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Re: MySpace Helps News Corp Lose $363 Million

From: Melvin Carvalho <melvincarvalho@gmail.com>
Date: Fri, 7 Aug 2009 15:15:53 +0200
Message-ID: <9178f78c0908070615n6b3e0223xc7504e2d12e4d4ce@mail.gmail.com>
To: cperey@perey.com
Cc: public-xg-socialweb@w3.org
On Thu, Aug 6, 2009 at 8:38 AM, Christine Perey<cperey@perey.com> wrote:
> 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).

I think facebook has offered more leadership here, particularly in two
areas, where it has excelled:  Access Control, and Apps.  OpenSocial
was a reaction to the extraordinary success of facebook apps.  Even
still MySpace came late to the OpenSocial party, it was Ning, Orkut
and Hi5 that drove this in the early days.   While there are certainly
some pluses, I think they simply haven't offered enough, to justify
the #1 position that they held for many years.

I think these two areas will also be well covered in the final report.

>
> 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!

This is a good point.  Time will tell on this one, however advertising
is only one source of income.  The network effect of the social web,
which is in its infancy, will be a key enabler of new economy
businesses.

Once you build a good infrastructure revenue strea,s may arise in
areas, not initially anticipated.  For example, approximately 50% of
world GDP is spent on the infrastructure of markets and trade.  The
W3C infrastructure is very well placed (via linked data) to modernise
these processes.  Add an entry point to the social web, and you could
see markets and revenue streams not previously imagined.

Though all of this this all takes time, so it's important to look
forward a number of years, rather than a few quarters, which is
perhaps and area where MySpace didn't show as much forethought as they
could have done.  I think the W3C has as strong a track record as
anyone in this regard, so while the focus may be on technical aspects,
I'm optimistic there's will be something in there for businesses too.

>
> 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 Friday, 7 August 2009 13:16:29 UTC

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