Rupert Murdoch’s cool new thing
Edie G. Lush says that MySpace, the online social network, is another money-spinner for the great media mogul Rupert Murdoch is probably the last person in the world who would use an online social networking service, but he may be the first to make serious money out of the concept. MySpace, which he bought for $580 million in 2005, is one such service, and it may or may not be the coolest thing on the internet. It has about 70 million users, but is already being squeezed by an upstart website called Bebo which is attracting a greater share of UK visitors. Nevertheless, Murdochwatchers see MySpace as the next big weapon in his relentless battle to maintain global media dominance.
But what exactly is an online social networking service? It is a website which allows anyone to build a homepage for free. You can list your likes and hates, top films, favourite books, sexual orientation and relationship status, and communicate with ‘friends’ — people you meet both online and off. You can upload photos and videos, communicate via instant messenger, and blog to your heart’s content.
It’s easy to see why the 16–34-year-old crowd targeted by MySpace are liable to flee as soon as something cooler comes along. Competition in the social networking arena is fierce — Buzznet, Facebook, Xanga, TagWorld, and Friendsorenemies are just a few of the challengers. Many users have homepages on two or three websites and flit between them all. But arguing about which is the hippest site on the web is rather missing the point. MySpace is one of a handful of companies now redefining the way we communicate. Look at who else is sucked into its vortex — more than a million bands have pages on the site. Users can hear and download songs from both signed and unsigned bands and check out forthcoming gigs. The Arctic Monkeys’ rapid rise from unknown to number one in the charts is well documented. They owe much to fans on MySpace sharing Arctic Monkey songs by providing links on their homepages, and sending those links to their friends.
Murdoch used MySpace recently to market the product of another arm of his group NewsCorp, Twentieth Century Fox. To publicise its film X-Men: The Last Stand, Fox launched an X-Men page on MySpace, allowing users to host the X-Men trailer on their own website and list a favourite X-Man as a ‘friend’ on their pages. Nearly a million MySpace users had a link to the X-Men page on their own profile page, and the hype thus created helped X-Men to breaking box office records. It was the biggest holiday weekend movie release ever, banking $123 million in its first four days.
All this is creating new optimism in the media industry. In a world in which we spend increasing amounts of time surfing the internet, often downloading illegal video content, media moguls have been worried that their staple box-office and television advertising revenues were draining away. Fox’s clever marketing of X-Men proves that this is not necessarily the case.
You don’t have to look far to spot other potential synergies for Fox and MySpace. ITV’s £175 million purchase of Friends Reunited — the hugely successful website through which users trace old school friends — has given birth to a television show on the digital channel ITV Play where friends brought together via the website answer trivia questions about a year when they were together at school. Interestingly, it is the first ITV channel not to be funded by advertising, but instead by revenue from phone and text charges.
NBC Universal’s $600 million purchase of iVillage Inc, the top US women’s community website, offers similar possibilities. NBC is examining the idea of ‘recycling’ news and entertainment programming from top-rated daytime shows such as Today onto iVillage’s site — and providing alternative endings to popular shows and pairing these items with specific advertising.
So it is no surprise that Fox is launching a new television station that will be closely linked with MySpace. My Network TV will be the first new US terrestrial television service in more than a decade. Its accompanying website will allow users to send clips of programmes to each other via mobile phones and email, and will host a ‘casting call’ section for budding actors. MySpace will play a major role in promoting the new channel.
Advertising also plays a big part in the MySpace strategy. In the next few months a deal is expected to be signed with either Google or Microsoft to supply internet searches on MySpace pages, alongside advertisements tied to the search results. Such deals involve advertising revenue being split between the two sides, with the company providing the audience for the ads usually gaining most of the revenue. It isn’t a huge leap to imagine a world in which ads will be targeted specifically at you, based on your listening and viewing profile. In fact, it’s already happening. MySpace and other sites can track what music listeners select, and suggest other bands they might enjoy. Whole websites such as Pandora and Last.fm are designed specifically for this purpose. Some of these sites allow you to link up with people who enjoy similar music and listen to the music they like via personalised radio stations. All the while the website providers are building up a profile of your likes, dislikes and moods at different times of the day. They can use this data to deliver highly targeted advertising direct to you, charging a significant premium to the advertiser.
Six years ago, the web claimed only 1 per cent of the British advertising market. WPP estimates that by the end of this year, it will account for more than 13 per cent of the £12 billion market, overtaking national newspapers. WPP also notes that spending on television advertising is at its lowest since 2001. Faster and cheaper broadband deals mean that 40 per cent of British homes are now connected at high speed to the internet, surfing more and watching television less. Where television ads often miss their mark, web advertising is highly targeted and has measurable results. Rupert Murdoch bought MySpace to ensure that he has revenue in this growth sector of the market, protecting himself against any corresponding decline in NewsCorp’s television and newspaper earnings.
Does it matter if MySpace is not the newest, coolest thing? No. NewsCorp is already adept at linking parts of its vast empire to exploit the internet’s ‘viral’ promotion abilities. So while Murdoch himself is lampooned on numerous fake MySpace sites as an ‘evil billionaire tyrant’ and ‘The Dear Leader of the Kim Jong-Il Fan Club’, he is — as so often laughing all the way to the bank. He may not be interested in making online ‘friends’ but he has always been remarkably good at understanding what people want and selling it to them, and through MySpace he has found a valuable new audience ripe for exploitation. If anyone can do it, Rupert Murdoch can.
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