How to monetize MySpace

How to monetize MySpace

Summary: MySpace can dethrone iTunes


MySpace.gifAnyone who’s followed my blogging knows that I have written extensively about Rupert Murdoch’s acquisition of MySpace.  So when I read the feature story in yesterday’s NY Times about the same topic, as well as all the follow-up discussions around the blogosphere, nothing really jumped out at me… at least not to the point where I thought I could add to the conversation with further insight.  But when I read the Times article again this morning, the following excerpt caught my attention:

Another question is this: Can the News Corporation achieve these goals if the executives in charge don't agree on how to do so, or even on whether they want to? Mr. Levinsohn, for example, said he saw opportunity in the one million bands that have established profiles on MySpace; he said MySpace could charge bands to promote concerts or to sell their songs directly through the site.

In an interview the next day, however, Mr. DeWolfe dismissed the idea. "Music brings a lot of traffic into MySpace," he said, "and it lets us sell very large sponsorships to those brands that want to reach consumers who are interested in music. We never thought charging bands was a viable business model."

In the disagreement between the two executives, I am firmly on the side of Ross Levinsohn.  Let me put it another way… if there is any player out there that is optimally positioned to challenge the dominance of Apple’s iTunes, it is without question MySpace.  No other service, site, or portal on the web even comes close to MySpace’s “natural” potential to monetize music.  And with iTunes having generated over $1 billion in revenues, this opportunity is the classic “low-hanging fruit”.  In fact, the record labels (who are currently at the mercy of Steve Jobs ) should be doing all they can to help MySpace get into the game in a big way with significant and innovative digital distribution deals.

Successfully monetizing via music will also alleviate much of the pressure on the ad revenue side.  Nicholas Negroponte said to me a long time ago that placing ads in online communities was like trying to advertise in books.  It’s not a natural format… neither for the advertiser nor for the users.  My bet is that for MySpace, ecommerce initiatives, starting with music, will prove far more native to the medium and financially lucrative.

That said, I’m not suggesting MySpace should abandon ads altogether.  Rather, they should ignore most of their remnant inventory and sell ads on a selective basis where they can charge premium rates.  They are already doing so by selling daily blocks on their homepage (which I estimate are currently worth $250,000 per day vs. Yahoo’s $1 million per day).  It should also be noted that MySpace’s massive reach and audience could make it feasible to monetize music via ads.

Topic: Social Enterprise

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  • Free advice is worth what you paid for it.

    Robert, I don't want to sound mean here but day after day I see guys (and gals) come here with their ideas on how others *should* do things. My questions to them is always, "What's stopping YOU from doing it"?
    • Doing it indeed


      Via, I am already actively involved in the monetization of digital music and I'm quite familiar with the relevant issues. But you're right, my opinion/advice is only that, so take it for what it's worth.
      Robert Y
    • Not owning myspace?

      ---"What's stopping YOU from doing it"?---

      Kind of hard to start a website that has arisen over time due to grass-roots support, particularly when there's already a site filling that niche (similar to what happened to all the ebay wannabes that sprung up and quickly disappeared). So I'm not sure what you're suggesting he do. It's kind of like when you tell people complaining about MS' business tactics that they should write and sell their own operating system. Not the easiest thing in the world to do when you have to compete against MS (which MS never had to do).
      tic swayback
      • everybody trying to get that $$$

        with NO unique vision ... exactly ... i'll be dropping a-bombs on these clowns really soon.

  • I want to see another avenue with MySpace

    I see nothing wrong with another avenue to supply something in demand, indeed something many of us want a piece of. Myspace introduces a healthy competition to Apple's offerings. Let the marketplace respond to the law of supply and demand. There is a growing demand for more sources of music. Supplying another obvious source will keep end user (read this: teens) with market prices that are within easy reach. Within reach translates to providing artists with more needed royalties. End users have a vested interest in ensuring roylaties reach artists: it provides artists with a compelling reason to produce more of what the end user is seeking. Another result will be greater distribution and a wider audience for a tune that might otherwise find its way into the eddies of nonrecognition. There is a lot of musical talent around to capitalize on; let's provide more sources to monetize it both for the advertisers and for the artists, and to the delivery medium while we're at it. Consumers demand more music everyday, let's provide more more ways to offer it in a legitimate way to help everyone, including even Murdoch's latest acquisition if it serves the end user better.