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.
After almost three years since its YouTube acquisition, Google still has yet to make a profit on its $1.65 billion purchase of the video sharing website. While YouTube recorded 420 million-plus unique visitors in June 2009 and is now second only to Google in terms of overall search queries (according to data by marketing research firm comScore), YouTube has yet to bring in enough revenue to compensate for its massive bandwidth and infrastructure costs. Google however doesn’t seem to be worried, and has recently made several improvements to put YouTube on the road to black. Specifically: Better partnerships with users, more ad products, and network tie-ins.
Calling all users! Viral videos are often launched on YouTube, but they don’t always lead to profit — for YouTube or for the users that post them. The company is now hoping to change that. Instead of just monetizing videos from its “partners” (users accepted into the Partner Program because they post regularly and have a wide following), YouTube will now enable ads and revenue sharing on individual videos that prove to be popular. Obviously, the more videos users post, the better chances not only of a hit, but also of advertisers to come around.
Calling advertisers! Aside from banner ads on its home page, YouTube now offers “Click-to-Buy” links, as well as advertising space before, during or after a video. YouTube is also touting its “content management” tools, which it says can help rights holders monitor when their products are being used so that these rights holders can capitalize on the opportunity. Google cites the viral hit “JK Wedding Dance” as an example. Rather than block the video from using Chris Brown’s “Forever” music track, rights holder Sony Music placed “Click-to-Buy” links over the video, enabling viewers to purchase the song on Amazon and iTunes. Google says the move resulted in increased “Click-to-Buy” traffic, not only on the “JK Wedding Dance” video, but also on the official “Forever” music video.
“Despite compelling data and studies around consumer purchasing habits, many still question the promotional and bottom-line business value sites like YouTube provide artists,” says Google in a July 30 blog post. “But in the last week, over a year after its release, Chris Brown's ‘Forever’ has again rocketed up the charts, reaching as high as #4 on the iTunes singles chart and #3 on Amazon's best selling MP3 list. We’ve seen similar successes in the past with partners like Monty Python.”
Calling networks! YouTube knows, however, that it can’t just rely on user-generated content to bring in advertisers. Facing stiff competition from rival sites like Hulu.com, which offers full-length videos from shows like “Saturday Night Live” and “30 Rock,” YouTube is angling to bring in more professional content of its own. It recently signed deals with media companies like Time Warner and Walt Disney, and is ramping up negotiations with other networks.
Will these improvements finally make Google’s investment in YouTube worth it? Obviously, the answer will depend not just on how much content YouTube brings in, or how many views each video gets, but on how many users actually click on ads and make the transition to purchase. Plus, with a plan that seems to benefit various groups in the value chain – monetary incentives for video publishers, quality content for video consumers, and innovative selling opportunities for rights holders and advertisers – YouTube might not be the only one that ends up making a profit.
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.
