MySpace searches for revenue

Mark Sweney
Tuesday May 23, 2006

The decision by MySpace to tie up with a major search partner is an obvious, albeit critical, strategic step that ultimately could determine whether it develops a viable business model or becomes another over-hyped dotcom fad.

MySpace is in talks with internet giants Google and Microsoft about providing search services in a move that would open the door to major revenue growth for Rupert Murdoch's social networking site.

While the popularity of the site is nothing short of a phenomenon, analysts and observers have thus far questioned how Mr Murdoch will recoup the $580m (£310m) he spent acquiring the site last year.

While MySpace's online advertising revenue is continuing to rise, tapping the search revenue market will be a key move to develop the site into a mature business.

ITV's £175m acquisition of Friends Reunited illustrates the purchase of a firm with an existing multichannel business model. Although the broadcaster has much to do to draw serious revenue from the product, the first step has been taken to tie the brand to its broadcasting capability: namely an interactive TV show on the new participation games channel ITV Play.

The underlying assumption at News International has run along the lines that if you own a property with huge numbers of users then advertisers will come.

"There has always been the question of monetisation at MySpace as advertising beyond the homepage is limited," says Julian Smith, online advertising analyst at Jupiter Research.

"A potential tie-up with one of the big portals or a search engine is likely to be a big revenue generator, making the acquisition of MySpace by News International look more and more prudent."

Similarly, eBay's strategy in acquiring voice-over-internet protocol company Skype is based on betting that the hugely popular service will be leveraged for serious revenues going forward.

While eBay is looking at various models to pay for calls and leads, social websites such as MySpace are advertising dependent and must be very aware of marketing saturation when targeting users.

Delivering huge numbers of traditional online advertising formats - banners, buttons and skyscrapers, for example - is not going to sit well with the largely "uncommercial" ethos of MySpace. Furthermore, the revenue generated from this strategy is not going to be huge in the long term. MySpace simply does not have the online advertising inventory.

While MySpace executives are successfully leveraging content deals with film and music companies - to develop branded pages for example - a deal in the search arena is critical.

By partnering with Google or Microsoft - to provide the search function and resulting listings - every time a MySpace user decides to do a search, ads can be delivered.

The partnership will be mutually beneficial to both parties. The likes of Google or Microsoft currently generate massive revenues from search-related advertising and any deal with MySpace will provide a huge number of new users.

In recent internet usage figures for the traditionally hard-to-reach 18- to 24-year-old market, MySpace ranks fifth behind established giants eBay, MSN, Google and Hotmail. According to internet measurement firm Comscore, users spend almost 30 minutes per session on the site, averaging around 6.4 visits overall per month.

"Search engines need to encourage more searching [to build revenue] and youth audiences are spending increasing amounts of time on social sites," says Smith. "So whoever provides the search facility to MySpace will generate a lot of traffic, search results and, ultimately, revenue."

Google beat Microsoft to buy the strategically important 5% stake in AOL for $1bn. However, that doesn't necessarily mean that Microsoft is in a "must win" situation this time around.

Youth audiences are huge fans of instant messaging, a valuable marketing and advertising platform and, across Europe at least, MSN is the market leader. Many MySpace users are almost certainly already customers because MSN messenger is packaged with PCs.

One site aiming to make sure that the social networking website market remains more than a one horse race is UK startup Bebo. Proving that there is still a lot of venture capital interest in the market, Benchmark Capital, the backer of Irish TV company Setanta, announced it is investing £8m to grow the business.

Bebo launched in July last year following the runaway success of MySpace. Recent figures from internet research company Hitwise UK predict that at current growth levels it could pass its arch-rival.

One analyst sounds a note of caution about getting too fixated on the belief that sites like MySpace are guaranteed to remain dominant: "Social networking sites are relatively easy to build. If users keep their profiles updated - churn and dormancy are always an issue - then MySpace will remain critical to people's social lives. If not, the site may possibly only last a few years."

Critical to people's social lives? This was a joke, right?

just because it doesnt apply to you it doesnt mean its a joke. try to get your head of your self righteous head once in a while for some level of objectivity. at least myspace allows indie musicians to get exposure easily to real people out there. strangers with real objectivity.

dmusic is fuckin joke. the only people likely to even find/repeatedly listen much less buy the music in dmusic are the same sanctimonious, dorky cliques or loved ones who have to support them.

yes..i'm an asshole to assholes.

toodles

"just because it doesnt apply to you it doesnt mean its a joke."

Just because it applies to you doesn't mean it isn't a joke.

"online socal lives"?!? I can relate, I spend over two years in the same chat room.... straight, 100% of the time...
my space sucks ass tho', everytime I visit I have to log in two or more times and it allways runs slow as hell. I havent been able to stream, DL or even poke around the music posted there.
Dmusic a joke? nah, wont be too funny when a Dmusician becomes a hit without signing a contract. No other site is so against selling out.
Belive it or not, I consiter myself a successful musician. Wonder what ruler Im using to measure that with cuz Im broke

WARNING :

Rude Assholes get thrown out of here all the time.

Go back to Myspace BUT REMEMBER -

"No indian prince has more attendants than a thief to the gallows."
-Edgar Allen Poe.

This ain't no popularity contest, idiot. Toodles to you too.

Ps:
What instrument did you say you played?

Here's something Bob Lefsetz says about the social networking sites (in regards to the music.) I agree with some of it when I am in more cynical moods:

"Friday night I was kept awake reading an article on Facebook in "The
New Yorker". I assume not everybody reading this knows what Facebook is.
Just like our parents had no idea what rock bands like the Doors or
Crosby, Stills & Nash were.

Facebook is a social networking site. Established by a Harvard
student. He started out a self-taught coder. He might have ripped off the
idea for the site from fellow students. But what he created was
INSTANTLY successful. With thousands of people signing up in a week. That's
the power of the Internet.

Mark Zuckerberg, Facebook's founder, is not quite like the rock stars
of yore, the ones who flourished in Southern California in the late
sixties and early seventies. To Zuckerberg, money was always paramount.
But, like the work of those great bands, Facebook is cool. Everybody
wanted it. And still does.

Music is passe. History. Oh, don't blow chunks, don't get your
fingers walking on the keyboard. Just sit there and contemplate. Music has
been around since the dawn of time, and will continue to exist, great
records will be made. It's just that today music is not where it's at.

I just finished reading the book "Hotel California" by Barney Hoskyns.
The second half is such a disappointment. It reads like a Zagat guide.
All pasted together quotes. But the first half, which I read second,
is the movie filmmakers have tried to make but have never succeeded in
getting right. It's the story of the birth of Southern California rock
and roll. And if you can put it down, you've never been touched by any
of the acts featured.

Linda Ronstadt left Arizona at age 18 to live at the beach, singing
songs to stay alive. Would you let YOUR daughter do the same today?
Without buying her a car with airbags all around and calling her cell phone
five times a day? Nobody really leaves home anymore. Nobody takes a
risk. Hell, they're taught not to, having worn bike helmets their whole
lives, having never walked to and from school, their parents worrying
they'd be stolen. Their whole lives are arranged, like the playdates
their mothers scheduled from the time they were born. The concept of
starting a new life on a whim, it doesn't even enter their brain. But
that's what the old rock stars did. In patched together automobiles they
made their way to Los Angeles. And ensconced themselves in Laurel
Canyon.

Locked in traffic on Laurel Canyon Boulevard today it's hard to fathom
that this avenue wound through the heart of musical creativity in the
sixties. Like a giant summer camp, musicians lived in different houses
and journeyed to their friends' cabins, to hang out, get high and sing.
There were no news crews. Not even any record companies at first. It
was about lifestyle, not fame. And with this genesis, with the sixties
values as a backdrop, the most enduring music of the rock era was
created. The exquisite poetry of Joni Mitchell and the sales of the Eagles.
Take your pick.

Where's the music scene today? Where's the community of like-minded
musicians in it for the tunes rather than the bucks? In an era where the
buck is king even Bonnaroo changed its jam band ethic to draw more
attendees. Everything's so sold out/whored out that there's no belief
involved. It's just endless product. That is essentially meaningless.
And without meaning, you've got no hooks, nothing to stick to the
audience.

Facebook is exciting because it's about community. Connecting with
other people. That's the guts of MySpace too, music has almost nothing to
do with it. People want to meet others, they want to flirt, want to
exchange information. Only oldsters could focus on predators. These are
the same people whose parents were worried about their kids going to
the rock show thirty five years ago. They miss the point. People want
to be free, they want to feel ALIVE! Mark Zuckerberg is the enabler.
Unlike MySpace, Facebook doesn't allow just anybody in. You've got to
be a student, an authorized one. And you get to choose, to a degree,
what information is revealed and who gets to see it. End users have
control. Where is the control in the music business? The music business
is one way. We concoct it, you buy it, FUCK YOU! It's like the entire
business missed it, the Internet revolution. There's a community as
strong as there was in Laurel Canyon, it's just virtual.

As for the acts exhibiting their wares on MySpace and other places on
the Web, they've been exposed to twenty five years of MTV, they're
experts on exploitation, but light on soul. The sale precedes the tune.
Imaging is key. Everybody's got a business plan, nobody is growing his
talent.

Reading about Los Angeles in the few music papers extant during the
heyday of the scene, I couldn't wait to graduate from college and come. I
guess if I'd had any balls I would have dropped out and arrived
earlier. Then again, unlike Ronstadt and Jackson Browne and Don Henley I
couldn't completely let go of my past, I depended on it, I wasn't ready to
reinvent myself. I wasn't ready to live on absolutely nothing, knowing
that all you've got is your experiences, and your physical assets don't
really count.

Don't feel bad if you don't get today's music. It doesn't have what
the old tunes did. It doesn't have a sense of adventure, a sense of
limit-testing, a sense of JOY! Because it's coming from a different place.
If not mercenary, a desire to be so DIFFERENT that it WANTS to exclude
you.

It's hard to create a scene today. Because as soon as you've got a
flame, the press fans it into a conflagration, and then it burns out
almost instantly. You'd think the record companies would finally understand
this movie, having seen it again and again and again. But chasing the
buck, they run acts up the flagpole and overexpose them again and again
and again. Nothing is allowed to grow. Acts are not allowed to
percolate, growing their base a fan at a time. And if you don't make the
kind of music that's easily sold, if you're not willing to play ball with
the corporate behemoth, you don't get to play at all. Unlike in the
late sixties and the early seventies, the act is not king, but the label.
And the label likes this, feels entitled, for risk is anathema to these
corporate entities. And, as delineated above, risk is primary to great
art.

We all want something to believe in, something to live for. I ask you,
with endless conventions, books about how to make it, institutionalized
success paths, who can get excited? Not only not the talent, but the
audience either. Isn't it funny that everything kids get excited about
is on the Web, built by their peers and populated with content they've
created? And isn't it fascinating that the corporate behemoths have
missed this every stop of the way, and can only get in by buying sites
that could die tomorrow? You'd think MTV would own music on the Web, but
with a corporate commercial viewpoint, the music video channel missed
it.

Morning has come to Morgantown. It's clear that the old days, the old
systems are done. The structures are decaying, they're empty. A new
world is being built by young 'uns the same way young 'uns built the
music scene in the last century, stealing the whole business from old
farts.

I can't tell you what's coming. But I can tell you what we've got now
is dead. Kaput."

Actually, I think the "new" way of getting the music out there is going to save the music. Too bad the RIAA and the corporates keep getting in the way. Truth is, it has always been THEY are who to blame for the frustrating woes.

Myspace.. it's just a matter of time..

gdz... lovin' yo' style!

Thanx, Mary. As long as one person is still laughing, I have done my job.

"just because it doesnt apply to you it doesnt mean its a joke."

Just because it applies to you doesn't mean it isn't a joke.

============
Just because it applies to you doesn't mean it isn't a joke.


"just because it doesnt apply to you it doesnt mean its a joke."

going around in circles
blah blah blah
of course every site except dmusic sucks to you. compensation for lacking. and of course its a popularity contest..thats why you're putting sites like myspace down. truth is no one really wants to go to dmusic except you because it's utter garbage for the same clique. even if its dollar cough dollar..its still going to have more users of the general population than dmusic. but yes..everyone is an idiot except you *rolls eyes*

yet im still puzzled for a site that endorses against the riaa that so many people on dmusic does riaa cover tunes...ironic.

You don't like it here, then you are gone.

Ps: RIAA doesn't represent publishers.

"yet im still puzzled for a site that endorses against the riaa that so many people on dmusic does riaa cover tunes...ironic."


PPS: We have an ASCAP and BMI blanket license. This guy must be lost in space.