhive, told The Times last month: "Given the poor advice we have received from the professionals in the past, everyone is now looking for stories from real people with real life experiences.”
The first issue for these sites is how to ensure your members are actually wealthy. Affluence.org accepts members with a net worth of $3 million or more and those who have household income of at least $300,000, while Family Bhive has three levels of membership: amber for members with assets of £5 million to £20 million, jade for those with up to £100 million, and jet for those with more than £100 million.
Of course, proving a member has the fortune they claim is more difficult.
ASmallWorld uses a sort of self-regulation qualification model. The site, which has 500,000 members with an average age of 32, restricts membership to people who have been invited by an existing member with special "invitation” rights (about 20 per cent of the total membership holds these rights).
Family Bhive takes a more direct approach, requiring would-be members to submit proof of their fortune, such as statement from an accountant or trustee. Affluence.org says it does its own investigation on each member, searching company records, asset records and marketing surveys the applicant has previously filled out to build a picture of wealth.
Unfortunately, no qualification system is foolproof and there have been countless complaints that these networks have become infiltrated by riff-raff.
Still, it appears the rich are benefitting considerably from these networks.
Perks provided to ASmallWorld members include high-end city guides, a spam-free messaging service, a global events calendar and a high-end recruitment section. Over at affluence.org, members are offered free access to a dedicated concierge service and can also "receive priority access to the world's most exclusive nightclubs, hotels, and restaurants”.
But the biggest benefit trumpeted by these sites is the opportunity to talk and network with other wealthy people. Most sites have a forum where rich entrepreneurs can discuss their problems and get advice, recommendations and tips on everything from investment and business problems to philanthropy and lifestyle issues. Most of the networks also coordinate face-to-face member meetings; ASmallWorld founder Erik Wachtmeister claims there were 13,000 member-generated events held in 2008.
Membership to the sites is usually free. In order to make money, most of the sites use their membership databases to attract advertisers and marketers. Events are a particularly popular revenue source. A big company, such as a private bank, holds a promotional evening (perhaps at the opera or a sporting event) where a number of network members attend and are given a sales spiel. The members receive a discount or preferential offer and the site receives a bounty for each member it provides.
And therein is one of the big challenges for these social networking sites. Most rich people I have met are generally intensely private, strong-willed and sceptical – not exactly the types that like being shopped around to marketers (although it must be said most networks offer the members the chance to opt out of these offers if they so wish).
Like as not, the benefits would need to be very impressive (and the security and privacy of data extremely high) before many such millionaires joined up.
These social networks are involved in a delicate balancing act. Unlike other social networks, they must tread a fine line between growing their membership and keeping out the wrong sort of members. The must also tread a very fine line between building a genuine community and building a sort of giant marketing database.
One step in the wrong direction and the credibility of these sites will be badly damaged.