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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.”

The Future Is Near

What do movies, ballgames, and operas have in common? If you want to watch them in person you have to stand in line to purchase your tickets or print them out online. Then you have to queue up again at the event to hand over your paper slips. Soon there will be no reason to perpetuate this quaint routine. With near field communication (NFC) you tap your mobile phone against a designated point or tag to process your request: info, seat choice, or payment.

NFC, in other words, proposes to transform customer service into software. If the powers that be and wanna-be have their way we soon may be the flesh-and-bone equivalents of cars zooming through the toll booth with the FastPass on our dashboards.

Wireless communication between devices is nothing new, but unlike a Bluetooth connection, your mobile and the other device don’t have to be programmed to work together; they can simply touch to establish a connection. Just tap your mobile to a pay station employing something like MasterCard’s PayPass program or Visa’s payWave and off you go. If your phone isn’t NFC-enabled you can attach a radio-frequency identification (RFID) tag to its back to perform the same magic.

Corporations and governments will be able to track our movements and spending habits accordingly. Which may seem kind of creepy, but should add to efficiencies and better allocate resources. For instance, traffic congestion will ease and municipal coffers will fatten when people pay to drive within a defined area; the City of London has done this successfully for many years. Don’t want to pay? Go another route or take public transport. And instead of feeding a parking meter with coins, you’ll simply tap it with your phone. The information that the space is occupied would then be transmitted to a central server; that database could be accessed by services (apps) letting drivers know where empty spaces exist.

NFC is the leading technology for paying via mobile. Such payments will reach $264.8 billion by the year 2015, according to a recent report, and are especially popular in densely populated Asian Pacific nations, followed by Latin America, the Middle East, and Africa – in other words, the more “under-banked” areas of the world. There are some four billion mobile phone users worldwide, and 1.6 billion bank accounts. You do the math: Mobile payments have huge potential as the gap between the two numbers narrows, and the First World catches up the the Third. http://bit.ly/gPFydf

NFC and electronic wallets won’t be ubiquitous of course until most merchants, airlines, buses, train operators, hotels, and entertainment venues adopt the technology. But that day is coming. The biggest mobile carriers and manufacturers support NFC and are pushing retailers to join them in a technology that has been around for years without getting traction – before the advent of mobile smartphones made it, well, smart. “Looks like the technology is getting moving,” says Gerald Madlmayr, an NFC expert in Vienna. “Finally.”  http://bit.ly/fg9G8s

As for all those ticket takers, you’ll have to look for human interaction somewhere else. Zoom, zoom.

The Best Way to Shop, Bar None

It’s not just mobile devices that are increasingly “smart” – they’ve earned their sobriquet by greatly boosting their owners’ intelligence as well. Consider how they’ve broken the bar code, that series of thick and thin vertical lines attached to a product that contains price information and helps vendors track inventory. Now your clever little hand held friend can scan it and track down the best price, wherever it may be. You may only need you to type or speak the name (or even just description) of your object of desire. And shazaam: the best deals, online and in stores.

Retailers have grown afraid of these ruthless new competitors residing in the pockets of their erstwhile customers. But not nearly enough.

Almost half (45 percent) of shoppers with smartphones use them to do on-the-spot price checks, according to consulting firm IDC Retail Insights, putting huge pressure on retailers to compete on price – on everything, all the time.

The big box has become a big sponge, letting all sorts of precious, valuable information in and out. “The four walls of the store have become porous,” Greg Girard of IDC told The Wall Street Journal. “The retailer’s advantage has been eroded.” [WSJ, 12/16/10]

That leaves the salesman with less and less to do. Almost three quarters (73 percent) of shoppers with smartphones preferred to consult their mobiles rather than an appliance jockey on the floor, according to a 10-nation study in 2010 conducted by the big management consultancy Accenture.

The casualties are already mounting. Best Buy, the nation’s largest electronics chain, saw its stock plunge before Christmas 2010 (typically its most lucrative period) after it conceded it was losing market share, which analysts said was due at least in part to mobile-equipped bargain shoppers.

On the day retailers traditionally go “into the black” for the year (dubbed “Black Friday,” the day after Thanksgiving), 5.6 percent of shoppers used a mobile device to access retail sites in 2010 – a 56-fold increase in one year, according to Coremetrics, an IBM division that measures e-commerce activity. [WSJ, 12/16/10] Soon enough it will be the percentage of those not shopping with their mobiles that will be in the single digits.

There are ways for retailers to suck it up and make lemonade from the new reality. Beleaguered Best Buy, for instance, has partnered with TheFind (which was downloaded 400,000 in its debut month) to target consumers with ads while they’re in the store – or at a competitor’s like WalMart. “That is an opportunity to steal a sale right when someone is in the throes of making a decision,” Barry Judge, Best Buy’s chief marketing officer, told The Wall Street Journal. “That is what makes mobile so powerful.” And shameless.

Siva Kumar, chief executive of TheFind, is unapologetic of playing both sides of the transaction. “It is not a consumer-only game,” he told the Journal. “Retailers can use it to their advantage.”

Nobody said war was pretty, but competing strictly on price is a losing battle, especially with the high upkeep of physical stores. More promising survival tactics would include:

  • Selling merchandise that customers can’t get anywhere else
  • Bundling special services with products
  • Removing or encrypting bar codes to stymie deal-seeking mobile customers

No matter how retailers adjust to the mobile age, it seems clear there will be less need for so many or such large retail showrooms, especially those selling commoditized merchandise or stuff readily available on the web. You have to wonder what’s going to happen to the commercial real estate market when this realization really sinks in.

Mobile Just Smote the Remote

Forget about rooting around in the sofa cushions for your remote control. Just reach for your mobile. It’s soon all you’ll need to navigate your life – not just on Facebook or Mapquest but among the ever-expanding choices you’ll have on internet-fed TV.

A number of companies already make apps designed to task your mobile device as a remote control. Google’s TV app runs on Android or iOS (iPhone, iPad); Apple’s TV app only on Apple’s own iOS devices. Google’s has voice search; the Apple Remote app lets you control your Apple TV as you would your iPhone, iPad, or iPod Touch. http://rww.to/eJ1Dcm

Not known as speedy technology adopters, pay TV distributors are also in the game of enabling mobile devices to serve as remote controls and program navigators. Comcast, Time Warner Cable, AT&T, Dish Network, Verizon and others have apps for iOS and Android devices. http://bit.ly/dK55Dw

Verizon’s FiOS Mobile Remote app lets customers change channels, manage parental controls, pause, rewind and fast forward or record a TV show.  Customers can also click on the video on demand (VOD) button or switch to live TV. And here’s an interesting bonus: customers can transfer apps from the mobile device to the TV. http://rww.to/eJ1Dcm

Certainly viewers crave new ways to search and discover content, to escape the up-down-left-right “grid” that has displayed program line-ups for decades. Universal remotes have tried to solve the problem of choice but they’re too big or too complicated. If we’ve learned one thing about consumer electronics it’s this: it has to be easy to appeal to the masses.

The remote control even as it is still plays a crucial function. Its real estate is consequently highly valuable. Television will feature more apps as it becomes an appliance of the Internet, and those apps will compete for viewers’ attention. No wonder streaming movie provider Netflix has struck deals with TV manufacturers to feature a Netflix button on next-generation remote controls (yes, even before they become an app on your mobile). [ http://on.wsj.com/icYxJY] With Amazon, Apple, Hollywood, and the cable companies gearing up to keep Netflix from extending its lead in movie exhibition, you can’t blame the scrappy company from thinking ahead. Which is the lesson for all of us in the rapidly moving tech-dominated world: think and act strategically or get buried under someone’s backside.

The Business of Writing

Ah, the allure of freelance writing. The creative freedom. The flexible work hours. The intellectual stimulation. The grinding poverty.

Consider freelance business journalists. While no one expects them to earn as much as the people they cover, you might think given their field they had made a financially sound, strategically minded career decision. They typically earn about $25,000 a year (and no benefits or pension, of course). That’s according to a survey by Society of American Business Writers and Editors, which also found that three quarters of respondents made considerably more when they had salaries. http://bit.ly/fKwscn

There are fewer of those full-time jobs in journalism, of course, with the outsourcing of the writing trades, and the technological extinction of the newspaper and magazine business. Their replacements, online content mills, do need copy of course … they’re just not willing to pay much for it, if anything. They’re inclined to interpret that “free” part of freelancing literally.

So do you really want to be a journalist today? http://bit.ly/ikAmbx

Really? http://bit.ly/eZtZhy

OK, not all freelancers are suffering. Specialized music writers can make $70,000 a year, according to research by Berklee College of Music, so biz writers might want to follow that Pied Piper. http://bit.ly/hZI3UR

And there is further hope, if only by way of analogy. Smartphones with their high-resolution cameras have pretty much obviated the need for traditional point-and-shoots. But sales of more powerful cameras like SLRs have increased nearly 29 percent since 2009, according to research firm NPD. Independent writers might think of themselves SLRs and market themselves accordingly, offering something that can’t be duplicated by some mug in Bangalore or Kiev cranking out keyword-laden ad bait at $5 a day. http://nyti.ms/dJ8dwZ

Or look at the ongoing popularity of wristwatches. People surely don’t need them to tell the time (their smartphones do that too, and usually more accurately). They’ve gone from a necessity to an anachronism. But against the odds, against all reason, they go on and on. Maybe quality journalism will go that route.

Regardless, those freelance business writers probably don’t care. Two-thirds of respondents to that same SABEW survey said they’d never go back to a full-time job. You gotta do what you love. Food, shelter, and health insurance can be overrated.