JUST CLOSE YOUR EYES AND BUY ALREADY
Another day, another breathlessly told story about MySpace, this time by Saul Hansell in the New York Times. It's the lead story in the Sunday Business section of the paper.
MySpace as most readers know, has rapidly become a poster-child of UGC (user-generated content), driven by the coveted younger demographic.
It's worth reading if you're curious not just about the faddish focus on MySpace by the mainstream media, but about how other internet companies are reacting to MySpace itself. (see Paul Kedrosky's pithy post on the media feeding frenzy on this company)
I had a number of reactions to the article, which I'll try and flesh out in this post.
1. WHAT ABOUT THE USERS? In a 3143 word article, most of the focus seems to be on how the MySpace founders, Intermix, it's previous owner, and News Corp/Fox, it's current owner, are obsessively focused on monetizing the mushrooming site's user metrics, through all types of advertising and marketing schemes. Very little in the article about how to better serve the needs of it's 70 million registered users and/or it's core demographic, highlighted by this CNET article:
"MySpace -- the explosively popular social network site owned by News Corp (NWS) -- represents the generation Y consumer -- those born between 1981 and 1995. At 57 million strong, this demographic is the largest consumer group in the history of the U.S., according to OnPoint. See OnPoint site.
In other words, MySpace, which saw 36 million unique visitors in March and 19.6 billion page views, can drive consumption habits across the Web."
One wonders what one of the ardent users might think reading the article...especially quotes like the following from Fox suit Ross Levinsohn,
"We have some very aggressive goals on how to build this thing into a real contributor to News Corp. financially," Mr. Levinsohn said last month. Mr. Murdoch, he added, "is focused on that, and he rightfully holds my feet to the fire."
Not that there's anything wrong with monetizing the site, especially, in the spirit of striking while
the iron's hot. As this graphic shows from the piece, MySpace's metrics are only number two to Yahoo! as of last month.
But the graphic reminds me of a small pot of water brought to a boil. After all, Yahoo! and AOL (part of Time Warner), both cater to mainstream, larger audiences worldwide, and not just the young people demographic.
Certainly, the folks in charge of MySpace are all too aware of the consequences of NOT striking while the iron is hot, as the article points out:
"In some ways, MySpace has assumed the role America Online held a decade ago when it introduced e-mail services and Internet chat to the masses. But AOL's example is a cautionary one. For many reasons, largely its failure to keep up with trends, AOL lost its place in the social lives of young people."
But the argument can still be made that these are early days for the service, and bringing the advertising/marketing to a boil too soon may irrevocably spoil the broth.
2. DEBATING THE QUALITY OF THE TRAFFIC. The article highlights another difference between MySpace and the mainstream portals like Yahoo!, MSN and Google. Clickety Clack, a blog online advertising, puts this in context:
"The article gives a great example of MySpace's poor traffic quality when it describes Google/Yahoo's lack of interest in distributing contextual listings on MySpace.com. However, the NYTimes softens this by implying that Google's lack of advertiser s is the issue:
The answer he received was a shock. Not one of them, not even the mighty Google, was sure that it could provide enough advertisements to fill all the pages that MySpace displays each day, Mr. Levinsohn said. The search companies did not want to dilute their networks with so many ads for MySpace users, whom they said were not the best prospects for most marketing because they use MySpace for socializing, not buying.
The first part of the quote can be translated to mean that there are no advertisers that will be happy with the performance of MySpace traffic (Adsense advertisers expect a certain level of performance from Google). When Google goes out to find and test more distribution partners, they look for good click through rate traffic with good performance (meaning that the traffic converts for advertiser). "
For those with long memories, this evokes some deja vu going back a decade, when first AOL and then Yahoo! tried, with mixed success, to sell community and chat areas dominated by younger users, to mainstream advertisers.
This debate is going on not just for MySpace, but also for YouTube, which is the current leader in show-casing user-generated videos. And it's also struggling with how to attract mainstream advertisers when there are no guarantees on the quality and content of what user's put up.
A CNET article today describes quoting Paul Heberger, advertising director at eBaum World, a leading uploading site:
"The problem is advertisers want it both ways," Heberger said. "They want to be in front of that 18 to 34, but they don't want to be associated with much of what that demographic finds entertaining."
Well said...he could just as well have been talking about MySpace. While sites like MySpace and YouTube are striving for their explosive business models, advertisers are concerned about keeping explosive issues from their businesses.
The CNET article gives an anecdotal example:
"Yet, one video featured on eBaum's World Thursday showed a multi-car crash on an icy road. As cars continue to slide into each other, up comes a banner ad for Bridgestone tires."
3. GOOGLE BEING SMART? Not to read too much into Google demurring, part of the reason may be that Google doesn't want to do for MySpace what AOL, Yahoo! and Microsoft did for Google. And that is make MySpace a successful competitor in the long-term, even though there may be short term merit to working with them today. As I've pointed out in a previous post:
"In fact, in the last decade (late nineties), Microsoft, AOL and Yahoo! collectively gave away the search store to a start up called Google, by using Google's search engine for their search services, while ALLOWING Google to build-up a separately branded, relatively open platform of their own. "
It's the issue eBay is struggling with today, weighing the short-term benefits to it's business model from Google's advertising distribution with the long-term near-certainty of parts of Google competing with it's core businesses.
The probable answer here is that sites like MySpace and YouTube will find their advertising footing as they craft and optimize their business models. But it's likely to be a slower, more tentative ramp as both advertisers and the users of these sites come to better terms with each other.
Both articles are good Sunday reading though, if you want to ponder the big issues facing online media.
You're right, most people right now are looking at how to make more money from their business, not how to serve their clients better. Excellent story!
Michael - www.web2earn.com
Posted by: Michael - Web2earn | Monday, May 01, 2006 at 06:41 AM