MySpace Economics: The Power Is Not In The Network


An interesting discussion was started in comments section of my post comparing MySpace to Bikes.

Scott Karp argued, as he did on his site, that MySpace would suffer financially because of the craziness going on on it’s site.

He’s wrong.


In order to understand why he’s wrong you have to first understand what’s different about web 2.0.

What’s different about web 2.0 is that the audience segments themselves.

Now it’s harder to notice on MySpace but it’s a lot easier to see on one of MySpace’s growing list of competitors, TagWorld.


TagWorld is almost just like MySpace. It has over a million people and lots of cool stuff like it’s new music discovery engine, (which I must talk about later).

Now you search for people by typing in your interest. Since people have tagged themselves, those interested in the same things I am comes up. (what? no women over 35 tagged short skirts?)

Now if you are an advertiser, you can (and if not you should demand) that your ads appear by the tags you choose.

If I’m selling some rap record I don’t want to waste my money having the ad pop up in front of Headbangers (um, I really don’t know if young people still use that word).

The fact that people are tagging themselves makes the problems of the larger community irrelevent.

It’s upside down. Advertisers can call up the individual channels (tags) that they want to advertise on. There may be some channels (people) devoted to mayhem but why would I, as a seller of coffee, care. That’s not my audience.

I’m only reaching the people who tagged themselves as coffee drinkers or visitors to Starbucks.

Social Networks puts power in the hands of the consumer.

The network only serves as a way to reach a large number of them.

Consumers have always been individuals.

Now advertisers have to treat them like that.

Karp is missing the point.

The power is not in the network.

It’s in the individual.

Advertisers are already catching on. Scott needs to as well.

[reloaded: And one other point (and don’t think I’m jumping on you Scott!). A lot of people seem to think that by giving people the freedom you lose control.

(In another example of the internet being upside down) Actually the opposite is true. Social Networks are not just personal message boards. It’s much more than that. People segment themselves. That means that the network ultimately ends up with more control.

Read some of the posts at Swarming Media. It’s eye opening.

[top picture by luckylulub529re2.jpg]

Explore posts in the same categories: advertising, blog networks, communities, money, rebuttal

18 Comments on “MySpace Economics: The Power Is Not In The Network”

  1. Erik Says:

    Um, first of all, Yahoo!’s ad servers did pretty much this kind of targeting this in 1998.

    Second of all you haven’t addressed the real issue he was raising, which was one of negative brand association.

  2. Brian Says:

    I think MySpace will get advertisers. More like the “Girls Gone Wild” type of advertisers, but their money is green too. The negative press about MySpace may keep blue chip advertisers away, so in that regard I agree with Mr. Karp.

    Tagworld could be the sleeper. MySpace may suffer from “pioneer” syndrome, taking all the arrows and allowing the followers to claim Santa Monica.

    The first mover doesn’t always win in an upside down Internet.

  3. Scott Karp Says:

    Glad to be providing so much grist for your mill — declaring that I’m wrong is what all the “cool” people are doing, so it’s good that you’re not missing out.

    In any case, I think you’re over-estimating the degree of targeting that is or will ever be possible.

    Perhaps small advertisers who don’t have big brands to manage won’t care what they appear next to. But how are you going to GUARANTEE to a major corporation worried about legal liabilities that its ad won’t appear next to any “questionable” content (questionable by an infinite variety of definitions)?

    There’s a German car manufacturer that refuses to have its ads run anywhere near the word Hitler. You clearly haven’t fathomed the depths of corporate sensitivity. Armies of lawyers are employed to manage liabilities.

    So I tag myself as a coffee drinker, then I post obscenity and pornography on “my space.” You think Starbucks wants to touch that?

    Rather than respond to me, you should have responded to Erik on the previous post — none of your 2.0 platitudes solve any of these problems that have been wrestled with since the 1.0 days.

  4. Erik Says:

    Char has clearly never sat in on a meeting with P&G execs discussing an ad buy.

  5. Brian Says:

    Erik, that sounds horrible… why would he want to? But your point is well taken!

  6. chartreuse Says:

    Char has clearly never sat in on a meeting with P&G execs discussing an ad buy.

    You are so right about that!

    If the brand gets tarnished to the point where the entire brand appears negative then there is not going to be much for Fox to do.

    But that’s not going to happen. I really suspect that a lot of the ‘bad publicity’ about MySpace came from Fox itself. It’s the only way to keep it cool to it’s targetted 15-24 y.o. market.

  7. Erik Says:

    “But that’s not going to happen. I really suspect that a lot of the ‘bad publicity’ about MySpace came from Fox itself. It’s the only way to keep it cool to it’s targetted 15-24 y.o. market.

    Char, you realize that traffic, without associated revenue, is an expense? If they can’t monetize those 15-24 Y.O. kids then they’re meaningless.

  8. Scott Karp Says:

    “I really suspect that a lot of the ‘bad publicity’ about MySpace came from Fox itself. It’s the only way to keep it cool to it’s targetted 15-24 y.o. market.”

    If that’s true, it’s the ultimate cut off your nose to spite your face strategy.

  9. chartreuse Says:

    I realize that. But because they are owned by Fox it opens up many other uses for that audience of folks. They have television and radio properties to push them to.

  10. Erik Says:

    Are you suggesting they paid $600 million so they could run house ads for fox shows?

  11. chartreuse Says:

    I am suggesting that the temporary complaints of the media will solidify the sites cool factor among it’s target audience, protecting it against competitors and next month the media will be complaining about something else meaning that the advertisers will come back (if they ever really left!).

    sorry that is such a long sentence. Not me at all…

  12. Erik Says:

    meaning that the advertisers will come back (if they ever really left!).

    What advertisers? I see no targeted ads on MySpace. They look like “run of network” geocities ads in 1998. Or maybe LinkExchange.

    They seem to be repped by and are doing old fashioned $1 cpm advertising. How web 1.0 of them.

  13. Brian Says:

    Look, my earlier point was that P&G is not the target here anyway. You can sell rap and alternative music, humor videos, novelty items, t-shirts, dvds, video games, and all sorts of other high-margin crap that kids like, to the MySpace crowd. None of those advertisers will care about the content.

    I don’t think Gillete Fusion razors were ever what Uncle Rupert had in mind for this audience!

  14. nathan Says:

    Coming at this from a non-business background, I agree that the power lies not in the physical networks of MySpace or TagWorld, but it is about a little more than simply the individual. It’s about many individuals acting on their own, in their own interest, but in a networked environment. So rather than being about the individual it’s about the interaction between the individual and the mass of individuals.

    You are absolutely right though to point out the process of self-tagging, but it’s also pretty significant to notice the amount of tagging that goes on between individuals. In MySpace (I’m not on TagWorld so I can’t speak for that) there’s a combination of self-tagging and tagging-as-interaction (we might even see posting comments on profiles as a type of tagging-as-interaction) going on. I think what’s most interesting is in the combination of these two processes and what emerges from that.

    How to apply this to advertisers? I have no idea. I leave that to people like you who have the ability to make these concepts into something tangible.

  15. MySpace is a toilet that old syphilitic geezers fish in with their damaged rods. Thus, I don’t care about the wankers and buffybabes, nor what happens to them. It’s cursed. Or worst. Brat. Thanks for putting mean old Vaspers the Grate on your blogroll.

  16. Zeerus Says:

    Char, we young people still use the word “headbanger”. In relation to clique’s there are the goths and the headbangers. They both dress similarly, and the only difference is that the goths have different religious and cultural views. headbangers just like heavy metal. I’m part of the skater/headbanger clique myself

  17. chartreuse Says:

    Thank you for explaining that Zeerus!
    And that’s a nice blog you have. Kudos.
    (that means great job in adult speak!)

  18. redamann Says:

    Great job guys… Thank for you work…

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