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Someone recently said that social networking is a fad. This is a phrase I hear often, usually from people who don’t understand what social networking is, and the possibilities it presents.
Socializing via the internet or otherwise, is an incredibly powerful aspect of humanity. On the net, it’s done more than anything else, including shopping. Think instant messaging and chat rooms. Don’t think about today’s social networking sites. The current tools and business models are inefficient blind leaps toward more efficient personal networking.
Friendster and Myspace are but initial versions of how we will network and communicate through the ‘net in the future. A few sites caught the wave and grew, which doesn’t mean they will remain relevant or morph into a business model that makes sense long-term.
Frienster slowly empties out, losing it’s stickieness as it continue to add features, none if which seem to strike as deep a chord as the initial rush of being two degrees from Bill Clinton or Pamela Anderson.
Myspace got lucky due to a fortunate bug in software that runs the site and early adoption by musicians. Record labels saw the writing on the wall when they recognized that instead of breaking a band for $1M they can do it on Myspace for $50,000.
Social Networking sites like Myspace are really replacement versions of previous concepts, which often lacked the vision, the rise in web services and most importantly, the post dot-com crash downtime that gave many innovators the time to huddle and figure out what’s next. It’s like MP3.com with blogs and more community-oriented features.
Ridiculous money is starting to flow from VC’s again. They say they are smarter, more willing to perform due diligence, however. given the stratospheric amount of eyeballs at myspace, it won’t be long before the well-funded me-too sites come along. Pay attention to them, they just might have that secrete sauce that turns the current social networking fad into a trend.
Go buy some Google stock, it’s a bargain today at $280.
[tags: myspace, social networking]
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Blog reactions
7 responses so far ↓
1
Edward Orysiek (Check me out!)
// Aug 19, 2005 at 9:29 pm
Dave,
Could you please elaborate on “Myspace got lucky due to a fortunate bug in software that runs the site “?
2
Markus Frind (Check me out!)
// Aug 19, 2005 at 9:47 pm
Social networking is just the latest buzzword, that every site tries to use.
The original friendster was a social network and nothing more. Basically a updated version of the hamster dance. Users would only go to the site for the curiousity factor. A social network on is own is just a fad and can not exist.
Every successful “social network”, it just a site trying to sell you something and is packaged up as a “social network”. You could take it a step further and say that the users in your “social network” help the site sell its product. Basically the users of your site become unknowing affiliate marketers, but for that to work you need to be selling something directly or indirectly.
Linkin –> jobs
myspace –> music
Then you have the social networking failures.
Friendster, trying to be a portal site built around a social network.
tribe.net –> Couldn’t make it as a social network, so it cloned Craiglist.
3
Dave Evans (Check me out!)
// Aug 19, 2005 at 9:54 pm
As legend would have it, during the early days of Myspace, a bug in the system allowed users to change the look and feel of their personal pages. This was soon exploited and many users began customizing their pages, layouts colors and so on. The bug turned into one the the biggest features of the site.
4
Markus (Check me out!)
// Aug 19, 2005 at 11:48 pm
Myspace.com had ~25 billion pageviews in the last quarter. The network segmant that myspace is in reported revenues grew from 6 million to 12 million over the last year. Assuming myspace accounts for 8 million of that, they are earning 32 cents/CPM. Most of the articles i’ve seen put myspaces year long revenue at 20 to $24 million.
Myspace has over 450 pageviews per unique visitor per month. If that ratio keeps going up they are going to have a serious problem maintaining any sort of profitability. I would suspect they are still operating at a very small loss, or a very tiny profit as past interviews have stated.
Where is the business model for these sites?
5
lg1964 (Check me out!)
// Aug 21, 2005 at 10:41 am
The business model is to sell out to one of the portals.
Someone convince me that 150 flavors of “social networking” are going to gain traction. It has all the allure of the early “personal web page” and “blog” — without some incentive to stay active people lose interest quickly.
YAWN.
6
Dave Evans (Check me out!)
// Aug 22, 2005 at 10:16 am
Markus, you are not taking sponsorship and large advertising deals into consideration. These deals are not tied directly to pageviews but to the myspace brand.
Ig1964, this is why Yahoo 360 is interesting, because it allows you to have a single profile that integrates your “stuff” from all over the web- Flickr photos, del.icio.us bookmarks, various blogs, etc.
Early personal web pages were incredibly exciting to people. Self-publishing is an important part of internet culture. Don’t forget that Geocities sold for #3.2 billion dollars, albeit during the bubble.
7
Markus (Check me out!)
// Aug 22, 2005 at 11:32 am
The advertising and sponsership numbers are already included. They have 32 cents/CPM in revenue, from what i’ve read they have been at break even with hardware costs increasing dramatically. But at any rate myspace is now #4? in terms of pageviews and if they are extremely lucky they can squeeze out a million in profit for the year. Unless they start selling something the revenue just isn’t there. They have to many pageviews per unique visitor and its eating up all their revenue.