Two interesting posts that go right to the monetization questions of MySpace from different angles.
Henry Blodgett's Internet Outsider:
And, yes, the company's growth is amazing. But so, it seems worth observing, was the early growth of user-driven companies like Geocities and Tripod, neither of which proved to be particularly good businesses. So with the MySpace hype-cup overflowing, it seems worth taking a peek at where MySpace stands as a business (as opposed to a cultural phenomenon), and where it might eventually go.
On the first score, based on Newscorp's recent 10Q, we can first note that MySpace is so irrelevant to the financial performance of the larger entity that it doesn't even merit describing. In the MD&A, the company describes in detail the performance of each of its other businesses, including its small book business, but it doesn't so much as mention MySpace.
Judging from the year over year comparisons in the "Other" category, in which MySpace and the rest of Fox Interactive Media have been unceremoniously dumped, we can assume that the company might have contributed somewhere up to $100 million in revenue in the last quarter ($400 million run-rate), while losing up to about $50 million. Although these revenue numbers are not tiny, they pale in comparison to those of Yahoo, Google, and other Internet leaders. Unlike the revenue at the other Internet leaders, moreover, they appear to come with significant losses, suggesting that the MySpace business model is nowhere near as leverageable as those of its larger brethren. Geocities and Tripod, if memory serves, had a similar problem. (via IWantMedia)
The second comes from the Online Publishing Insider
Traditional publishing companies heavily invest in a content strategy supported by authenticity and credibility. This guides their business of creating a perception of premium-valued inventory. Self-created content found on MySpace, on the other hand, is often heavily invested in self-promotion. The publishing business model at MySpace by definition lacks a clearly defined content strategy and the guiding principles of authenticity and credibility. The rates for the inventory sold currently on MySpace are indicative of a lack of perceived value.
MySpace is less like a publisher and more like a property owner for what appears to be a gigantic online flea market for young adults to sell their wares. Web cams, mortgage rates, music, or just their own self worth--everyone seems to be selling something. So it begs the question--if MySpace is crawling with sellers selling to sellers, does it make sense for advertisers to advertise in an arena with no buyers?
Back in 1999, Yahoo paid $3.6 billion dollars for GeoCities, a network of 19 million monthly users at the time, who produced their own content that was broadly categorized and sold to advertisers (sound familiar?). GeoCities, like MySpace, struggles with "appropriate environment" issues--but for all we know, the acquisition helped Yahoo secure that number-one traffic position they maintain today. Ironically, one of the senior executives involved in selling GeoCities to Yahoo was recently hired by Fox to help invigorate ad sales for MySpace. Oh what a tangled web we weave.
*Tangled web indeed as I find it odd to be quoting Henry Blodgett on whether or not something is a big piece of nothing.
