Web 2.0 Social Networks: Cool but marginal and unprofitable?

Summary:Web 2.0 social networking: Cool but marginal and unprofitable?

Is Cisco making the RIGHT BET on Social Networks?

Not according to Om Malik who offers a "News flash" for Cisco

This social software thing – it is too marginal, doesn’t make money and can’t make you cool.

Really? Apparently Rupert Murdoch, News Corp. CEO and proud corporate owner of MySpace, didn’t get the memo! 

Why did News Corp. bring MySpace into its space? 

Murdoch shared his strategic thought process on the acquisition and its now far from marginal financial impact on News Corp. at the Media Summit in New York City last month: 

Two to two and a half years ago we were living in a booming economy…but print advertising and television advertising was not growing at the rate they would have in the past…we looked at where the money was going, a lot of money was going to the Internet…it was time to move there seriously.

MySpace is now growing faster than we expected, we had to almost put the brakes on it physically, handling the traffic, we needed a lot more hardware, a lot more servers…not a vast amount of money needed to support, though… 

The advertising revenues have gone from basically nothing to $25 million a month, growing monthly, 30% every quarter, next year search revenue from Google kicks in…we are looking at a billion dollars in revenue… 

Murdoch projected that revenues from MySpace and other Fox Interactive Media sites such as IGN could represent as much as 10 percent of News Corp.'s total revenue within the next five years.

Malik's “news flash” for Cisco is headlined “Cisco’s wrong bet on Social Networks.” 

Perhaps it was Murdoch’s News Corp. MySpace $1 billion revenues “news flash” in NYC that is reinforcing Cisco’s RIGHT BET on Social Networks!

READ MY ANDREESSEN VS. CISCO: WEB 2.0 PLATFORM COMPETITION HEATS UP TO SEE WHY CISCO MAY BE COOLER THAN NING!

Topics: Cisco

About

A former ZDNet blogger, Donna Bogatin is the founder of online directional media properties VIPOffers.com and UrbanSavings.com. In addition to her own ventures, Donna has been advising companies on Web-based business development since 1997, when she created and led an "Internet For Entrepreneurs" workshop for the Small Business Administra... Full Bio

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