FT : MySpace Vs. Facebook

Monday, October 26, 2009

Now that MySpace has officially thrown in the towel and ceded leadership in the social networking world to Facebook, it is time to declare the first phase of the online social networking revolution at an end.  In the next phase, already well underway, success will be defined by more than just amassing the biggest audience.  MySpace’s new boss, Owen van Natta, buried the hatchet in an interview with the Financial Times last week, but the numbers already told the story: at 300m, Facebook has three times more users than MySpace – though this comparison merely underlines that the umbrella term “social networking” has outlived its usefulness.  In reality, Facebook and MySpace are fish and fowl, the different courses they are on demonstrating the evolving Web’s inchoate nature.

The new management at MySpace is right to realise that Facebook is not the competition.  MySpace is a media business being built around a community: what MTV would have been had it been dreamt up in 2001 rather than 1981.  Facebook, on the other hand, is a platform, built for communicating and sharing information.  But while understanding what their users find most valuable about them is one step in the right direction, proving that they can hold on to that audience while also making money will be something else.  As a media company, MySpace has the more obvious business opportunity, though it will not be easy to pull off.  Its audience expects to be entertained, making this an environment for advertising.  Many advertisers, though, will not want to see their brands too close to its users’ pages.  Facebook represents a much bigger business opportunity, but one that will be harder to cash in on.  People who come to its site to communicate or share information with their family and friends do not represent a classic audience for advertisers.  The sort of viral commercial messages and opt-in marketing that Facebook is trying to pioneer have so far been slow to catch on, though it passed a milestone last month as it became cashflow positive for the first time.

Nor is it certain, as online behaviour changes and the Web continues to evolve, that Facebook will be able to adapt fast enough.  So far, at least, it has been adept at moving with the times, opening its platform to third-party applications, then aping some of the characteristics of Twitter when that service soared in popularity.  Still, the true test of a commercial business remains whether it can turn popularity into profits.

Reference : http://www.ft.com/cms/s/0/9780e088-c196-11de-b86b-00144feab49a.html

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