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MySpace: looking for the profit

The continued success of MySpace, with its membership quadrupled since Rupert Murdoch shelled-out $580m for the social networking site, has made it seem like an excellent buy. Murdoch appears to have at last got to grips with the internet after an uncharacteristically slow and shaky start.

But John Naughton in The Networker column in the Observer has his doubts. He thinks MySpace is unlikely to produce sufficient advertising revenue to make its proper contribution to Murdoch’s demand for annual revenues of $1bn from online properties by the end of the decade.

He quotes Peter Chernin, chief operating officer of Murdoch’s News Corporation, on the subject of MySpace users importing feeds from other sites such as YouTube and Flickr so driving traffic their way. Chernin said: “Almost all of them are really driven off the back of Myspace. There’s no reason why we can’t build a parallel business. Given that most of their traffic comes from us, if we build adequate, if not superior, competitors, I think we ought to be able to match them, if not exceed them.”

Naughton comments:

If you wanted a statement encapsulating why Big Media still doesn’t understand the internet, you couldn’t do better than that. The lesson of Web 2.0 is that the whole (of a number of independent, autonomous services) winds up being greater than the sum of its parts. If Murdoch fails to get this, Myspace will wither before his eyes.

Sometimes attacks on Murdoch feel like wishful thinking. And making real money out of the internet is the challenge facing every media business not Mudoch alone.

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  1. FJ says

    Another thing Mr Murdoch’s Internet strategist don’t seem to realize is that MySpace is incredibly vulnerable. Why? Because in essence its success rests on the clever idea that people can ‘ping’ each others blogs, thereby giving their own site a dynamic, community feel. Now if someone where to create a standalone version of this ‘friend ping’ mechanism, and allow people to easily integrate it into their own site, whether they use Myspace, WordPress or Blogger, then the main appeal of Myspace would rapidly disappear – and with it Murdoch’s millions.