MySpace: Time To Show Us The Money
MySpace has taken the world by storm. With more than 70 million registered users, huge pageview and traffic growth, and ubiquitous and usually gushing PR, the company is now tipped as the vanguard in a new Internet portal revolution. The company's success has also restored Rupert's status as a brilliant visionary, one who saw its promise early and picked it up for a song.
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.
These estimates are imprecise, and MySpace's staggering traffic growth has obviously far outpaced its ability to monetize itself. The company has been a part of News for more than six months now, however, so it the profitable-monetization engine is ever going to really kick in, it ought to kick in soon. If it doesn't, and if News Corp. doesn't provide more insight into the company's business model, it will probably be prudent to conclude that, in MySpace's case, as with some of the first-generation user-generated sites, traffic should not necessarily be viewed as a good proxy for business value. The MySpace revolution, in other words, may not, in fact, revolutionize News Corp.'s bottom line.
UPDATE:
An excellent story from Julia Angwin at the WSJ on MySpace's push to create "safe" areas that mainstream advertisers can embrace without appearing to subsidize teen pornsters. Although this sounds like a promising move, Julia points out at the end of the piece that users have yet to really embrace the new areas, preferring to remain in the user-generated jungle that scares the bejesus out of Disney, et al. The site's tremendous audience no doubt creates numerous monetization opportunities that don't include traditional advertising (data-gathering, for one). Again, however, it remains to be seen how large and profitable these will be.
first
Posted by: victor | June 21, 2006 at 12:18 PM
Fuck Second
You are becoming a strong opponent Victor
Posted by: KING TROLL | June 21, 2006 at 12:24 PM
Henry, note that I am in the process of trying to set up a Local page to advertise my apparel stores within my city. Id like to do it like Burger King but only target my area. I will pay top dollar for this and for local targeted video ads.
This is how I as a small business owner views this. I will not advertise keywords locally on google, but I WOULD advertise on Myspace and probably Youtube.
Local magazines and newpapers didn't do shit for my company. Radio has been great. I think Myspace will attract a large % of my ad budget.
Posted by: KING TROLL | June 21, 2006 at 12:29 PM
"Mr Murdoch has passed on to colleagues that Eric Schmidt, chairman of Google, told him that buying MySpace.com will prove to be the best deal of his life."
http://www.economist.com/business/displaystory.cfm?story_id=5407672
I think you're making a weak analogy with geo-cities henry. There was no social interaction or user participation features on geo-cities which meant it had far less lockin. ANyone who knows a teenager today knows how engaged they are with myspace. It's how the meet their friends, how they comment on their favourite bands, how they live on the internet. They're a very very valuable demographic and i think it's premature to count Fox out for not monetizing myspace fully as yet. Their strategy now should be continue to foster burgeoning growth and to increase lock in. Monetization will come in time, just as it did for Google and Yahoo.
Posted by: victor | June 21, 2006 at 12:54 PM
Good point, Victor. I don't mean to write off the monetization possibilities. Given the size of the site, however, as well as the near-universal conviction that News has hit a massive home run, I just think it's time to see some evidence. How fast is revenue growing? What do the margins look like? What governs the revenue growth? (Salespeople, inventory, advertiser concerns, etc.)
Posted by: Henry Blodget | June 21, 2006 at 01:03 PM
Are there monetization possibilities for MySpace and web properties like it? Sure. Will they gather even 1/10th the dollars-per-eyeball that paid search gathers? Probably not. Will the "hottest thing out there" MySpace make anywhere near as much money as "also ran" Ask.com? No way.
I think some people are finally starting to get that Search--and the advertising around it--utterly IS Internet advertising, and everything else is, relatively speaking, window dressing.
Based on what I've seen recently from GOOG PR, they might even be starting to get it. Of course they can also look at their own numbers and figure this out. The other players clearly know this. Even the WSJ is getting it, as they recently ran a story about paid search optimization and what a gigantic business it is becoming. You don't read too many stories about MySpace banner ad optimization.
SI
Posted by: Still Inside | June 21, 2006 at 01:42 PM
While not fulfilling the revenue promise others have for it, News might have a tremendous built-in, cost efficient mechanism to market the rest of its content businesses that when added to an eventual $600 or $700M revenue business is not bad.
Posted by: Bruce Hamm | June 21, 2006 at 01:59 PM
SI, you've obviously not looked at Google's earnings statements. Only half of it comes from search advertising, and the other half is growing faster.
It doesn't take much thought to see why. How many search pages are there, and how many other internet pages are there? The difference is orders of magnitude.
Posted by: Victor | June 21, 2006 at 02:09 PM
How long has it taken Google to come up with its killer app/money maker (i.e. keyword auctioned advertising)?
If Fox can afford to subsidize MySpace until a business model by which they can capture value emerges there should be no problem.
Posted by: chircu.com | June 21, 2006 at 04:22 PM
i think myspace has many opportunities to generate revenues beyond simple banner advertising
- selling music downloads
- selling video downloads
- video ads in MySpace Videos (catching up with YouTube traffic)
- selling tag words
- selling avatars (ala http://skype.klonies.com) [my favorite]
- probably many more opportunities
Posted by: Avner Ronen | June 21, 2006 at 07:08 PM
Adobe says to distribute Google Toolbar
http://today.reuters.co.uk/news/newsArticle.aspx?type=internetNews&storyID=2006-06-21T225313Z_01_WEN9880_RTRIDST_0_OUKIN-UK-ADOBE.XML
For watchers of Google, this is a telling development. Google has been quietly, but aggressively following a strategy of distribution by partnering with companies that have wide reach. Adobe is an example (through shockwave, Adobe PDF reader) and Dell is another example, but Google has been pursuing lots of smaller deals like this. What does it mean? Well, Google has leverage to help low margin businesses by paying third parties to distribute the toolbar. They know exactly how much more money they get from a user with a toolbar vs a user without one. With this knowledge that can profitably and aggressively court suitors to distribute their wares for them by enticing them with juicy high-margin google-paid profits. This is happening quitely in the background of the internet business world, but it's becoming a real and important phenomenon.
Posted by: Victor | June 21, 2006 at 07:56 PM
Sorry that link above was dead:
Try this
http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&storyID=2006-06-21T223828Z_01_N21286394_RTRIDST_0_TECH-ADOBE-UPDATE-1.XML&rpc=66
or this:
http://www.thestreet.com/_googlen/tech/internet/10293077.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA
Posted by: Victor | June 21, 2006 at 08:00 PM
Oh damnit, your blog is truncating links. Oh well, use google news and search for google adobe and it'll come up:
http://news.google.com
Posted by: Victor | June 21, 2006 at 08:01 PM
This has to rate as one of the dumbest ideas ever:
http://biz.yahoo.com/rb/060623/microsoft_research.html?.v=1
Do people actually pay for research from this Justin Post fellow?
Posted by: Victor | June 23, 2006 at 01:27 PM
Cost-per-action:
http://www.informationweek.com/internet/showArticle.jhtml?articleID=189601098
This should quell the click-fraud bromides that people love to keep resurrecting (henry, you included :)
Posted by: Victor | June 23, 2006 at 06:30 PM
Aside from finding ways to monetize all these registered users, what would you estimate would a customer potentially annually (or even better lifetime) bring? Aside from that, I've noticed that these sort of communities do tend to grow very quickly... just take a look at this Dutch (European) start-up Hyves (www.hyves.nl) from nothing to 2m subscribers in about a year or so.. (unprecendented at this side of the ocean with the exception of Skype perhaps)
Posted by: RB | June 25, 2006 at 02:48 PM
I think you need to start editing your comments Henry, other than the obvious porn links, seeing troll and victor do the first spam is annoying.
MySpace has topped out from my observations with many users starting to see the disadvantages of having thier life on public display.
Posted by: User | June 26, 2006 at 12:21 PM
Who uses a search engine to find laundry soap? To find Budweiser? Coke? McDonald's? And how would you measure the effectiveness of a Budweiser ad on the Internet. Click-on would be irrelevent. Bud wants their ads to be seen, not clicked on.
MySpace has the eyeballs that advertisers are looking for.
What's the view rate of Myspace compared to network TV? ABC? If it is comparable. Why would banner ads rates not be comparable to TV network ads?
With the advent of Tivo DVR's, people aren't watching network ads anymore.
It will always be about the content. Content brings the eyeballs.
Posted by: walter | June 26, 2006 at 12:30 PM
I came to think of an idea as to how MySpace should monetize their business -- they should have picked up del.icio.us (but Yahoo did in Dec 2005); still, they could pick up Backflip, which is a similar service. MySpace needs to begin competing with Google, Yahoo, and MSN -- not working out a search deal with them. Well, for the time being they should, to make more $ from users doing searches. But the next step of Search in my opinion is something I'm calling "Social Search" -- it's the idea of doing web searches and seeing results that are influenced by your contact network (or contacts that you admire/respect). MySpace is positioned to do this -- they could be Search 2.0 -- people start tagging/bookmarking websites that they like/approve of, and your web searches include their results at the top of the list, along with sponsors on the right of course. So now my network of 400+ MySpace friends help me better find information I want; or I could do a web search for something based on the network of contacts in a particular MySpace Group (for example, I want to find what VC firm invested in boo.com back in the 90s, I could do a search on webpages influenced by a Group of VCs in MySpace).
Posted by: Steve Poland | June 26, 2006 at 01:07 PM
Henry, i strongly recommend that you watch this:
http://video.google.com/videoplay?docid=9052748627071917708
Eric Schmidt on internet advertising at the Economic Club in Chicago
Posted by: victor | June 27, 2006 at 12:33 AM
My site here :
http://myspace-friends-train.blogspot.com/
Posted by: Jim | September 23, 2006 at 02:41 AM
photo nu amatrice photo amatrice femme belge gratuit photo amatrice black gratuite photo amatrice sexy lilou amatrice photo black amatrice lingerie amatrice photo amatrice chaude gratuite mature nu amatrice video amatrice sexy video amatrice gratuite fr sexy amatrice sophie amatrice musique du film alexandre jaquette divx film extrait gratuit film x avec bruitage carte postale affiche film cinema film erotique xfermer film porno x bande annonce film pornographique telechargement payant de film jaquette and film and jaquette dvd gratuite film and and cul and gratuit and and dvd pornographique film emule telechargement de film regarder film cul gratuitement chatte cul film x branlette jaquette film indestructibles telechargement musique de film mini film cul egyptienne film x gratuit visionner extrait film cul jaquette de film partition de piano de musique de film telechargement gratuit film x pamela anderson film hard avec rocco siffredi extrait and film and x telechargement film dvd gratuit film gratuit porno film gay en ligne bande annonces de film xxx bande annonce film gay gratuit film gay acces jacquette de dvd pour film noleggio film vhs dvd playstation location dvd film copie de film sur dvd x and gratuit and film and x and gratuit and extrait and video and video and clip and video film pornographique tourner reunion film sexe hard gratuit film d horreur 2004 film porno en direct festival film locarno extrait gratuis film hard virtuel film cinema a marseille sex gratuit film film pornographique mineur extrait film xxx gratuite figurine film d horreur meilleur film porno bande originale film dis oui film 100 action direct action film bibliotheque film action bande originale film donjon et dragons bo film alexandre film turque erotique gratuit acteur du film harry potter scanner diapositive photo film pochette dvd film walt disney voir le film harry potter film gay gratuit telecharge telecharge gratuit film porno harry potter 2 film regarder des film divx film photo rayons x moms film free video clip matter film sexe gratuit film video divx photo film guerre monde photo film avec sarah biasini critique film realisateur top site film video jacquette film wash film arabe gratuit sex bo film le pianiste film guerre monde cinema bouche rhone liste film 2006 derniere sortie de film au cinema paris hilton film sexy fourniture montage film liste film x canal dernier film sortie en dvd sortie film cinac annuaire film hard comique meilleur film comique casa telechargement film gratuit film sexy video telechargement musique de film gratuit liste film porno spiderman2 film video telechargement gratuit film gratuit origintype film sortie des film porno beur cite gay gay photo gay annonces gay brest rencontre annonces sm cite gay gay anal sexe porno gay gay porno photo porno gay gratuite jeune gay photo rencontre gay midi pyrenees cite gay vix cite sexe gay homosexuel gay free video photo porno gay hentai gay rencontre gay partouze gay rencontre gay veraxioo mec des cite gay gay muscle gay photo free photo gay cite gay couple photo sexe gay photo gay hard photo x gay beur gay photo photo gay arabe annonces rencontre gay chat gay france gay chat monaco gay sexe porno extrait film gay gratuit sexe gay poilu gay immobilier fr google fr ya gay secteur alsace guy gay fr free gay porno gay porno x chat beur gay video gay porno gratuite gay sexe video gratuite chat gay totalement gratuit zone dial gay fr chat gay arabe gay gros sexe extrait gratuit de video gay gay chat limoges gratuit photo de gay porno gratuite histoire gay suisse porno and gay gay chat belgique video gratuite sexe gay gay gratuit fr sexe jeune gay presse gay fr acteur israelien porno gay histoire gay uro video beur gay gratuite club gay voiture ancienne club escapade association gay caen club gay duc club et bar gay new york gay black sex gay sex club nice france hard sex stud gay beau and mec and nu and gay photo gay hard gratuite latino gay muscle gay nu free download histoire gay hard club gay montpellier star gay nu gay club beur gay boy hard gay free bruxelles gay club club fitness gay auvergne club gay cannes club gay bruxelles club echangiste gay black gay sex racaille beur gay sex hard gay gay exotique homme nu club naturiste gay beur and gay jeune black gay black gay pics photo sex gay gratuit muscle gay site groups.msn.com photo gay gratuit francais gay porn free blog couple gay free gay porn clip photo gay sexy gratuit photo pornographique gay gratuit blog bordeaux gay sex gay gratuit photo gay porn video photo mangas gay gratuit gay gallery mature porn webcam blog sperme gay homo gratuit sauna paris gay homme gay muscle gay sexe photo gratuit keum free ebony gay porn free porn gay young gay boy porn galerie gay minet muscle muscle military gay photo gratuit gay arabe sexy blog gay homme jeune photo gay francais gratuit gratuit photo pompier gay francais blog porno gay chat gay cam gratuit video x gay gratuit very young boy gay sit chat gay gratuit young gay black galerie gay mangas chat et rencontre gay gratuit corp mec gay gay euro boys chat gay gratuit photo gay film x gros sexe gratuit gay gay hairy boys pompier gay gratuit video young boys gay porno gay video gratuit gay porno film star extrait video gratuit gay poilu photo gratuite des mec gay acteur film gay british boys gay video clip gay gratuit photo gratuite des gay mec gay mature young telechargement film gay gratuit free gay boys pic zuzian webcam chat gay gratuit gay video gay gratuit gay boys nude bite sexe gratuit homme gay bo mec gay annuaire site perso gay gay cum racaille gay cum facial young gay ass fuck gay and mangas bear gay fuck bear annuaire page perso gay big cum gay fuck cock gay gay homme blanc sexe black grosse bite gay gay annonces bordeaux gay mangas gratuit photo gay bite annuaire culture gay annonces gay dunkerque photo jeune homme gay cum gay suck annuaire gay porno mangas hard gay fuck gay crad annuaire and gay rancontre homme gay porno gay homme gay suceur de bite bite gay porno gay site homme mur annuaire gay et lesbienne gay double ass fuck photo gratuite homme gay black vivastreet.fr annonces rencontre gay havr foto sex gay arabe arab gay photo galerie photo gay marie carangi histoire arabe gay escorte gay lyon rencontre gay arabe gay minet arabe technique de sodomie gay gay porno men free gratuit gay partouze site groups.msn.com gay men galerie gay and marie and carangi gay photo arabe galerie photo baise gay gay double sodomie webcam gay site groups.msn.com webcam gay en direct escorte sm gay boy sodomie entre gay escorte gay cannes gay arabe photo gratuit gay free galerie gay chat webcam extrait de partouze gay perso gay david galerie homme gratuit porno gay gay porno gratuit sans cb code partouze gay black partouze gay site groups.msn.com gay porno sex gratuit page perso gay free gay pic big cock xxx gay gratuit gay escorte boy france free pic leather gay sex gay video xxx anal sex gay lavement anal gay sexe hairy gay free pic mec gay xxx brother gay pic guide paris gay free gay pic skets free gay daddies pic gay escorte massage paris xxx gay algerien.com le depot paris gay gay hard anal baise gay anal sexe gay anal homme gay xxx men gay x paris gay hotel free gay bear video sample free hot gay sex pic movies and pic gay free paris gay free pic gay football free gay black video hairy gay free video gay motard sex free pic gay men pics actrice amatrice x francaise amatrice mature hard amatrice hot page perso amatrice sexe felin amatrice rencontre lyon amatrice perso org amatrice avec gros sein amatrice belge be amatrice sexe voiture amatrice mature libertin belge amatrice vieille exhibitionniste japonaise amatrice acces gratuit cynthia amatrice noire chat webcam amatrice blog amatrice photo sexy contribution grosse amatrice brune cochon amatrice brune amatrice nu cul amatrice contribution amatrice francaise jeune photo amatrice gratuit femme agee amatrice nu jeune amatrice libertin hard amatrice gratuit amatrice branlette gros sein amatrice inurl perso inurl amatrice inurl free fille amatrice
Funny movies, priceless pictures, site reviews, security tips and recommended software against spyware.
Posted by: Ometecutli | November 30, 2006 at 01:11 PM
To buy tablets now
The future of medicine and health care in a biotech age - genetic research and pharmaceutical industry challenges and future trends
http://www.futuremedicine.bravehost.com/
Ron, Boston
Posted by: Medicine and Health | July 20, 2007 at 02:54 PM