Thursday, April 12, 2007

MySpace Response

So my buddy Sergey Lossev (Founder/CEO of VCEL) wrote a post in response to my last one about MySpace and Photobucket entitled "Blocking Photobucktet: not as stupid as you think."

He makes some good points, basing his argument around the following tenants:
In order to sustain their leadership MySpace needs to make sure to:

1) Drive a sustainable and large enough revenue stream via advertisement
2) Make sure that the quality of the content and the userbase remains intact. Meaning that the ratio of Signal to Noise in this network needs to favor signal as much as possible (e.g Have real private messages and comments vs robot spam)
Both very good points, especially the second. MySpace has a vast audience, so obviously advertisers are going to pushing for ways to get their wares in front of all those eyeballs.

But one point of his represents the crux of our disagreement - that MySpace needs to ensure they get 100% of the revenue from their site (or at least the majority of it - he mentions widget revenue share at the bottom of the post). Basically, he's taking the same stance as MySpace itself - the site shouldn't let parasitic companies make money off their traffic.

But that's exactly my point - they should. They should let others make money off their site. Because while MySpace is great, it's all the cool widgets that make it even more great.

Philosophically, that's exactly what being "open" is about - freeing oneself and one's company from greed (I'm loving the hippie slant to that last phrase) and understanding that if they don't embrace the little guy trying to make a buck, one of those little guys could be the one that ends up killing them. Going back to the OS Wars, it's the same thing as Apple saying they want to make all the money from the software and Microsoft being content with letting 3rd party software developers make a fortune as long as they do it gives people more of a reason to buy Windows. By dangling the incentive of money, you effectively have the entire widget development community working for you.

Now the times have changed, and it's understandable for MySpace to want to see some of the money widgets make because they're not exactly making money for signing up users (where Microsoft makes a bundle for each OS sold). So fine - work out a rev share with widget developers. And I think that's where Sergey and I have an area of agreement on the issue.

Maybe you've noticed that I've ignored the signal vs. noise issue. It's basically because I have no answer, except that maybe it's a non sequitur. What about letting widget developers make money encourages noise? I mean, I kinda see it - advertisements can be spam, and if you let people make money they're going to want to push ads and whatnot as much as possible. But you get a bit of a free market effect going on - if a widget is pushing spam and it pisses users off, then it will become less popular. And because widget developers rely on MySpace to put food on their table, they're not going to want to lose popularity.

Essentially, allowing them to make money outsources creativity. And creativity and new features keep users coming back for more and staying in love with a service, even if there is better stuff out there. Microsoft has done just that with Windows.

And then you can pull the second page out of the Microsoft book and copy what widgets and crush the competition (like Lotus and Word). Gotta love the boys in Redmond.


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