BUSINESS BLOGS
BUSINESS BLOGS
category: business
05 Oct 2007

I think we need to stop it with the Facebook vs. MySpace much like we needed to stop the LinkedIn vs. Facebook talk, too.

After all, if Facebook is supposedly like LinkedIn and also supposedly like MySpace, then Aristotle would deduct that LinkedIn is on a collision course with MySpace, right? Well, technically, it could be argued that yes, they are, but I think by doing so we’re stepping back in history, not forward.

Let’s consider some trends and realities:

What the Cool Kids Say

Ultimately, much the same way that LinkedIn isn’t “nearly as cool as” Facebook (or so say the geeks), then invariably, Facebook isn’t as cool as MySpace (or so say the hip crowds). I actually think, like most sane people, that simply put, LinkedIn is far more useful professionally and Facebook is more useful personally.

But ultimately, Facebook does not really pose a threat to MySpace for a few reasons (yes, despite our ealier tongue-in-cheek posts here and here about how Facebook’s growth suggests that it will inherit the earth soon).

Mainstreet vs. Silicon Valley

Yes, Facebook has gone mainstream, but as many reports (unofficial, mind you) suggest, Facebook a more tech-oriented, educated audience whereas MySpace attracts the masses.

Admittedly, online “masses” is not a good term, but with the acquisition of Strategic Data Corp. last year, it’s a matter of time, one would presume, before MySpace offers the kind of targeted solutions that advertisers of the 21st century will come to expect and demand. And once that happens, as much as I hate to say it (honest bias: cause as a content producer, I won’t lie, I ain’t a huge fan of UGC, but ask yourself what came first…), MySpace will see an acceleration of revenue per page view much as Yahoo! did with Right Media. Right Media gave Yahoo! an auction-driven push, SDC will give MySpace a behavioral-driven push.

Either way, it’s a step in the right direction for HQ.

But Users Don’t Care About the Bizness Stuff

WatchMojo.com works with a lot of bands’ management etc. and we haven’t come across any Facebook pages, and as teens get older and get into music - and subsequently get beaten into submission WWF-style - they’ll grow up viewing MySpace as MTV (well, when it was relevant and cool) and see Facebook as a great interactivity tool.

Sit down folks: they’ll probably interact with both. In fact, I’ll say they’ll start off with a MySpace page when they’re just getting rebellious, then they’ll move on to Facebook, and once they realize they need more than beer money in life, they’ll take a liking to LinkedIn, too. It’s awfully like the beer, to hard liquor, to wine evolution.

It’s all about PR

Yesterday Paid Content pointed to a speech by News Corp.’s Peter Chernin that got me thinking.

“I have a healthy level of respect and paranoia for Facebook. Competition is a very valuable thing. In most countries, we continue to outgrow Facebook. We [MySpace] are worth significantly more than they are. I think they’re worth at least $15 billion (he said with a mischevious smile). I don’t think they are for sale….MySpace and Facebook are doing fairly different things. MySpace is much more of a discovery platform, while Facebook is much more of a utilitarian platform for connecting with people you already know.”

I agree with Mr. Chernin that it’s really like comparing apples and meatballs, ultimately. I always tell press and investors “I didn’t build a company for the press or for investors to understand”, I built a company that makes sense to users, partner companies and ultimately, advertisers.

The lesson there is we in the media and technology business are trying to project things onto users and marketers and that might be the biggest mistake of them all.

I think the longer News Corp. focuses on the “Facebook/MySpace: Who is better and mainly, who’s worth more” the more they’ll lose the war with partner sites and advertisers. Notice I didn’t say users. Why? Unlike us folks in the media/technology business, marketers, investors, etc., users really don’t care about the business stuff of a company’s offerings, while it’s natural to follow the crowd to some extent, they’re not sheep or lemmings, they know that MySpace and Facebook are pretty dissimilar just by looking (what’s that expression with porn? “I can’t define it porn but i know it when i see it” - never mind that I can define it… but I digress).

But if News Corp. consistently gets on a soapbox and says “we’re better than Facebook” then it is giving marketers a reason to pause their ad spending on MySpace and look at Facebook.

That’s dangerous, because MySpace is helped by Google’s deal but not limited to it, unlike Facebook, which largely gets its revenue from MSFT, but hey, who’s comparing?

Media vs. Technology

Ultimately, the main area why the Facebook vs. MySpace rhetoric loses steam, in my humble opinion, is that by virtue of being a part of one of the largest, most powerful and profitable global media companies, MySpace is now largely “traded” and seen as a media entity, whereas Facebook has taken the Google cue and positions itself as a tech play.

Ok, what would the analysts say?

All right, so we’ve made the case why Facebook and MySpace, while increasingly indirectly competitors, have fairly divergent futures. But much how we compare the market values of somewhat dissimilar firms like MSFT and Google - as we did here when we asked whether Google will surpass MSFT in market cap by 2010 - we’re curious as to, pound for pound, who’s worth more.

Facebook or MySpace.

Some arguments to consider:

- If the media vs. technology argument is a correct dichotomy, then it can be argued that Facebook gets a trading multiple premium over MySpace…

- Of course, MySpace is larger in terms of audience, it is both the largest social networking site in the world and the largest property when measured by page views.

- Its revenues higher.

- Being part of News Corp. it has a lower liquidity discount.

- Facebook, I believe is younger, and thus boasts a higher growth rate.

I think the edge, still up to now, would have to go to MySpace.  But, we’re not saying anything new or shocking.

Besides, it’s a moot point, how come, read part II, below.

Part II: Is News Corp. Planning a spin-off?