Another reminder this week that the social media space – just like every other market – is not one consistent goldfield. While the likes of LinkedIn and Facebook continue to build powerful brands and potentially public business models, MySpace has lost a lot of ground, and much of what I see here takes me back 10 years to the boom and bust of the dot.com times. Some parallels I noticed:
- Participation is not enough. If you don’t have a distinctive, clear and evolving money-model for your brand, it’s not enough to be in the same arena as those making money. You will be overshadowed and outperformed. Cash cows are grown, not born.
- The purchase price is no guarantee of anything. In the case of the $580 million that News Corp paid, it’s not even a barrier to entry for others. It just means you paid a high entry fee based on a perception of what lay ahead. There’s a recurrent warning in there too for valuing “new models”. In terms of fundamentals, there are no new rules.
- Another thought that harks back to dot.com. While the acceleration rates for online businesses can be amazing, their brake speed can be equally dynamic. The model is community powered – and the assessments of value and potential are often based on those numbers. But if the community leaves or is distracted elsewhere in sufficient numbers, momentum dies. This is perhaps as close as one gets, so far, to a ‘frictionless’ market. There is nothing to lose as far as visitors/customers are concerned. Leaving, just like arriving, is simple, quick, painless and, at a time when connections are instantly reset at the new congregating ground, non-consequential.
- Resources are costs not reassurance. If MySpace think they can run still business on half the staff they had, and get it ready for sale, why did they have so many staff in the first place? Did they need them now, or were they arching for the future. And what does that now hand potential buyers or partners – a streamlined opportunity, a going or a concern?
One to keep an eye on.
