Whose Space?

May 16, 2006 | Leave a comment

In April 2005, the New York State Attorney General alleged that Intermix Media, an Internet marketing firm, was the source for illegally installed spyware that quietly launched ads on millions of computers across the country. They had created a website that allowed users to change their mouse cursor to one of their choosing (something that you can do anyway with a very minimal amount of tweaking) – and the catch was a pop up advertising engine that users inadvertently downloaded at the same time. Intermix Media eventually settled for nearly $8 million without admitting guilt.

In 2003, California passed an anti-spam law that put Intermix Media’s business practices at risk. One response from within the company was to launch a social networking site that encouraged people to enter demographic information about themselves (allowing for more targeted, and therefore more lucrative, advertising). It also contained rudimentary blogs and tagboards, allowing for the kind of dynamic, user produced content that pushes sites higher and higher up search engine rankings. Everyone involved was from the marketing industry, and everyone agreed that it would be a cash cow. It even had a friendly, marketable name: MySpace.

This isn’t a completely scientific test for popularity, but these days Alexa ranks Myspace as being the 6th most popular website in the world, with somewhere in the region of twenty billion pageviews a day. It has nearly 80 million registered users – more than the entire population of the United Kingdom – and most of these have filled in their profiles, providing valuable demographic information to its advertisers.

When Rupert Murdoch’s News Corporation bought MySpace for $580 million, it wasn’t the blogs or the photos or even the advertising eyeballs he was buying: the market research made it worth every cent. Users list the music they like and the movies they’re into; they can embed their favourite songs in their profile. Eighty million people, all willingly telling the world’s largest media corporation what media products they’re into at the moment. Rather than guessing, or polling a small number of people through a research firm and making projections using statistical means, News Corporation can simply mine their database to know what to put their money behind. They’re not just out to sell inventory through all those videos and songs they plaster the site with; they’re paying very close attention to what you’re listening to, what you’re watching.

Because of this data gathering, it’s in their interests to encourage people to put out as much information as they can into the ‘public’ MySpace sphere. Until recently, this was coupled with inadequate security protection; very little emphasis was placed on the effect publishing personal information to the whole world can have, and as a result the site has become famous for kidnappings, sleazy self portraits and more. Although it should be noted that in any society with 80 million participants, online or real, there will be a certain amount of crime, the high profile nature of some of the cases has been harmful to other networking systems that share similar visual elements. Although they’re making a big deal out of hiring safety experts, their emphasis will undoubtedly be on catching criminals through usage analysis; educating people about the way they share information with the general public is unlikely to be part of their strategy beyond the usual “don’t give people your home telephone number” message.

The same kind of sensationalist, traditional-media-fuelled moral panic that erupts every couple of years around Internet issues has erupted around MySpace, and every other social networking system is feeling a knock-on effect. On the back of this furore, one Republican congressman has launched a bill that would prevent all social networking sites from being accessed from schools and libraries; as well as Myspace this includes anything with blogs, forums, or anything at all that would allow users to create their own web pages or profiles. Institutional installations of Elgg or other community software wouldn’t be affected, as the bill is limited to commercial web services, but this nevertheless means that libraries would be blocked from accessing Livejournal, Blogger, Newsvine, Google Pages, Elgg.net and more. In many ways, together with tiered Internet, this is a convenient way to squash the whole read-write web movement and sit us back down in front of the TV.

However, as far as business strategy is concerned, you can forget the read-write web. That’s something enthusiasts like me talk about on our blogs, but MySpace is part of a larger movement: harnessing social networking to provide marketing information. All the players, from Amazon through Friendster, Google through Yahoo, are playing this game. The model for the new web economy seems to be to run a single, centralised service that acts as a carrier for advertising, be it MySpace’s occasionally popup-laden banners or Google’s AdWords. Even Microsoft is getting in on the act with their range of Windows Live services, which will be partially funded by advertising; it’s got its own context-sensitive ad network, which seems strange for a company traditionally focused on selling operating systems and wordprocessing software. Are they really that afraid of the new crop of web applications?

The pages of TechCrunch, web 2.0′s cheerleader weblog, are filled with advertising-sponsored sites. The trouble is, this sort of advertising immediately fails the common sense test. When was the last time you paid attention to a Google ad, except on Google itself? I use Gmail as my main provider and can honestly say I don’t notice the paid links anymore. As they become more ubiquitous, just part of the scenery, people will click on them less; although they work on search engines (people specifically visit them to go somewhere else), and therefore will provide income for Google for some time to come, on most sites they don’t fit, and encourage designers to build their site around the advertising, much as magazines have long since buried their content behind pages upon pages of paid imagery.

Result: “new” media is subject to the same business interests as the old media. This is a mistake; the current crop of Internet applications are software businesses. Google is an application; Writely is clearly a wordprocessor; Facebook is an application to search for contacts at your institution; even Myspace is really an application (and it certainly is from the back end). Perhaps, as products like Flickr hint at by providing paid options, there are other business models to look to.

Further reading

MySpace

For MySpace, Making Friends Was Easy. Big Profit Is Tougher, New York Times, April 23 2006
Everything and Nothing At All, Trent Lapinski’s Weblog, January 4 2006
Can MySpace Make Money?, ReveNews, April 6 2006
Friendster Lost Steam. Is Myspace Just a Fad?, danah boyd, March 21 2006
What MySpace Means to Murdoch, BBC News Online, July 19 2005
MySpace, Wikipedia Cope With Growing Pains, PBS MediaShift, April 18 2006

The “Web 2.0 business model”

Web 2.0: Now What?, EarlyStageVC, April 26 2006
Moola’s Interesting Business Model, TechCrunch, May 14 2006

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