Technology

MySpace: Going Places


Hoping to renew its growth, the social network will let users transport their profiles to other sites, such as Yahoo and eBay

MySpace is moving into your space. Users of the social network will soon be able to transport their MySpace profile pages to sites across the Web, including the portal Yahoo! (YHOO), global shopping site eBay (EBAY), and microblogging service Twitter. "Today, MySpace no longer operates as an autonomous island on the Internet," company co-founder Chris DeWolfe said on a conference call May 8. "Profiles can now be shared across all the sites our users visit."

The move by News Corp.'s (NWS) social network is in keeping with a trend of tearing down the digital walls that long have separated one family of Web sites from another. Tech companies are increasingly letting users access information previously found on one particular site and shift it to any number of other online destinations.

With its announcement, MySpace became the first social network to say it would let users take the profiles created on its site elsewhere. The changes take effect with partner sites in the coming weeks, company executives said. Eventually, MySpace users will be able to move their profiles to a wider range of other sites. "The walled-garden approach will not survive in the long run," MySpace Chief Operating Officer Amit Kapur says in an interview.

Mobility Key to Expansion

Internet companies are hoping that opening their sites to outside developers and even competitors will deliver a richer, more engaging experience that gives users more things to do online and more reason to stick around. Instead of relying solely on internal innovation to spur traffic growth, sites are now fueling interest by letting third parties build programs and by enabling users to take information with them to other Web destinations.

Social network Facebook (BusinessWeek.com, 2/13/07) helped spread the new business model by opening up its site in early 2007 to third parties, a move that helped accelerate traffic growth. Facebook's monthly users increased 240% to 109.2 million in March from the prior year, according to research firm comScore (SCOR).

Allowing users to bring MySpace to sites across the Web is key to the social network's continued expansion. Once a juggernaut with triple-digit growth, MySpace has seen its monthly traffic growth slow to about 10% as it has largely saturated the U.S. youth market, according to comScore. It now has 116.6 million users worldwide. To continue to grow, MySpace needs not only to expand to new markets, a major effort during the past several years, but also to reach people who are not traditional network users.

Looking for New Revenue Streams

Putting MySpace on popular Web hubs such as Yahoo and eBay could help the site penetrate new markets. Initial mock-ups of the shared profiles had links back to MySpace that enabled users to return to the site with a click of a button. "We believe what we are doing is going to create a richer Web experience and a higher degree of usage and engagement with MySpace," Kapur says.

MySpace also hopes the move will result in new revenue opportunities. Initially, shared MySpace profiles will not come with advertising or other methods for generating revenue. But executives have not ruled out selling ads on the profiles or sharing in the ad revenue from sites where users post their profiles. "Over time it is something that we are definitely looking into," Kapur says.

Finding new ways to make money from social network profiles is a priority for the company. In a May 7 fiscal third-quarter earnings conference call, News Corp. Chief Operating Officer Peter Chernin admitted the division that includes MySpace would miss a $1 billion annual revenue target by about 10% because it's having a harder time than expected in wringing sales from the social network. "Social media has only been around for a few years, and gaining market acceptance for any new category will always have its challenges," Chernin said.

A Glut of Ad Inventory

For starters, MySpace has millions of pages, creating a glut of inventory for online advertising and depressing the value of an ad in any one place. The company has taken steps to increase the value of ads by helping marketers target specific audiences, say auto enthusiasts. MySpace is also working to increase the amount of premium ad space on its site with the addition of channels with professional music and video content.

Another problem is users' lack of responsiveness to ads (BusinessWeek, 2/7/08). Social network users are often so engaged with the content on their pages and interacting with friends that they don't click on ads as frequently as users do on other kinds of sites. It doesn't help that the high number of ads on social networking sites has made some users seemingly immune to the ads in general. "People who visit sites like MySpace are there for an entirely new form of Internet activity," Chernin said during the earnings call. "As a consequence, the online ad models that have driven the Internet economy in the past need to be refined."

Bringing profile content to other nonsocial network pages could give MySpace an opportunity to put ads in places where users are more likely to respond to them. It could also give them a chance to share in advertising revenue on other sites while concentrating on what social networks appear to do best—keeping an audience captive and interacting on a site for long periods of time.

Holahan is a writer for BusinessWeek.com in New York .

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