Yesterday's MySpace/Photobucket flap was the latest skirmish in the ongoing war on widgets led by Fox Interactive Media, the News Corp division responsible for running MySpace.
It's funny watching the digerati contort itself in an effort to explain why MySpace is wrong both morally and financially. Jon Fortt at Business 2.0's The Utility Belt, probably went the furthest, actually quoting scripture to suggest that MySpaces is on a hubris-paved path to destruction. And Photobucket's own desperate attempts to foment unrest among MySpace users reminds me of nothing so much as the scene from Woodstock-mud caked hippies sitting in a field chanting "No rain"!
My old friend Ed Sim offered what I thought was the most simple, sober observation:
Well guess what-distribution via widgets on MySpace was relatively frictionless, but now that Photobucket is a serious player, the Gorilla is fighting back and that is just the way the world works. I am not saying that you should not leverage free distribution, but that you should prepare yourself for the day that it may disappear.
There's plenty of other postmortem examination today, the best comes from Om Malik, who gives us 5 lessons of Photobucket Fiasco, and Nicholas Carr, whose comparison between the economics of social networks and the economics of sharecropping is truely inspired:
It's worth remembering that the business model of Web 2.0 social networks is the sharecropping model. After the Civil War, when the original sharecropping system took hold in the American south, the plantation owners made money in two ways. They leased land to the sharecroppers, and they also leased them their tools. It's no different this time. The payments for land (Web pages) and tools (video widgets et al.) don't come directly, through exchanges of cash, but rather indirectly, through the sale of advertisements. But the idea is the same. If there's a widget that can accommodate advertising, that tool will be supplied by the plantation owner, not by some interloping varmint. Whine all you want, but that's the way it's going to be.
Now, if the interloper would like to pay for the privilege of being a tool supplier on the plantation owner's land, well, that's a different story entirely.
There's one crucial difference, however, between social networks and cotton plantations. God wasn't making any more plantation acreage, but Internet real estate is infinitely expanding, and users don't need to rely on government largess for their 40 acres and a mule.
Having spent a fortune for MySpace, executives at FIM are obviously feeling their oats and certainly MySpace (as well as Facebook) remains a powerhouse by virtue of the traffic it generates and the barrier to user exit created by the network effect. But industry leading social sites have come and gone before, going back to the Web 1.0 days of personal web page building through the social media era. Does anybody remember TheGlobe? Geocities? Friendster?
(Wired News has an interview today with Friendster founder Jonathan Abrams about his new, vowel-challenged business, Socalizr, which combines event planning with social networking.)
Embedding social functionality in the browser in inevitable. Social networks that aren't web basedâ€"like AIM-can snap on Web-based functionality (although the AIM Pages beta is lame so far). Businesses like Socializr reflect the trend of adding social functions to all Web content and services. The era of private label social networking is just beginning. Transportable identification will allow users to easily cross social networks. Clearly the future of social media is open, not closed.
As long as social networks like MySpace are free, easy to use, quick to add functionality and perceived to be cool, there's no reason for consumers to switch. But there's also no reason for consumers to join only one social network. The mindshare and pageviews crucial to MySpace as an ad supported business in the end may rely more on new and added functionality than FIM executives believe.
FIM may be on to something with its SpringWidgets platform-a plantation on which it invites sharecroppers to grow new widgets that Fox can own and control. But its an open source world. New and better functionality is sure to be developed more quickly via open access to widgets. That said, I understand how vexing it must be to see other companies selling advertising on your real estate.
Meanwhile, at Techcrunch Michael Arrington-who leaked information from Photobucket's roadshow book-asks the question of the day: Can Photobucket Survive without MySpace? To the extent that Photobucket survived before the blockade by selling advertising on its site, seen by users uploading photos, then, yes, Photobucket can survive. (According to Techcrunch two thirds of Photobucket's revenue came from advertising on its own site over the past two years. Last year's total revenue was less than $10 million.) To the extent that Photobucket was counting on video posted to MySpace to meet its 2007 revenue target of $32 million, then no, it can't survive. But it was hard for me to believe the 3X revenue growth in the Photobucket projections to begin with.
Link Love:
Two New Ways to Mine for Twitter Gold
The 12-Minute Definitive Guide to Twitter
To the average Joe, blogs aren't cutting it
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