Techdirt’s Technology or Community?


Techdirt (a free service of techdirt corporate intelligence) had this insightful little bite from Mike of the seems-like-it department:

Which Is More Important: Technology Or Community?

from the seems-like-it dept

There’s an interesting little blurb making the rounds today about Rupert Murdoch claiming Google could have bought MySpace three months before he did at half the price. That’s interesting in its own right — but in thinking about how few acquisitions of this type Google does, it becomes clear that Google values technology over community by a long shot. The reason Google didn’t want to buy MySpace was because it thought it could build the same thing. That’s a technology answer, that ignores the community side of things — which isn’t so easy to build. It’s also why Orkut is barely discussed these days, outside of Brazil. However, if you compare the acquisitions Google has made over the last few years to those that Yahoo and News Corp have made, it’s pretty clear that Yahoo and News Corp are buying community, while Google has focused more on buying engineers. So, it’s no surprise that Google would turn down a chance to acquire MySpace. The technology was (and still is) nothing special. It’s the value of the community that they didn’t see (or didn’t care about). The real question is which strategy is going to make the most sense in the long run. Google has obviously done quite well with its technology focused solution. While MySpace is growing like gangbusters, there are still some questions about how well that community can be monetized.

Lets look more closely at the bite about monetizing/monetising MySpace:

Doing The Math On MySpace: Who Gets The Failing Grade?

from the something-doesn’t-add-up dept

It seems like MySpace is the media darling lately, following their buyout by News Corp. Even if it’s unclear what Rupert Murdoch is going to do with the site, the media loves the idea that it’s the new MTV. So, it’s really no surprise to see Wired Magazine put out a glowing profile of the company that seems to have tossed any sense of skepticism out the window. In fact, the numbers presented in the story (without sourcing) seem extremely questionable. The article first claims that MySpace received more pageviews than Google in August. That’s a surprising statement, and probably should be backed up by a source, but there’s none. Then, it claims that MySpace actually has 12% of all ads on the web which seems extremely high — and again, has no sourcing. Of course, even if we take that at face value (which seems pretty questionable), it’s hard to square that with the very next statement (which is the only one that is sourced): “MySpace should gross $30 million to $40 million this year.” So, they have more page views than Google, a significant portion of all online advertising… and yet they’re going to make a tiny fraction of what Google makes in a single quarter? Also, by that math (assuming MySpace is really 12% of the market), doesn’t it mean that the entire online ad market is equal to somewhere between $250 and $333 million a year? Either someone’s done the math wrong or the management at MySpace deserves to be fired for their ad sales deals. Update: Jeff Howe, who wrote the article for Wired Magazine, stops by in the comments to claim that the numbers are legit and are from Nielsen. While we had no doubt he got the numbers from somewhere legit, it still seems worthwhile to question those numbers, as the math makes almost no sense. If you have 12% of all ad inventory online and you’re only making $40 million a year, something very big is very wrong. As we said, it may be with MySpace’s dealmaking ability or it could be something else — but some big explanation is clearly missing.

The comments on these TechDirt’s threads are interesting. It really is possible to monetise communities, you just have to be smart and savvy about it. Seriously tho, there is nothing new on the ‘net. Its just masked by all the hype. Yes there are 70 million users on MySpace but are they all looking at one page/ad? Its not the Soccer on telly for goodness sake! Swarming, viral campaigns, interactive or user generated campaigns….

Back to Technology vs Community: Ten years ago, the telcos got it wrong by trying to be all things to all people. Own the land lines, and mobile space. Own the portals and points of interconnect. Own the content and the means to generate and upload content. It was too much, the walled garden never got visitors. Google got it right though – provide the technology so that others can work out how to make communities into revenue generating audiences. Let other companies build it, see if they come… and be very clear what your role is. Community provider or technology provider?

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  • Erietta Sapounakis

    Reply Reply July 19, 2006

    Another update for you — the yahoo! CFO Sue Decker was speaking last night (Wedneday 19 July 2006) on CNBC about boring things like growth and profits. More exciting is that she explicitly stated the value of community properties on the interweb. Sue said that Yahoo! saw the monetary value of MySpace as a huge validation of their community strategy and went on to say that the size of the Yahoo community (yahoo answers) is bigger than MySpace.

    On the yahoo answers note: Stephen Hawking, yes the real Stephen Hawking is one celebrity Yahoo! have asking questions to help build the hype.

  • Laurel Papworth

    Reply Reply July 19, 2006

    Sweeeet! Thanks for the link to Yahoo! Answers.

    I like the Leaderboard idea, although I prefer ranking by members rather than by number of posts. And they do have a nice *thumbs-up* idea for gaining points.

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