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Re: MySpace Helps News Corp Lose $363 Million

From: Christine Perey <cperey@perey.com>
Date: Thu, 06 Aug 2009 08:38:50 +0200
Message-ID: <4A7A7A7A.8010807@perey.com>
To: Melvin Carvalho <melvincarvalho@gmail.com>
CC: public-xg-socialweb@w3.org
Hi Melvin,

I fully agree with your point that business issues are critically 
important (to company shareholders, executives, employees, etc). But 
let's not draw too many conclusions from the announcement made by NewsCorp.

There CAN be fiscally unsound social networking companies (just like 
fiscally unsound businesses in any industry) and fiscally unsound social 
web divisions/services within multinational diversified companies 
(perhaps the case for News Corp/MySpace).
 
However, I don't think the "MySpace strategy" is clearly (or always) the 
wrong one. A social web strategy has many components (how to accrue new 
members, increase engagement with existing members, monetize what you 
have, keep the technology scalable and the user experience evolving, etc).

In many of these respects, MySpace has demonstrated industry leadership. 
In my area of focus-mobile- they recognized its significance early and 
made investments; they embraced OpenSocial as part of MySpaceID, they 
clearly have a music/performing arts focus (as opposed to lack of 
focusbook). They have invested in keeping the user experience evolving 
via an "Open Platform" developer community (as opposed to a proprietary 
application platform for developers).

MySpace's monetization strategy has largely relied on advertising. In a 
year like the past 12 months and given the exceptional economic climate 
in the US, this result (loss of $363M) is not terribly surprising, nor, 
in the grand scheme of things (-$3.4B) is it terribly large.

 From inception to date, the SWXG has focused on technical matters and 
the W3C is going to promote an Open Social Web. Unfortunately, this Open 
Social Web strategy is precisely what MySpace's Open Platform strategy 
and community development initiative is striving to achieve. 
http://developer.myspace.com/community/

I think we may be seeing that MySpace has yet to identify the successful 
(lucrative) business models for a successful Open Social Web strategy. I 
would not be drawing this conclusion, as a business person, however, one 
conclusion companies /could/ draw from the announcement is that the Open 
Social Web strategy which MySpace has pursued since Dec 2008-ish, is NOT 
good for their business (at least not in the first year).

Given its current composition and the focus of the W3C, in general, I 
don't believe that the SWXG is going to be the forum where we will find 
mind-blowing business strategy recommendations emerging. On the 
contrary, the lack of business case is a significant risk for the future 
work of the W3C in the area of Social Web. I fear it could be extremely 
difficult to "sell" the SWXG's technical recommendations to the most 
successful social networking companies, and perhaps to those who strive 
to become successful, because no one has yet been able to formulate the 
Open Social Web business case (make the financial justifications).

This business case may emerge in the future, in which case an SWXG 
report (or the work of the SW WG in the future) should point it out!

Christine

Spime Wrangler

cperey@perey.com
mobile +41 79 436 68 69
VoIP (from US) +1 (617) 848-8159
Skype (from anywhere) Christine_Perey


Melvin Carvalho wrote:
> News Corp., which owns FOX, The New York Post, the Wall Street
> Journal, and other media outlets, hasnít been doing so well in the
> last year. The companyís net income was $5.4 billion in the 2008
> fiscal year, but the numbers they released this afternoon for 2009
> show the company heading in the complete opposite direction: a loss of
> about $3.4 billion.
>
> News Corp specifically blames MySpace for a loss of $363 million to
> the companyís bottom line.
>
> http://mashable.com/2009/08/05/myspace-news-corp-losses/
>
> IMHO, these really is the strongest possible incentive to get your
> social web strategy right (hopefully the SWXG final report can
> contribute to this!).
>
> Perhaps it's not simply that the social web can make the companies
> that get it right, but maybe it can break the ones that get it wrong?
>
>
>
>   
Received on Thursday, 6 August 2009 06:39:34 UTC

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