March 30th, 2006
More MySpace (and Web 2.0) Skepticism
It’s happening again — the numbers just don’t make any sense. Facebook turns down $750 million, hoping to hype themselves up to $2 billion. And why? Well, just look at that CASH COW MySpace — it’s making…how much money? I’m on the edge of my seat for News Corp’s first 2006 earnings release, but “in the meantime” we have Peter Chernin hyping it up in Fortune:
In the meantime, MySpace is rushing to add more ad sales people. It had been selling its home page for about $100,000 a day. The price is moving up to about $750,000 a day, according to Chernin, who says he’s been told that Yahoo! commands about $1 million for its prime real estate.
So, $750K a day — that’s pretty pricey. I wonder who can afford that. To find out, I went to MySpace’s home page and found — NO ADS!
Hmmm. So I started surfing the pages that actually get traffic on MySpace — the pages of individual users, and here’s what I found:
House Ads
Google Ads
Dating Service Ads
Etc.
So WHO, exactly, is on the verge of paying $1 million dollars a day?
On my own undeveloped page, I actually did see some blue chip ads from Burger King, H&R Block, Citibank, Verizon, and others — but I can guarantee you that NO ONE is spending time on my page. But at least the content on my page is SAFE.
Speaking of which, I must say that I saw less of the usual porn and quasi-porn — it appears that MySpace is getting the message:
But if some of the criticism is overblown, Chernin has no choice but to take it seriously. Only if MySpace is seen as an advertiser-friendly site will News Corp. be able to realize its potential. [THAT SOUNDS AWFULLY FAMILIAR] The very tricky challenge for the media giant is to somehow manage MySpace, without taming its cool factor.
“We don’t want to change the cultural feel of MySpace,” Chernin says.
Of the company’s 280 employees, about a third work, at least in part, on online safety issues. They screen photos being submitted to the site and take down profiles of users who are found to be underage. About 220,000 profiles have been eliminated, according to a company spokesman. The company is also experimenting with software aimed at identifying pictures with a high proportion of bare skin, believe it or not.
“We need to be a leadership position about protecting minors on the Internet and, more importantly, giving the parents the tools they need to protect them,” Chernin says.
Bet those 280 employees are a real profit center.
Here’s the real problem: MySpace has the ultimate audience, but it’s taking an utterly 1.0 approach to monetizing that audience.
Some advertisers are being smart and taking their own 2.0 approach to MySpace, like the page Wendy’s created for it’s square burger — but creating a page on MySpace DOESN’T COST ANYTHING! That’s the beauty of user-generated media, isn’t it?
You would think that with an audience about to rival Yahoo’s, MySpace would be swimming in cash like Google, but they only seem to be swimming in hype.
Which leads me to this: What if the best marketing 2.0 strategies for leveraging the social media network are essentially free, and having the audience DOESN’T mean you can “monetize” it.
Maybe MySpace will ultimately figure it out, but heading towards the one year anniversary of News Corp’s acquisition, I’d think twice about spending $2 billion on FaceBook.
Subscribe to Publishing 2.0 | 
Follow on Twitter
Topics: Facebook | Hype | Media Economics | MySpace | Social Media | Web 2.0
Powered by 
Design by 
More MySpace (and Web 2.0) Skepticism. æ–°èž《æÂÂ盟將統一駕照，æŒÂå¡人å¯暢行25國》。ä¸ÂéŽ談到摩托車事故部分，æÂÂ盟出來的數å—就有點 tricky 了。我想很多當地的權益促進團é«â€Ã¥Âˆæœƒé›†çµÂ去總部繞一圈å§。
The value is in data-mining.
I’m sure there’s huge value in the data, but if they knew how to unlock that value, why would Peter Chernin be out there hyping up the advertising?
Running a local music site has made me an unwitting and unwilling regular MySpace user. And I would argue that the homepage is one of the least valuable on the site. Once you’re a user you never go to the homepage.
And lest I sound like an attention hippie, I’d argue that their ads should be steeply discounted by all the surrounding noise.
As I’ve written often over at Om Malik’s blog, monetizing MySpace through ads is going to be a real challenge. Monetizing the homepage, portal-style, is actually one of the only significant avenues to big ad dollars… I had previously estimated they could fetch $500,000 per day. But the previous commentor, Mike Orren, is spot on with his insight that regular users never visit the homepage. So what this means is that the homepage monetization scheme will only work with new traffic/users, and it will trail off as growth slows.
BTW Scott, great blog… I’m a big fan!
Also, a quick comment about your previous posts about MySpace, that quickly turned into a debate about “morality”.
When one is running a very large web community that inevitably attracts the scum of the earth (e.g. sexual predators), management endures a significant amount of moral conflict. The best analogy I can think of is what it must be like to be a defense attorney, where you’re regularly defending the rights of murders, rapists, etc. Another example would be an activist with the ACLU. While it’s easy to get caught up in the reprehensible actions of such low-lifes, one has to be cautious not to throw the baby out with the bathwater. It that sense, I totally empathize with the management of MySpace.
On the other hand, I find it ironic that the ACLU-like defense of MySpace is actually coming from none other than a Murdoch-owned company. In similar vein, I find it equally interesting that there hasn’t been a expose on MySpace by Fox’s ACLU-bashing, anti-sexual predator, and “defender of all-things-virtuous” Bill O’Reilly.
Robert, thanks for stopping by — I have enjoyed your writing on Om’s blog.
About the morality thing, I empathize with the management of MySpace as well, and I definitely don’t think they should throw the baby out with the bathwater.
But I don’t think that MySpace/News Corp has given the appearance of moving aggressively enough to do something about the problem — the mention in the Fortune article of 280 employees policing the site was the first I’ve seen, and that’s after a lot of pressure.
What I find most striking is that no one wants to occupy the middle ground between arguing there’s not a problem and calling for censorship. I guess it’s not a headline-grabbing place to be.
So much if it stinks of hypocrisy, including the absence of the usual moral outrage at Fox, as you point out.
they’ll sell themselves. Better still the community will help design the products. This is a huge paradigm shift for mass marketers, but if the success of sites like MySpace and YouTube are any indication, it’s one they better get used to. And likeScott Karp says, metrics and monetization will be very different. ‘What if the best marketing 2.0 strategies for leveraging the social media network are essentially free, and having the audience DOESN’T mean you can “monetize†it.’
MySpace is the second largest destination on the web, by page views It splits 50.2% male, 49.8% female They reach more men online than ESPN.com. They reach more females online than iVillage. The primary age demo is 16-34On the other side of the fence,Publishing 2.0 questions the alleged advertising revenue model. But who cares how long the party lasts? If your brand is important to this audience, get on board and be a part of the action.
Well, MySpace was successful because it *refrained* from interfering with the community - heavy-handedness may actually harm it. But I agree with you that the monetization methods are totally unoriginal and very much a 1.0 approach. They’re trying to charge companies $35,000 to set up a profile, but there’s nothing to stop you doing that for free. However, I think there may be profitable ways to leverage the community itself (ie. not banner ads).
Pete, first of all, MySpace is very much interfering with the community:
MySpace Censors Content To Lure Marketers
Second, define “success.” Traffic is NOT success. Making money off of that traffic is success.
I agree that there are profitable ways to leverage the community itself, but so far it’s just been a whole lot of theory and not much money.
Speak of the devil… just found out that Bill O’Reilly did a segment on MySpace on the evening of this post. He invited danah boyd and you can see the clip here. I don’t think I’ve ever seen O’Reilly so civilized and calm. I wonder why?
Check this out… A very, very interesting article on all this stuff that you guys are discussing… Actually that’s how I found this post, since it was referencing this blog…
Bubble 2.0: Facebook, MySpace, Desperate Dinosaurs, Web 2.0 buzz machines, and gazillion other startups
The guy is talking about “the dynamics of the “Bubble 2.0″. So a lot of discussion revolving around Web 2.0, what is hype, what is real, why the entry barriers to the social media space are very minimal, and how a popular service can quickly lose its “cool  And all that…
I can’t say that I’m very knowledgeable about this stuff, but I think his discussion was quite intuitive, and definately worth to check out…
[...] Whilst there is debate about whether it is actually worth this money and the methods MySpace are using to monetize their own site, as a niche marketer, you have to sit up and take notice of this type of target group! [...]
[...] Rumor has it that MySpace is currently charging $35,000 for these “advertising spaces” — from a comment by Pete Cashmore on one of my previous MySpace posts: Well, MySpace was successful because it *refrained* from interfering with the community - heavy-handedness may actually harm it. But I agree with you that the monetization methods are totally unoriginal and very much a 1.0 approach. They’re trying to charge companies $35,000 to set up a profile, but there’s nothing to stop you doing that for free. However, I think there may be profitable ways to leverage the community itself (ie. not banner ads). [...]