June 9th, 2006

MySpace Is The Most Expensive Data Mining Project Ever

by

“We have a lot of work to do,” said Ross Levinsohn, President of Fox Interactive. Got that right. According to Levinsohn:

“The digital gold inside of MySpace wasn’t the number of users, but the information they’re providing, structured and unstructured data,” Levinsohn said–both demographic and psychographic data that Fox Interactive can use to suss out the brand preferences of young people on the Web.

Levinsohn said that the site isn’t intended to be like a portal, and that “it’s more about [users] presenting themselves to the world” by creatively expressing themselves through their MySpace profiles. “It’s important for us not to suppress that–not to push content,” he said.

So if I follow this latest contortion on the rationale for the $580-million-dollar purchase of MySpace, it’s all about data mining.

Which means that MySpace is officially the most expensive data mining project ever. For that price, they could have bough three market research companies. Or paid 1 million teenagers $500 to participate in focus groups.

But wait, what teenagers post on their MySpace pages is a “pure” reflection of their consumer habits, some will argue. Well, maybe, but I’d love to hear Levinsohn hold forth on exactly how they plan to data mine the chaotic slather of content on most MySpace pages.

It’s notable that the rationale for News Corp’s purchase of MySpace seems to be changing as often as the rationale for the Iraq war.

As for advertising on MySpace, which was supposed to be the big victory for News Corp:

More mainstream marketing on MySpace will be kept to the “well-lit” areas of the site, like the Books, Comedy, Film, and Games sections rather than on individual profile pages, which have less strict content controls–something many advertisers have expressed concerns about.

Sounds more like advertising will be roped off away from the action, like protesters at a Bush rally. And even if they could, most advertisers wouldn’t take the risk of appearing on individual pages anyway.

For the sake of their shareholders, I hope News Corp has a plan to turn all that MySpace “data” into dollars.

  • Scott,

    I don't think the $350/year is unreasonable. In fact, it could be light given the 30B pageviews/month they're doing now. Massive massive numbers. Even with a tiny CMP or CTR, they're making piles of cash. That is to say nothing about the revenue from the homepage:

    Not sure where Jack saw it, but I read the AdAge article about MySpace's homepage making over $1M/day in revenue thanks to deals with Disney and Pepsi, among others.

    I blogged it here last week:
    http://www.i-boy.com/weblog/2006/06/1-million.html

    Love your blog, btw. Great stuff.
    ~G~

  • Jack -- I haven't seen that $350 million revenue projection -- what is your source? Can you provide a link?

  • jack largent

    gimme a break. news corps buy of myspace is looking like the smartest and cheapest buy of any site in history. published reports say 350 million in rev this year for a 580 buy. wow. these guys have a strategy and its to make money

  • Karl

    btw: Pentagon sets its sights on social networking websites

    That data *is* the gold of MySpace. I believe I've mentioned it before here. And users are giving it up freely without understanding its value or the consequences of doing so.

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