Imagine a world without music executives – a world where an artist has control over the production, manufacturing, publishing, and management of his or her career. A world where a singer is only a song and an Internet connection away from worldwide acclaim. This world may be closer than you think.
Fresh from buffing up its site and eager to redefine its identity, MySpace has a new mission: collaborate and make “friends” with other players — especially the “cool kids” in social media. An interesting strategy, but will it be enough to bring MySpace back into the “in crowd?”
As we noted in a previous post on MySpace, while the company has been losing supporters to Facebook, it still has a lead on videos and music. Unsurprisingly, MySpace recently refocused its efforts on these strengths, in a bid to differentiate itself from Facebook and to woo back users and advertisers.
Recent site improvements include: 1) launching MySpace Music Videos, which aggregated video content from major music labels and independent record companies; 2) purchasing and integrating iLike, a music-sharing app; and 3) offering artists and labels an interactive tool to analyze audience data, through the MySpace Artist Dashboard.
“Facebook is about core communications with your friendship network, whereas MySpace is about congregating around popular content with people who share your interests,” said MySpace CEO Owen Van Natta, in a Telegraph interview.
As proof of this new direction, MySpace is now in talks with Facebook to allow users to share MySpace music and videos on Facebook, via Facebook Connect. Indeed, MySpace is all about collaboration nowadays. “Partnerships are going to be a big part of our strategy moving forward as a lot of value can be derived from them,” Van Natta told the Telegraph.
Aside from the potential Facebook team-up, MySpace is now working with Apple to allow users to purchase songs via iTunes. It’s also one of the companies powering “music results” and enabling “music purchases” on Google’s new music discovery service, “Google Music.” AllThingsDigital’s Kara Swisher reports that MySpace is even exploring a partnership with Microsoft to offer MySpace Music on MSN.
So will this new entertainment-focused and “collaborative” MySpace finally get out of Facebook’s shadow and succeed in carving out its own niche online again? It’s possible. By emphasizing licensed content from professional and independent artists, and by catering to music fans, MySpace is “filling a gap in popular culture left by MTV's move years ago away from music programming and the diminishment of music publications,” notes Forbes. This, in turn, could lead to more ad dollars.
New friends or not, however, MySpace still has to face other tough competitors — such as YouTube, the top-ranking video portal owned by Google. A recent report by marketing research firm comScore notes, for example, that Google sites rank first in all online viewership — drawing in 26 million viewers, who watched 10.4 billion videos, as of September. Of that number, YouTube accounted for 99 percent.
And of course, when it comes to business and profit, how long can “online friendships” really last? The turbulent world of digital media is filled with tales of “partners-turned-competitors” (an example might be Apple and Google on online mapping). MySpace’s new “ties” could end up complicated. If its video-streaming service ends up threatening YouTube, for example, how would Google react? It would be interesting to see how MySpace would fight for audience and advertising support, and how it would balance collaboration with competition, as it continues its revamp.
Can celebrity power save a troubled industry?
According to market research firm NPD Group, US sales of videogame hardware and software fell for the sixth straight month in August, down 16 percent to 908.72 million dollars. Of all genres, music video games were the weakest, down 46 percent year-to-year as of July.
Media conglomerate Viacom, anxious to salvage its troubled music video game franchise “Rock Band” (which caused a 41 percent decline in ancillary revenues to its Media Networks division, per the company’s 2nd quarter filings), placed its bet on timeless celebrity: the Beatles. The Los Angeles Times reports that Viacom paid Beatles rights holders an unprecedented amount to include the band members’ songs and likenesses in “The Beatles: Rock Band,” released September 9.
And from the looks of it, that bet is paying off. "Sales have exceeded our internal projections and we’ve sold 25 percent of our inventory in the first week,” says Viacom CEO Philippe Dauman at the recent Goldman Sachs Communacopia Conference (as reported by The Financial Times). The company expects the operating profit margin for the Beatles game, which also has special edition hardware bundles and additional downloadable songs for sale, to reach 20 percent.
It’s a strategy shared by Activision, which publishes the pioneer – and current market leader in music video games – “Guitar Hero” series. With “Guitar Hero 5,” launched September 1, users can play 85 hit songs, using avatars modeled after music icons like Johnny Cash, Carlos Santana and Kurt Cobain. While data on US sales won’t be available until next month, tracking firm Chart-Track reports that “Guitar Hero 5” debuted at top spot on the weekly UK charts, while “The Beatles: Rock Band” took fourth place.
Guitar Hero CEO Dan Rosensweig is confident that more growth is foreseeable for both the “Guitar Hero” franchise and the music video game market. "Less than 20 percent of console owners have a music game. So, there is an upside,” he tells The Hollywood Reporter. “Also, we are only two years into (the franchise’s launch) in Europe. And we haven't even started thinking about Asia yet. There's plenty of growth left."
Indeed, The Los Angeles Times reports that Activision is planning to launch other music video games such as “DJ Hero” and “Band Hero,” which will include songs from popular artists such as Taylor Swift, the Jackson 5 and No Doubt. Meanwhile, the team behind “Rock Band” (music video game developer Harmonix, Viacom’s MTV Games, and distributor Electronic Arts Inc.) recently announced shipment of “Rock Band Metal Track Pack,” to retailers nationwide. The standalone disc offers 20 tracks specially chosen by heavy metal icons such as Godsmack, Children of Bodom and Judas Priest.
Celebrity power can only take the industry so far, however. If the music video game market is to continue growing, companies have to continue to innovate, says Jesse Divnich, Director of Analyst Services at video game industry research firm Electronic Entertainment Design and Research (EEDAR). “It would be erroneous to assume that any franchise or brand can grow unless it brings something new to the table,” Divnich writes in IndustryGamers.com. “Even if DJ Hero and The Beatles propel the respective series forward, as both are looking to be strong commercial successes, one still has to ask, where do we go from there?”
Once the king of social networking, MySpace continues to bleed subscribers to archrival Facebook, which grew 221 percent over last year, while MySpace inched up less than half of a percent, according to July data from Web analytics firm Compete. Rupert Murdoch, CEO of MySpace parent company NewsCorp, blamed himself for the mess in an interview with TheStreet.com, and declared that MySpace is getting things right and will be a strong force in many ways. But could it? Let’s take a closer look.
One company strategy is to launch in the near future MySpace Mail, enabling users to send and receive multi-media messages using a dedicated account — something Facebook doesn’t offer and doesn’t seem to be considering. MySpace says this potentially makes it the second biggest e-mail provider in the U.S. But a recent report by online widget-maker AddToAny notes that more users favor sharing content through Facebook over e-mailing anyway. So is MySpace Mail a threat to Facebook? Probably not.
Another strategy is to strengthen its video game platform. "MySpace is and will be more in the future a gaming platform," said Chief Digital Officer Jonathan Miller at the recent Fortune Brainstorm: TECH conference. Seems like a wise move, as users pay to access premium content on their favorite games, customize their avatars, or send virtual gifts. In fact, roughly 12 percent of Americans bought a virtual item at some point in the last 12 months, according to research firm Frank N. Magid Associates.
Facebook, however, currently has more applications than MySpace, and has already rolled out its own micropayment system allowing users to buy virtual credits. What’s more, according to media and marketing research firm Nielsen, total minutes spent on Facebook increased 699 percent year-over-year in April, while time spent on MySpace fell 31 percent. Combined with Facebook’s sheer number of users, guess which company would be more attractive to game developers?
There are, however, two areas where MySpace still takes a lead. The first is videos: Nielsen reports that MySpace ranked first among social media sites with 120.1 million total video streams as of June, compared to Facebook’s 54 million. However, Nielsen also noted that Facebook was the fastest-growing site for both total video streams and unique viewers of video, growing 434 and 397 percent year-over-year respectively.
The second is music: Since its launch last September, MySpace Music grew its unique visitors 190 percent, from 4.2 million to 12.1 million as of June, according to Nielsen. While Facebook has a popular music application (iLike, a third party app, which has been renamed to “Music” on the site), it doesn’t have its own dedicated music service — unless it buys iLike, which some, including CNET News, consider a possibility.
The verdict? While MySpace loses out on social networking traffic, it still has an upper hand on assets like videos and music. But Facebook is catching up quickly even on these, and MySpace has to focus on making its good points more attractive to advertisers, developers and users while it still can, if it wants to hold on to its lead.
