June 2011

Can MySpace Get Its Sexy Back?

It's understandable that MySpace would want to regain its groove by hooking up with a hipster like Justin Timberlake, one of its new owners. But what does the singer-actor see in this tone-deaf cougar of social networking? An ad-placement outfit called Specific Media brought in the tastemaker as an investor in its $35 million purchase, or roughly a dollar for each of MySpace's 34.9 million U.S. users (per comScore). That’s only 6 percent of what seller Rupert Murdoch paid just six years ago for the service, which pitches music and other media to users based on their profiles. Is it a bargain
or a value trap? What can the new bosses do better?  Did Timberlake's turn as former Facebook president Sean Parker in the movie The Social Network give him some special insight for his new true-life role? Those looking to turn around a business (or a career or even a life) must first honestly assess their strengths, weaknesses, opportunities, and threats (good old SWOT analysis). Beyond name recognition (now enhanced with the Timberlake association), MySpace has an immense trove of marketable user information and it's in the hot-hot-hot consumer social media sector. In the negative column, its flat-footedness has left it isolated, losing money, and swamped by numerous rivals that are well capitalized, popular, innovative, and determined. Hmm... Timberlake, with more than 5 million Twitter followers, has said he wants a place for artists to connect with fans, but MySpace has tried to do that for years without much effect; hence, Twitter. No, the big idea from Specific Media seems to be encouraging users to share favorite ads with their friends. OMG: I can’t wait to share my favorite product pitches with everyone I know!! Wait, what? Is that what passes for social exchange and enrichment? Doing the heavy lifting of advertisers? Why did Myspace ever let this happen? It was way, way ahead of Facebook just a few years ago. Now it only has some 225 employees, down from 1,400 a couple years ago, and will lose $165 million for the fiscal year ending today, June 30. Why did it fail to recruit or retain top tech talent? Why did it fail to open up its service to outside developers (Farmville, anyone?) Why did it let youngsters like Groupon and Zynga zoom ahead to valuations in the tens of billions? And why did Rupert Murdoch dye his hair orange? What MySpace failed to do, primarily, was product development, according to the real Sean Parker. "It was basically this junk heap of bad design that persisted for many, many years," the Napster co-founder told Jimmy Fallon at the NExTWORK Conference in New York. [http://tcrn.ch/iGNSOr] "There was a period of time where if they had just copied Facebook rapidly, they would have been Facebook. They were giant, the network effects, the scale effects were enormous.” Why do any of us lose our way? A variety of factors from arrogance to misplaced trust can lead us astray, but it's almost always pride that prevents us from getting back on track. All you can do is accept the new reality on the ground, dust yourself off, and keep going (hopefully a little the wiser). Parker, a bankrupt hacker not that long ago, did; look where it got him. And give News Corp. some credit. It’s fairly nimble for a leviathan. It rapidly bulked up on Internet properties and then shed them when fleeter rivals overtook them. (It also too-quickly flipped the Dodgers to the McCourts, but that’s another tale of woe.) The corporation is now doing the smart thing of developing digital versions of its real product: its television and newspaper brands. Funny how media’s other irascible octogenarian, Sumner Redstone, didn’t step up to buy MySpace once it fell into the clearance pile. After all, the Viacom chieftain canned well-regarded Tom Freston for the sin of  letting MySpace slip through his fingers and into the hands of nemesis Murdoch for a mere $580 million in 2005. (Businessweek shortly afterward referred to it as one of the savviest acquisitions ever.) Poor Freston. He didn’t want to overpay. There will always be plenty who do (viz, the $5 billion later paid for Dow Jones, once again by Murdoch). Look no farther than current valuations for new media properties. Living Social is eying a $1 billion IPO; its larger rival Groupon dreams of $20 billion. Facebook, MySpace’s vanquisher, has gone from $30 to $50 to $80 to $100 billion in valuation estimates (or is it a trillion this week?). LinkedIn’s recent public offering made it the most expensive stock in the market, with a price to earnings ratio of more than 1,000. By absorbing MySpace, Specific Media is probably laying the groundwork for its own public offering. “We have one of the most creative people driving the creative strategy,” Tim Vanderhook, Specific Media’s CEO said of Timberlake. [http://on.wsj.com/isHi2b] “That’s a huge difference than what was done in the past.”

Father’s Day and the Value of an Education

Father’s Day is as good a time as any to reanimate the PubArts blog after its months-long slumber. It’s my offspring, after all. And where would I be without my own dad, who worked so hard to make sure I had a great education and could earn a living myself. Okay, so I chose to ply the writing trade and calling that a living is a bit of a stretch at times. But still. It was awfully good of him, and I have always been tremendously grateful to him, and my mom, for their innumerable, and strangely willing, sacrifices.
It's among the most basic parental (and societal) responsibilities: preparing the young to stand on their own.
So it’s worth looking at the value of college education today, which can confer crippling amounts of debt with dubious real skills as a crutch. Does Shakespeare pay off? The Center on Education and the Workforce at Georgetown University studied lifetime earnings of degree holders to find out. The chief finding: those who majored in engineering, computer science or business earn half again as much as those who majored in the humanities, the arts, education, and psychology. [http://wapo.st/lgVnDT ] Well, duh. The study found the median annual earnings for someone with a bachelor’s degree in petroleum engineering is $120,000, in pharmaceutical sciences $105,000, and in math and computer sciences $98,000. Not too shabby. Holders of bachelor’s degrees in English, on the other hand, have median earnings of $48,000, while a degree in early childhood education will likely earn you $36,000. Counseling or psychology brings up the rear at $29,000. The lesson: daddies, don’t let your kids grow up to be philosophers. Yet it’s worth noting that the holder of a bachelor’s degree still makes 84 percent more than someone who topped out academically in high school. The Georgetown study didn’t cover advanced degrees. But if money is your bag, also note that an MBA can really pay off, especially if granted by a top institution, according to research done for Bloomberg Businessweek. A Harvard MBA is particularly rewarding, netting its average holder $3.6 million over 20 years, and consulting is the most lucrative field. [http://buswk.co/k8TgUp] What have we learned? Spouting synergistic babble means big-time bucks and helping kids make good choices, not so much. That’s the marketplace. But here’s something no study can quantify or slap a price tag on: Education is still the greatest gift because it is the give of love. So a big thank you to all the good, education-minded fathers out there. ... Especially mine. I love you, Dad.
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