Wednesday, April 05, 2006
Friending is a Verb
"...Hi Umair, thanks (sort of!) for the link.
A couple of points: First off, I think you've misunderstood the thread - we're talking about how and why Murdoch might monetise MySpace (he's not in this for any web 2.0 kudos). Secondly, I can't see anything in MySpace that insulates it from being overtaken by a competitor. I'd like you to elucidate, because I've read your stuff here on MySpace and I'm far from convinced.
Sure it's got momentum now, but I don't think its got anything that gives it sufficient edge over rivals (present and future) or the strength to ride through changes that Murdoch could be envisaging."
How is Murdoch going top monetize MySpace?
The point is that this is the wrong question.
Discussing "monetization" - an ugly word, and a silly concept - is pointless if you don't think about a firm's econ a bit more deeply, and/or take the time to understand a firm's context. "Monetizing" diamonds is very different today than it was 50 yrs ago; "monetizing" newspapers is not (and that's the problem).
With that in mind...
Why is MySpace's advantage durable? Let's not talk about network effects - though those are certainly there in spades. There is a deeper reason. MySpace has got what we sometimes call in strategy economies of time compression. It has spent three years building the deepest social value proposition and deepest social music experience in the world; by tailoring and adapting a unique set of services around it's users. They have coevolved now; they are in a kind of symbiosis.
Both of these are reflected in the exec summary to my MySpace paper, where I say "friending is a verb". Because it is, MySpace can capture value from it in ways that are going to be surprising - just like Google did.
So to think that someone can come along and rip off MySpace's services, or simply build a better mousetrap overnight is to misunderstand how advantage happens at the edge.
This is not "momentum". Friendster had that, and it got crushed. This is adaptivity - advantage happening in combination with people, not "for" them.
Look, the real problem is the MySpace hype these days.
Far too many people talk about MySpace without ever really having taken the time to play with it. If you do, you will quickly see what I mean about adaptivity. Until you do, it's likely just an abstraction.
Far too many people apply a Google revenue model to MySpace, again because they don't use it. If you do, you will quickly notice that branded ads on MySpace are going to be as revolutionary to brands tomorrow as PPC was yesterday to naive ads.
All of this is why VCs are mostly investing in social plays which will go sideways - like Tagged, Tagworld, and yesterday's also-ran, Friendster. Like most people - even most startups - they have no idea what the "social" in social media is really about.
If you're interested in this stuff, you can ask for a copy of my (not free) Laws of Social Media: MySpace vs Friendster paper.
Final note, and an important one - with his "He's not in it for any Web 2.0 kudos", but Bobbie neatly sums up probably the most central problem with Europe and value creation.
This is the problem: in Europe, people think business has to be evil. Bobbie thinks Murdoch has to be myopically focused on "monetization", otherwise, he's just in it for "kudos".
The implication is that both together are impossible.
In fact, the thing about 2.0 is that kudos/not being evil is what creates value. Google could do the most evil thing in the world, and sell it's data today - but it won't (can't); because it would lose a great deal more than it stands to gain.
Now, I think this assumption is the single biggest thing that stands in the way of Europe creating more value. If you think business is evil - obviously, you don't focus on business.
I am shocked, on returning to London, just how dead it is in these terms - for example, 2.0 is even creating ripples in India and China, but Europe is like a doddering old man watching it skeptically (and a bit jealously).
"They have coevolved now; they are in a kind of symbiosis."
Yep, ditto Digg and Flickr. Replicating the technology won't be enough.
I like what your saying because it reaffirms what I've been doing with my business (in a different online space, but gradually moving a bit closer... not because of any deep strategy, but because that.is.what.users.want.)
At its core it seems to me what you're saying is that MySpace has such a huge advantage over also-rans because they took the time to do what users wanted, then sat back and listened and evolved in real time, just as their users did. And they did these things with utter competence. They weren't afraid to live test, to scale back when needed, and to scale up when necessary. It's an extremely fluid, smart organization and this was perhaps (besides the network effects) the #1 reason why the purchase was a bargain. Today's company needs to be as fluid as its userbase or it will find that they flow right around them, like water seeking an outlet.
The only trends I see potentially working against MySpace are offline trends. Online trends, they're right in the sweet spot for sure. But offline trends can shift radically in a relatively short amount of time and ebb away MySpace growth. Yes, I know on one level online/offline trending is exactly the same thing, but at the same time societal change can come quicker then one always imagines. Based on what I wrote above, I think MySpace would be able to move with these trends and itself become "the myspace of...", but I am talking about something deeper, where a MySpace of... is not desired by a broad enough segment of the population to be very valuable.
Hi again - and thanks. I agree with many of your thoughts, though I still think you underestimate the ability for a competitor to overtake if MySpace doesn't move fast enough.
On the European point, I think you are correct. Web businesses in the EU are way behind on this curve, and they always have been. But that has crucial implications for the entire question you're talking about. Because I'm not saying "how would *you* monetise MySpace", I'm saying how would *Rupert Murdoch* do it.
This is pertinent not because it's idle conjecture, but because NewsCorp *is* the owner of MySpace and he runs the company. He's an important business leader, but he doesn't have a great record on internet investment and many think he's not got the right thinking to look forward in this medium.
Now, if he sees the opportunities you point out - which do exist - then that this is great for him, and for the service. But if MySpace is directed by the ideals that you rail against (and I'd argue that there's a good chance this will come to pass), then what does that mean for the future?