MySpace and Facebook are typically categorized together as “social networking” Websites.
Facebook, however, makes a clear distinction between its business and that of MySpace.
I chatted with Dan Rose, Vice President, about the Facebook business model at the recent Media Summit in New York City, He underscored to me that Facebook considers itself a technology business, not a media business.
Facebook views MySpace as an open “media portal,” while Facebook considers itself a technology platform enabling communication and interaction among networks of trusted friends (see Facebook: ‘technology business, not media business’”).
Rose put forth that just as people regularly check their email, Facebookers regularly check their Facebook profile for the latest "news.”
Is Facebook vs. MySpace simply an issue of semantics? If so, it is a mighty important one, to $150 billion market cap Google in particular.
Google CEO Eric Schmidt last June in the LA Times: It’s better to think of Google as a technology company. Google is run by three computer scientists, and Google is an innovator in technology in our space. We’re in the advertising business — 99% of our revenue is advertising-related. But that doesn’t make us a media company.
Google is cited by Tom Foremski as a media company, along with Facebook, YouTube…to support his thesis that “Silicon Valley is rapidly turning into Media Valley--and New York, NY should look out--the capital of the media world is shifting about 3,000 miles westwards.”
Since its original publication, the Foremski story appears to have been (quietly) lengthened to now include a discussion of the media company vs. technology company debate, as well as a new ode to New York City.
Despite the added nuances, however, the Foremski "warning" to New York City remains the same, as his present title reinforces: "Silicon Valley has become Media Valley, some one should tell NYC."
The notion that high powered "old media" titans, be they in New York City or elsewhere, are somehow blind or indifferent to the rapid transformation of media production, consumption and usage, has been put forth, at length, by John Battelle. Battelle worries, however, that "old media" is beyond help!
In "Web 2.0: Who needs business models?" I debated the Battelle packaged vs. conversational media theory last December:
Battelle uses the recent departures of interactive execs from AOL, Fox Interactive Media and CBS Digtial Media, to support his theory that not only don’t stodgy corporate parents “get it,” they are deliberately sabotaging future interactive riches by retrenching into their “old media” cocoons.
Wired John Web 2.0 Battelle has traversed from old media to new and back again, with flying, and profitable, colors. Battelle puts forth, however, that the titans of Time Warner, News Corp. and CBS, have tunnel old media vision, incapable of grasping what he deems to be “radically different economic and business models” in new media.
Foremski nevertheless generously offers to "help out" the New York media industry. His "basic rules for media company success," would actually hurt the "media industry," however, much as Battelle's theories would.
In my Battelle follow-up, "Web 2.0: Who controls the ‘conversations’?" I underscored that digital media is not in inexorable conflict with traditional IP. I drilled-down on the Battelle assertion that there is a fundamental “conflict” between old and new media and refuted his suggestion that Web 2.0 “users are in control” mantra forces traditional media companies to act in “unnatural” ways.
Battelle: If you have a major company based on PGM, succeeding in the world of CM is going to be exceedingly difficult, because it forces you to embrace entirely unnatural acts. Not owning or controlling the content? Not owning or controlling the audience? Not having total control of your advertising and subscription revenue? Impossible!
In "Web 2.0: Who controls the ‘conversations’?" I put forth YouTube, Facebook and MySpace mini case-studies showing that successful "new media" companies integrate best business practices of "old media" companies to illustrate that new media seeks to control content, own the audience and control revenues, same as old media.
Online or off, digital or traditional, ownership, control and monetization of IP, distribution, advertising and subscription are shareholder-focused operating principles. At the end of the Web 2.0 day, the corporate shareholders are in control, not non-paying users.
Nevertheless, Foremski advises the "New York media industry" to succumb to the cliched, but not business savvy, Web 2.0 religion that content must be free, even if it means taking someone else's content without paying for it:
Get your content as near-to-free as you can with machine harvesters such as spiders and searchbots.
-Use algorithms and community-power (also nearly free) to organize the content.
-Publish it widely and in many forms (video, podcasts, etc) through the amazing scale that the global internet provides and that our media technologies (RSS, media platforms, TCP/IP, etc) provide.
Machine and user powered "almost free" content aggregation and distribution are beautiful Web 2.0 things.
The fundamental fact that content must be produced, and should be paid for, before it can be aggregated and distributed is given short drift, however. User preference for old media expensive to professionally produce content over fellow user generated "friends and family" fare is also neglected, perhaps deemed to be Web 2.0 politically incorrect.
Facebook and Google do not consider themselves media companies, they do not seek to produce and/or own or license content. Google owned YouTube does not produce or own any content either and relies on a DMCA business model to support its contention.
Social media aggregation of content needs professionally produced media content for aggregation and distribution, as I posit and analyze in "Google: Why TV networks will trump YouTube."
Silicon Valley based Web 2.0 social media start-up traction renders media content companies, in New York City or elsewhere, more valuable rather than less. “Madison Avenue” advertising agencies which drive revenues for all manner of media companies are also highly valued.
While both the media and advertising businesses will continue to evolve, the Big Apple will continue in its proud leadership position, this native and resident New Yorker proudly predicts.