The Rise of the Clone Sites

An ‘underground’ Internet industry has existed for many years, where development companies (usually based in India/China) would create turnkey Web site products aimed at duplicating some or all the functionality of popular Web sites such as Youtube and Facebook. These products have become known as clone scripts.

The name is misleading, naturally the developers have no access to the code of the large sites they are trying to emulate. They work hard to create products that customers want, and customers increasingly demand functionality they see on sites they see on famous sites worldwide.

More recently, the owners of clone sites have stepped into the spotlight and started making some serious money in the process. For example, in China, a Facebook clone called Xiaonei dominates the market and raised $430million in 2008. Groupon has acquired several clones which got traction in niche markets making their owners $millions. Upon seeing the growing successes of clone sites, more and more investors and Web entrepreneurs are looking at taking a clone script and starting a site with a focus on a new niche market.

What people have realised, is that intellectual property owned by US start-ups usually doesn’t apply to emerging markets. A lot of it doesn’t apply outside the USA! In the US it is possible for a business to patent a ‘business process’ allowing Web sites to prevent clone sites from appearing which have similar functionality … however these patents are unenforceable in the rest of the world. US companies can protect their trademarks and copyright their designs Worldwide, but the Web site functions can be legally duplicated so long as the code is 100% original work.

This is a great opportunity for those keeping up to date with start-ups emerging from Silicon Valley and elsewhere. Should a business be seen to get traction, it can be quickly ‘cloned’ for a different marketplace where first-mover advantage can be grabbed before the concept goes global.

There was a mad rush to create a Groupon clone in recent months, which Web site will be next?

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