You’ve got a hundred million registered website visitors. Now what? Some say focus on growth and retention. Another might say the next step is to try and sell them things. Perhaps a third voice says both. MySpace CEO Chris DeWolfe is looking for the fast track to MySpace money—his job’s on the line this year—or at least to where he last saw a few hundred million bucks laying around.
Chris Dewolfe
Maybe a pair of shorts from last spring?
Rupert Murdoch (pronounced muhrrrrrrrrdock!) set a revenue goal of $1 billion for the social network last year, a target missed, according to some reports, by as much as $400 million. On top of that, Facebook has doubled MySpace’s user base in less than a year, and Google is expected not to renew its search contract.
There goes another $250 million for MySpace.
Murdoch(!) did recoup his investment over the years. After all he only paid half a billion, a sum in 2005 that seemed astronomical but turned out to be a real steal. (Some investors have said it was a steal literally since Intermix, MySpace’s parent, was facing federal heat, hence the fire sale complete with News Corporation-provided legal indemnity.)
Rupert Murdock
The financial crisis is hitting everybody, not just MySpace. Google’s stock is at half-mast, and searches are down. Facebook’s boy wonder CEO lost a third of his net worth last year. In effect, Facebook lost more money than MySpace missed its target by.
That means 2009 is a critical year for these two rival social networks, and how their leaders leverage their market position over the coming months will contribute to the narrative we’re telling this time 2010. At stake is whether intense user-focus or intense revenue focus will win the day.
Facebook has the distinct advantage of sudden, rapid mass adoption and a reminiscently Googlish appeal without the Googlish revenue. One can’t help put MySpace in a camp with Yahoo and AOL, bright flashing lights, demonstrable revenue, solid but declining user base.
Mark Zuckerberg
At odds in this strategic battle are 24-year-old Mark Zuckerberg and back-alley Internet marketing veteran DeWolfe. It’s an interesting match up of opposites. Prior to briefly joining the Masters of the Universe Club, Zuckerberg had trouble making early morning Yahoo negotiations. Prior to being instantly legitimized by News Corp., DeWolfe’s previous ventures were lucrative and scandalous adware and spam companies consistently in litigation or regulatory punitive crosshairs: companies like Intermix, eUniverse, and ResponseBase.
In short, DeWolfe should have (and has had) no qualms about turning MySpace into a neon-lighted marketer’s bonanza. In fact, that’s the express strategy going forward. Leveraging 100 million users with a reputation for being music lovers, DeWolfe plans to introduce concert tickets and band merchandise for sale on MySpace this year, as well as the sale of virtual merchandise. The site has the advantage of being part of a media conglomerate, so there’s no shortage of movies and content to be sold to this captive audience. Already advertisers with big promotion budgets can “take over” the MySpace homepage.
DeWolfe says money is the name of the game right now and his team is focused on generating revenue via new ways to monetize the MySpace audience. He offers this tidbit: “if I could have 300 million people using MySpace or be profitable, I would take profitability.”
One supposes by that logic if MySpace dropped from 126 million users to 75 million this year, profitability would still be justified as the main goal. And then just 50 or 25 million? Well, that should reduce website overhead at least.
Obviously what Zuckerberg has at the moment that DeWolfe doesn’t is time. Zuckerberg seems to think he’s got about three years before he runs out of money, and likely there will be a buyer waiting at every rumormonger’s corner. Investors (like Microsoft) are patient, waiting to see just how big Facebook can get. In meantime, Facebook just keeps rolling out upgrades.
Zuckerberg in 2009 is where DeWolfe was in 2006 or 2007, with all the time in the world (albeit with more autonomy). One can’t help but think DeWolfe will look back at those years as lost ones, for now he has no choice but to focus on revenue—his users are leaving.
