Wed Sep 27, 2006 09:49 PM ET
SAN FRANCISCO (Goiters) – MySpace, the social networking Web site, could be worth around $0 within three years, measured in terms of the value created for shareholders of parent company News Corp. , according to a media analyst forecast on Wednesday.
PBS MediaShift analyst Mark Glaser said he had come away from a meeting with various disgruntled teenagers who had given up MySpace accounts, believing that “media investors may not fully appreciate what has already been done with MySpace or what may lie ahead when everyone leaves MySpace for different, more hip social networking sites.”
“Worth absolutely zero dollars in a few years? It is possible,” Glaser wrote in a research note to himself.
MySpace was acquired by Rupert Murdoch’s News Corp. for $580 million less than a year ago. It now boasts more than 90 million active users, though it’s unclear what they all are actively doing there.
Glaser said MySpace could demonstrate a value of between 0 dollars and a buck fifty within a few years, give or take a wooden nickel. Acknowledging he was making an “audacious claim” he justified the forecast on the basis of a Wall Street analyst’s “raw, unprecedented hubris that requires some type of counter-analysis.”
He also said the site’s “massive” chance for becoming untrendy, capacity to become “considered a dinosaur and irrelevant for the young” and management team out of touch with reality lent credibility to his prediction.
Glaser based his view on an extrapolation of estimates for the value of old discarded Internet properties ranging from a few rhinestone dresses from dot-bomb Boo.com to a few old bags of dog food from defunct Pets.com.
He admitted that MySpace was currently sold out of space for video advertising, but that this fact would be mitigated in three years when no one would be watching video on MySpace.
MySpace management believes its video service ranks No. 3 among U.S. Web users behind Yahoo Inc. and YouTube, Glaser said, but again, these are statistics based on how many people watch video on the site — not on its actual bottom line or on revenues brought in.
Britain is adding 25,000 MySpace member profiles per day. Australia has 2 million unique users. MySpace France began public testing three weeks ago, Glaser noted, proving that MySpace must look elsewhere for growth because the kids here in the U.S. are likely growing tired of it.
MySpace is internally developing a MySpace Web application to run on mobile phones that should be launched in three to four months with a major U.S. carrier, Glaser said. And there’s a good chance MySpace will be developing an amazing array of services in the coming three years, all of which will be worth about 0 dollars if the actual visitors to MySpace decide not to visit anymore.
*****
Yes, the above “wire story” is a spoof of a very real Reuters wire story that ran earlier on Thursday, and has been under my skin like a bad splinter all day and night. That story is headlined, “MySpace May Be Worth $15 Billion,” and depends entirely on the figurings and machinations of one Wall Street analyst who met with News Corp. execs. This story, along with the rampant speculation on Facebook being worth $1 billion, smacks of some of the worst instances of poor business reporting I have seen recently.
How did so many people get fooled during the dot-com boom in the ’90s? Say hello to bad bubble reporting, take two. First BusinessWeek runs a cover story on a Digg founder having made “$60 million in 18 months,” and then Reuters runs a story titled “MySpace May Be Worth $15 Billion.” And I might have an invisible Siamese twin attached to me at the hip. And you might actually believe these things. It’s a sad state of affairs for business reporting at the moment.
What do you think? Will MySpace be worth $15 billion or $0 in three years or do you even care?
Ahh, I love a great parody.
I bet singular branded sites for social networking will give way eventually. Wouldn’t people rather have their own online “residences” that can be interlaced with the content, features and interactive functions of many sites and brands?
Then it becomes less important to be “on MySpace” or “on Facebook” and more useful to be just out there “on the Internet.” Social interaction doesn’t endure branding well.
MySpace is a maddeningly closed and clunky environment for networking. I’d hate to be an engineer there. They have the dilemma of so many users who have “modded” their MySpace profiles and content pages using third-party design tricks and embedded objects. If FIM ever wants to significantly upgrade the patchwork functionality of MySpace, it risks breaking all those users’ modifications and angering its user base.
Pretty fragile, if you ask me.
Enjoyed this piece very much, thanks. Content Nation is a nation without corporate borders.
Great article.
Well, Netscape went from having the biggest market share in the browser market to barely a blip on the radar.
MySpace dominates the social networking market, but it is awkward and badly designed. For those reasons, I would have never predicted its current success – but what the hell do I know.
It will be interesting to watch Cyworld.us; although it also looks over-complex and too cutesy for the N.American teen audience.
It feels too me like there’s a ‘unified theory’ of social networking that’s completely eluding us at the moment. Until we find it, I’m going to go see how many ‘friends’ have ‘added’ me.
Fun stuff. Projecting the future value of MySpace is about as easy as picking the fashions that will be popular for back to school in 2009. Actually, it’s probably tougher.
The upside of a site like MySpace is that the content is created by the users, at relatively little cost to the publisher. From this perspective, it looks a lot like the “Holy Grail”.
The downside of such a site is that, if users get disenchanted (for whatever reason, valid or not), the site and its content can collapse like a popped balloon.
When you have a currently-successful site like this, you’ve got to realize this volatility. If you transfer ownership to someone who changes the users’ perspective, the value can disappear overnight.
I’m not sure how these kinds of sites should be valued. If they work (and continue to work), they’re incredibly valuable. But if they don’t, …..
$0
Hi Mark,
I agree with Terry: The peril of relying solely on user-generated content is the fact that users are fickle. That hit home when someone pointed out on an NPR story about Wikipedia that the online encyclopaedia could find itself in dire straits if its legion of volunteer editors left for the next big thing. The play for MySpace could be long, but the bet should be short.
My initial reaction and long-standing opinion about Myspace has always been negative, and perhaps I’m simply another naysayer who “just doesn’t get it”.
But this article about Myspace was an eye-opener for me:
http://www.valleywag.com/tech/myspace/what-news-corp-doesnt-want-you-to-know-about-myspace-condensed-edition-199668.php#more
According to the article, Myspace’s deep email database and solid connections were the reason it was able to get off the ground and reach critical mass.
This seems obvious, and it substantiates something: The Myspace/virus/plague would never have gotten anywhere on it’s own design/technical web-goodness merit.
It all goes back to the age old mantra of “it’s not what you know, but who you know”
hey there in our fannin county library ……. we do not have myspace and all the children that come here most of the time are wanting to get on it….. butttttt …. the state library people blocked it as dating… therefore we have runescape wich has chatting and so on…. could you please help with this situation with us getting myspace back…… you do nto know how much we would appriciate it ………thanks
katie
With all the errors that you get on myspace as well as the spam you get on there social networking site there is bound to be a better site out there. You see lot’s of social networking sites poping up i just see it as a matter of time.