FIM Ross Levinsohn on MySpace in 'Real Deal' exclusive interview

FIM Ross Levinsohn on MySpace in 'Real Deal' exclusive interview

Summary: Ross Levinsohn, President, Fox Interactive Media (FIM), believes in the “digital revolution.” He began his OMMA keynote in New York City recently by quoting none other than William Shakespeare: “The golden age is before us, not behind us.

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Ross Levinsohn, President, Fox Interactive Media (FIM), believes in the “digital revolution.” He began his OMMA keynote in New York City recently by quoting none other than William Shakespeare: “The golden age is before us, not behind us.”

I can attest to Levinsohn’s passion; I had the pleasure of a front row seat for his keynote and his excitement for the digital opportunity was palpable.

 

In “Fox Interactive to Yahoo: watch out, we are on your digital tail!” I cite the FIM metrics that Levinsohn presented.

FIM is already the “number one content network on the Web” thanks to its portfolio of online properties:

myspace.com: social networking
foxsports.com: sports content
ign.com: gaming community
rottentomatoes: movie destination
askmen.com: lifestyle portal…

FIM content network:

Has more than 131 million unique users worldwide;
Reaches more than 50% of all 18-34 year olds;
Had 33 billion page views last month;
Has highest concentration of 18-34 year old males…

The FIM content network has grown from a 5% reach of all 18-34 year olds in the U.S. a year ago to a 50% reach today, Levinsohn said.

Levinsohn underscored that the majority of the content at the FIM properties is created by individuals. Levinsohn put forth that such user-generated content has the advantage of “rich CPMs” from “hyper-targeted advertising.”

I spoke with Levinsohn by phone last week to discuss the FIM opportunity. Below are my “Real Deal” questions and Levinsohn’s responses in italics (responses may be slightly paraphrased).

1) Your keynote echoed Rupert Murdochs assessment that “the precise business model for sustained profitability from our digital investments is still uncertain at this point…we are embarking on a period of trial and error.” Given FIM’s 14 months of experimentation and the experiments you have in the works, which three monetization models do you judge to be the most promising long-term? 

There are four:

1) Branded display/sponsorship advertising. We have a terrific demographic. We are attracting Fortune 1000 advertisers.

2) Google contextual deal is a big opportunity; Opportunities are monumental for greater collaboration, we met at the Zeitgeist, Google will be a big strategic partner.

3) Commerce. Two programs now: Consumers can buy and download video, movies and television shows; With SNOCAP, consumers can post, sell and buy music online.

Follow-Up: SNOCAP arrangement aims to let the musician keep the majority of the sales price. Will that be profitable for FIM? 

We have a floor. Even with a small cut of the transaction, our scale makes it interesting.

Commerce will be very important:  downloads, ringtones, mobile applications…

4) Performance display advertising. We are working with 17 ad networks to optimize the business. 

 

2) In describing the digital revolution in your keynote you put forth that there are no barriers to entry, no barriers for distribution and underscored that no one saw Yahoo or MySpace coming, so anyone can be the next Jerry Yang. Given that there may be the next MySpace around the corner, how vulnerable is the Google $900 million revenue share contingent guarantee to FIM not achieving its traffic and other commitments? 

It drives you to work very hard. If we do our job right and build out the full portfolio, we will fortify our position and it won’t deteriorate. We have a strong network effect, we shouldn’t be worried.
3) Rupert Murdoch and yourself look at Yahoo as the number one Internet company to catch. Murdoch recently said, “With continued international expansion, MySpace could well become the biggest global online company as early as this time next year. We are close to Yahoo! in unique visitors in the U.S. already after one year, Let's see how we do around the world." You said at OMMA that FIM is the second biggest Internet company in the U.S. in terms of page views and fast approaching Yahoo. FIM is not fast approaching Yahoo if revenues is the measurement, however. Yahoo is a $6 billion revenue company, while FIM is reporting less than $300 million in revenues. What is the timeframe for catching up with Yahoo’s revenues? 

We are not focused on beating Yahoo at anything. Yahoo has been around for ten or eleven years. We are just getting started, 13 months, it’s been a great first year.

Rupert Murdoch and Peter Chernin want us to build the best business possible, we’re not comparing ourselves to the 800 pound gorilla in the room. We are ahead of our strategic plan so far. We are doing terrific for a traditional media company.

Yahoo is a great company, but it is not huge in social networking.

Follow-up question: Have you identified a single, major competitor? 

We are all competing against each other, but we all are partners too, just like in the traditional media business.

4) You began your keynote by quoting William Shakespeare. The William Shakespeare MySpace profile hawks a third-party tee-shirt company with slogans like “Shakespeare Bong Company” and  “These tits belong to Shakespeare.”

 

Will MySpace continue to allow every bit of user-generated content, no matter how distasteful, to flourish? Will MySpace continue to allow the pages it hosts for free to be commercialized to the financial benefit of third-parties? 

For the first question, we don’t like to hear things like that. We are leading the industry in policing content. We don’t want inappropriate content, hate speech, pornography. Under age users are policed out. We have a big staff, we use technology, manual systems to enforce the Terms of Service. We have removed a significant amount of content that is not appropriate for the Internet. We are doing a good job from where we were. We continue to work hard at it.

If a company is running a business at MySpace that doesn’t interfere…but if it violates the Terms of Service we will pull it down, we are sensitive to that.

When we acquired MySpace, we told the founders there would be no restrictions that would slow down the growth and we have tripled since then.
5) comScore Media Metrix reported that according to its data the “composition of MySpace.com visitors now skews older.” Is that assessment accurate? Are older users as engaged as the younger demographic?

We are growing, social networking has become more mainstream, it is good news.

We reach more than 50% of all 18-34 year olds, we have reached saturation with the youths. As we grow, the proportions change.

We have 50-60 million uniques in the U.S., with 500-600 page views per person monthly. Older people will engage less, but 200-300 page views is still a lot.

If you add up all our properties, we have more than 131 million unique users worldwide.

6) When a Wall Street analyst puts a three year $15 billion projected value on MySpace, do you believe that is helpful to News Corp., harmful or indifferent? 

It is flattering, but it shows how much work you have to do.

Jordan at RBC is very enthusiastic about our business, I met with about 30 analysts and he analyzed the information, but I’m not focused on that.

We are building out our Internet platform, we are driving this Web 2.0 business with a different approach, it is paying off, if we can deliver and build that value for News Corp., that would be great.

THANKS ROSS!

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