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The top movies, books, TV shows, music, heroes and general interests on Myspace are… December 10, 2007

Posted by jeremyliew in myspace, performance, social media, social networks, taste.
2 comments

Last month dana boyd and Nicole Ellison were guest editors for the Journal of Computer-Mediated Communication in a special theme issue on social network sites. One of my favorite papers was by Hugo Liu at the MIT Media Lab who investigated how social network profiles act as taste performances.

Liu surveyed over 100,000 random myspace profiles, paying particular attention to the stated lists of interest (music, books, movies, TV shows, heroes and general interests). And the winners are…

Favorite Book: The Da Vinci Code
Favorite Music: Radiohead
Favorite Movie: Fight Club
Favorite TV Show: Family Guy
Favorite Hero: Mom
Favorite Other Interest: Music

See the whole list below, by category (click to read):

Myspace most common interests

Aside from idle curiosity, Liu notes that these interests also constitute “taste statements” for the profile owners:

The materials of social identity have changed. Up through the 19th century in European society, identity was largely determined by a handful of circumstances such as profession, social class, and church membership. With the rise of consumer culture in the late 20th century, possessions and consumptive choices were also brought into the fold of identity. One is what one eats; or rather, one is what one consumes—books, music, movies, and a plenitude of other cultural materials.

New emphasis on taste and cultural consumption frees identity from some of its traditional socioeconomic limitations. The milieu of cultural interests one creates for oneself can even be transformational, because cultural consumption not only “echoes” but also actively “reinforces” who one can be. In the pseudonymous and text-heavy online world, there is even greater room for identity experimentation, as one does not fully exist online until one writes oneself into being through “textual performances”.

One of the newest stages for online textual performance of self is the Social Network Profile (SNP). The virtual materials of this performance are cultural signs—a user’s self-described favorite books, music, movies, television interests, and so forth—composed together into a taste statement that is “performed” through the profile. By utilizing the medium of social network sites for taste performance, users can display their status and distinction to an audience comprised of friends, co-workers, potential love interests, and the Web public. Although social network sites are relatively new, SNP taste performance can be seen as an instance of what sociologist Erving Goffman termed everyday performance. Successful performers are “aware of the impression they foster.” Thus, taste statements need to be crafted so as to stand up to the scrutiny of an audience that is able to “glean unofficially by close observation”.

Essentially, on a social network profile, saying what you like defines who you are, not just to yourself, but to others. Liu’s primary findings were that:

    1. Taste is not random, but rather is guided by aesthetic preferences across interpretable axes. For example, the two dimensions: (i)utopian-vs-dystopian and (ii)sincere-vs-satirical, explain over one quarter of all the variation of taste in books. The two dimensions; (i) sexy-vs.-funny and episodic-vs.-saga structure, explain over one quarter of all the variation of taste in TV. If these axes are indeed opposable, it raises the question; is it possible to be both sexy AND humorous in MySpace?

    2. Many MySpace users craft their interest list with a view towards “looking good” to a particular audience (Liu calls this “prestige”). He found that “coherence” among stated interests was much higher for both those with extremely popular interests, and those with extremely rare interests, than for average users. This suggests that people in both cases are deliberately constructing a clear message that they belonged to either the popular culture, or a particular sub-culture, and self censored other interests that might obscure their message.

    3. Some MySpace users craft their interest list to differentiate themselves from their peers. Users’ interests tended to be more dissimilar from their “Top 8″ friends’ interests than would be expected to happen by chance. While it is possible that users tend to friend those who complementary tastes, it is more likely that they craft their profiles with an awareness of their firends’ profiles so as to be unique.

    4. Musical interests play a dominant role in taste and identity. There was far more variability in music interests than in the other categories. Indeed, it seems as though specificity in music interest is far more valued than genre or any other factor.

While these conclusions may not be surprising, it is helpful to have empirical evidence, rather than simply asserting them to be true, which the typical blogger pundit is wont to do.

Business models for apps and widgets November 16, 2007

Posted by jeremyliew in ad networks, advertising, business models, facebook, myspace, open social, platforms, self espression, social media, social networks, user generated content, widgets.
9 comments

This afternoon I spoke to the Stanford class on Creating Engaging Facebook Apps.

As I said at Web 2.0 expo, building big businesses online is hard work. While it isn’t hard to start an app company, especially as a single developer ($250k in revenue) or even to support a small team ($2.5m in revenue), it gets quite hard to scale revenues to $25m/yr.

Assuming a 5% daily active rate and 3 pageviews per visit, an app developer with a $0.50 RPM would need to get to 926m installs to get to $25m run rate. Compare that to the app with the most installs on Facebook – Slide’s Superwall which has around 20-21m installs. Clearly, broad reach app developers need to develop (i) multiple (ii) high engagement apps [ie higher active rates and pageviews/visit than these assumptions] (iii) across multiple social networks to be able to get close to this revenue target. (RPMs will likely be higher for companies with a direct sales force as well, so the target isn’t quite as high, but you get the point).

Under the same activity and pageview assumptions, an app developer with a $10 RPM would need 46m installs to get to $25m in revenue. Apps with endemic advertising opportunities can easily realize this level of RPM but will still need to be in multiple social networks to get to those levels of installs. It doesn’t make sense to limit your world to being a Facebook app. Social network platforms are avenues for distribution, and app developers should be taking advantage of all of them.

One of Lightspeed‘s portfolio companies, Rockyou, is taking the former approach. Another, Flixster, is taking the latter. Both seem to be working so far.

I also did a similar analysis for digital goods business models in the presentation. Here is a link: Stanford Facebook Class presentation

Social Design Best Practices November 5, 2007

Posted by jeremyliew in business models, facebook, game mechanics, google, myspace, open social, product management, social media, social networks, viral, viral marketing, web 2.0, web design.
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Bokardo notes a set of social design best practices as recommended by the Google OpenSocial team:

1. Engage Quickly – (my interpretation: provide value within 30 seconds)
2. Mimic Look and Feel – (make your widget look like the page it is in)
3. Enable Self Expression – (let people personalize their widgets)
4. Make it Dynamic – (keep showing new stuff)
5. Expose Friend Activity – (show what friends are doing)
6. Browse the Graph – (let people explore their friends and friends of friends)
7. Drive Communication – (provide commenting features)
8. Build Communities – (expose different axes of similarity)
9. Solve Real World Tasks – (leverage people’s social connections to solve real problems)

Worth reading the full text from OpenSocial

Why did Myspace join OpenSocial? November 2, 2007

Posted by jeremyliew in business models, distribution, facebook, myspace, open social, platforms, social media, social networks, startup, strategy.
6 comments

Yesterday was a very good day for app developers with the official launch of Open Social. A particularly good day for Flixster (a Lightspeed company) which was on stage with MySpace, Google, Ning and others for the launch, and was the sample app used in many of the demos.

With so many platforms opening up, resource constraints are the key problem for many app developers. There are plenty of great opportunities, but they don’t have enough people to pursue them all. They are forced to make choices and prioritize.

Open Social helps a lot in that you can “learn once, run anywhere”. While it isn’t “write once, run anywhere”, the resource commitments required to support multiple social networks are much lower. As Andreessen notes:

As an app developer, you have three options:

* You can write purely to the Open Social API. If you do this cleanly enough, your app will run unchanged in any compliant Open Social container. (Google is actually not making this claim — they’re calling Open Social “learn once, write anywhere”, which is not the same as “write once, run anywhere”. But in practice, the API is simple enough that “write once, run anywhere” should work just fine.)

* You can write an app that is specific to one container. For example, there may be some apps that make sense only in LinkedIn — business-related apps, say. There may be other apps that make sense only in Ning — apps that presume that users are creating their own social networks, say. And there may be yet other apps that only make sense in Salesforce.com, which will also be an Open Social container. In those cases, you are targeting your app to one specific container, and so using whatever additional APIs that particular container provides, in addition to the Open Social APIs, is a no-brainer.

* Finally, you can write an app that behaves differently depending on which of several containers it’s running in. Your app just discovers which container it’s running in, and then does whatever it wants on a per-container basis.

No standard can possibly anticipate all of the different use cases and scenarios people will think up. Standards that try to anticipate all of the different use cases fail, because they are too complex and generally impossible to implement. Standards that standardize behavior that is clearly standard, while leaving open the ability to innovate on top, succeed. The history of this kind of thing is quite clear, and Open Social is on the right side.

For smaller social networks, joining Open Social is a no brainer. But MySpace is big enough that app developers would have written for its platform regardless of whether or not it was part of Open Social. So why did they join?

It comes down to the competition for app developer’s time and resources. In the few months since Facebook opened up its platform, Myspace has seen its lead eroded from being 3x as big to just 2x as big. Facebook was winning more users, and more share of user time, because app developers were adding new features to the Facebook experience much faster than Myspace could do on its own.

If Myspace had stayed out of Open Social, there would have been three platforms competing for developer time. By joining, there are now only two, and one (Open Social) provides potential access to far more users than the other. More developer time would be spent on Open Social, and MySpace would benefit more from the improved rate of innovation.

MySpace also knows that it can win more developer mindshare relative to other participants in Open Social if they help the developers make more money. It has a better developed sales force and ad network than many of the other participants, and if it opens up access to that salesforce to app developers, then you’ll see even more developers focusing even more of their time on Myspace (at the expense of Facebook and the other Open Social participants). If they were to go so far as to guarantee a minimum CPM for “canvas pages” on Myspace, then they’d see a surge of developer interest.

This will require a significant mindshift for Myspace which has traditionally not wanted other companies to monetize pageviews within Myspace, let alone helping them monetize. If they make the shift, MySpace will not have given anything up by joining Open Social. Rather, they will have gained something. They will be the place that app developers can make the most money, and hence be their first priority. The increased stickiness and loyalty to Myspace will accrue to Myspace alone.

Google’s OpenSocial benefits smaller social networks October 31, 2007

Posted by jeremyliew in facebook, myspace, platforms, social media, social networks, widgets.
4 comments

Breaking news tonight about Google teaming up with several social networks to create a set of standards for application developers. The NY Times says:

On Thursday, an alliance of companies led by Google plans to begin introducing a common set of standards to allow software developers to write programs for Google’s social network, Orkut, as well as others, including LinkedIn, hi5, Friendster, Plaxo and Ning.

According to Techcrunch:

OpenSocial is a set of three common APIs, defined by Google with input from partners, that allow developers to access core functions and information at social networks:

* Profile Information (user data)
* Friends Information (social graph)
* Activities (things that happen, News Feed type stuff)

Lots of discussion on the web about it.

This is great news for widget and app developers like Flixster and Rockyou (both Lightspeed companies) as the burden of building apps for multiple platforms can quickly get overwhelming for the resources of a small company. It’s also great news for the largely “second tier” social networks (in terms of US users) that are members of the network.

According to Venturebeat, Facebook was invited but declined to join. Not a big surprise.

Open networks like this benefit smaller players. It’s simple math. Lets say you’re a social network with N members. You’re looking to join a coalition of other social networks to create an open standard; in aggregate they have M unique users. Your benefit is proportional to M and your cost is proportional to N. So the cost is greatest when N is large (big social networks will have app developers jumping at the opportunity to develop for their users anyway) and smallest when N is small (as they probably would not get a lot of apps developed for them on a standalone basis otherwise).

This same scenario has played out whenever there have been dominant closed platforms. Windows remain relatively closed (with dominant market share) while Linux embraced openness. AOL tried to stay closed (using its proprietary Rainman programming language) while small web sites embraced the openness of the web. Anil Dash had a good post covering this history earlier

Historically, openness has taken share against (even large) closed networks because M keeps getting bigger and bigger and more developers get encouraged to write for the platform.

Also historically the biggest owners of closed platforms have been slow to embrace openness, if they ever did at all.

The other variable in this case is how friendly each social network is to app developers making money. It isn’t enough to get a lot of users on a platform if you can’t get paid. Rockyou and Slide both shifted their efforts from the larger Myspace to the smaller Facebook when Facebook opened up because they could make money from Facebook but not from Myspace.

We’ll see if past is prologue!

Valuing social media companies and Facebook apps October 9, 2007

Posted by jeremyliew in advertising, facebook, media, myspace, social media, social networks, start-up, startups, VC, Venture Capital.
11 comments

People are asking what a widget is worth, and in particular what a Facebook app is worth. Lance Tokuda, CEO of Rockyou (a Lightspeed company), received a lot of coverage when he told the NY Times that the Superwall app was worth more than $10m.

Despite my previous attempts at building a framework to value a facebook app, I now think it makes little sense to talk in the abstract about what “an app” is worth. It’s better to apply the same principles to think about what a company is worth. A company will have various distribution channels through which it reaches its users; this can include its own website, a Facebook App, a Myspace widget, a distribution deal with AOL, SEM on Google, email virality, and others. Viewed this way, open platforms, and distribution, are opposite sides of the same coin.

In the late 90s, some companies pinned their futures to a single distribution deal with a single portal, and paid up for the privilege. Others, wisely, diversified their dependency on any single channel. A company that defines itself solely as a Facebook app runs the risk of relying on a single distribution channel.

Companies like iLike and Flixster (a Lightspeed company) have built their systems as a single database; their users can access the same data regardless of if they come in from their Facebook app or from their website. As the other social networks open up their platforms, these too will become alternative channels to reach users with the same system. It’s like one kitchen serving multiple restaurants.

On this basis then, we can apply standard mechanisms for valuing a media company, but adding the virality factor that is peculiar to social media:

    Value of a social media company
    = # of users x value of a user

    = # of users x RPM x lifetime “pageviews” generated by user and subsequent invitees

    = # of users x RPM x lifetime “pageviews” generated by user x virality factor

    = # of users x RPM x “pageviews” per user per month / monthly churn rate x virality factor

(Note that I use the term pageviews loosely – these can include canvas views or any area that the company can put an ad.)

So value goes up as RPM goes up. RPM goes up depending on how targeted your traffic is; whether you’ve got endemic advertisers, demographically targeted users or just broad reach.

Similarly, value goes up as PV/user/month goes up. This argues that companies with high ongoing engagement (ie some aspect of ongoing utility) will be more valuable. Higher engagement often comes with access to the social graph through an API.

Value goes down as monthly churn goes up
. One of the factors that reduces churn and increases “stickiness” of a social media site is how much “archive” value is built on top of the site. The more you commit to adding information to an site, the stickier that site will become.

Finally, value goes up as virality goes up. Virality will be different in each distribution channel, so this will need to be evaluated separately, depending on what viral growth modes are open in each social network.

As Myspace, iGoogle/Orkut, Hi5, LinkedIn, Bebo, Tagged and others open up APIs to their platforms, I think the companies that treat each social network as a distribution channel, rather than defining themselves as an application on a single platform, will create the most value.

Is there really an advertising model for social networks? October 8, 2007

Posted by jeremyliew in advertising, business models, facebook, media, myspace, social media, social networks, widgets.
6 comments

One of my consumer internet predictions for 2007 was that social network widgets would find a business model. There are a number of conferences coming up over the next few weeks that will address this, including Graphing Social Patterns, Widget Summit and SNAP Summit. In my opinion, it looks like the business model will be advertising, and that it will be rolled up into the broader category of social network advertising.

Of course, not everyone is as bullish on the advertising business model for social networks. As the NY Times noted:

Andrew Chen, an advertising executive and adviser to the Silicon Valley investment firm Mohr Davidow Ventures, suggests that the Facebook enthusiasm is overblown. Precisely because Facebook is such an appealing and engaging environment, he says, Facebook users click on ads significantly less frequently than elsewhere on the Web. And Facebook members who add applications to their pages can just as easily remove or ignore them.

“It’s really hard to value these things right now except on a very arbitrary basis,” he said. “The ecosystem has to mature significantly before any sort of real revenue or value can be created.”

Andrew is a smart guy, and based on current data, he is right. But as I’ve noted before, new forms of advertising take a while to develop, and until a standard emerges, they do not scale up quickly. Today, Google is 40% of all online advertising. It’s worth remembering that Google was founded in 1998 but didn’t switch to its CPC Adwords model until 2002. Overture was founded even earlier, in 1997. So too, judging the opportunity in social network advertising based on the first 18 months is likely to vastly underestimate the market.

To understand if there is an advertising model for social networks and their widgets, you have to ask two questions:

    1. Is this a mass market medium?
    2. Is there value to an advertiser in having a user willingly affiliate herself* with their brand?

* e.g. Friending Scion in Myspace, or joining an “I love my ipod” group on Facebook, or skinning their personal photo slideshow with a Casino Royale theme on Rockyou.

The answer to these questions is clearly “Yes”. Based on that, I’m confident that we’ll see a large new form of advertising emerge over the next few years. Exactly when that occurs will largely depend on how quickly the big advertisers and the big social networks and widget companies can arrive at a standard for what form this social network advertising will take.

I’ll be moderating a panel on Monday at 2:45pm at the Graphing Social Patterns conference that will explore this question in more detail within the Facebook context: Facebook Ad Networks & Paid Distribution.

Will email be dead in 5 years? September 17, 2007

Posted by jeremyliew in communication, Consumer internet, email, facebook, myspace, social networks, start-up, startups, VC, Venture Capital, virtual worlds.
14 comments

I used to work with John McKinley at AOL where he was CTO and, later, President of Digital Services. I have enormous respect for him. In a recent blog post, he says that email in its current form is under attack and doesn’t have long to live:

We are in the midst of an important moment of truth – email as we know it is under attack, and the major firms are not moving fast enough to prevent it from becoming more of a niche form of communications in the next 5 years. The email experience of today is being threatened on multiple fronts by a variety of new forms of communication:

  • Twitter/short-form blogging
  • Asynchronous messaging in social networks (e.g., the Facebook Wall)
  • IM experiences now supporting queuing of messages to offline buddies
  • Away message/Status message utilization in instant messaging
  • SMS adoption (late to come to the US, but now pervasive)
  • Wikis and other new collaboration platforms
  • Comments (MySpace comments, Blog comments, et al)
  • Casual communication forms (the nudge, the wink)
  • New sharing experiences (Flickr, et al)
  • Email aggregators (e.g., I use Gmail to aggregate all of my AOL, Yahoo, and POP3 accounts. These other companies still bear all the cost of hosting my email accounts, but now get none of the pageviews.)
  • Email and IM integration into social networks (the new entrant risk).
  • People have more compelling, more contextual, more effective, and more convenient options to share and interact than ever before, and incumbent forms of communications will be the losers here.

    John hits on a very interesting broader point. Every few years a new form of communication arises and for some people this becomes their primary form of communication. Over time, earlier forms of communication lose overall share. This has happened to letter writing, telegraphs, talking on the phone, Usenet newsgroups, chat rooms, and message boards in the past. Email has displaced many of these prior forms of communication over the last 15 years, and is now under threat itself.

    I don’t think all of the communication forms John lists above are equally threatening to email. Some are just features, and others have communication as a secondary aspect to another purpose. But it is clear that SMS, IM and social network messaging have supplanted email use among teens. Kids and teens are also some of the earliest and most enthusiastic adopters of casual immersive worlds.

    As John points out:

    The risk is as follows: the major internet incumbents rely tremendously on having a robust base of consumer email account relationships to feed their ad/search businesses. Having that email inbox relationship can yield 2x the monthly page views, when compared with non-email-account consumers.

    The reason is simple – users are more likely to use their primary form of online communication as their homepage. This is why the social networks threaten portals. Being a homepage is an incredibly powerful position because as the first page a user sees, you have an ability to influence what other pages a user sees.

    The portals have long used webmail as the “milk at the back of the store” – a low margin product that keeps users coming back. But to get to the milk you have to walk past the high margin impulse purchase products in a supermarket – the candy and the cookies and the chips. Similarly, to get to your email you have to get past the editorial programming on the portals homepage. A few extra impulse clicks to which shows won at the Emmys or to read about the 700 foreclosure homes being auctioned in one city, and the portal generates some advertising revenue.

    This presents a real opportunity for startups. In the past, innovators that have driven mass adoption of new forms of communication have been bought by big portals well before they needed to show a revenue model, with ICQ and Hotmail being the two best examples. I’d be interested to hear what readers think are today’s most promising candidates for new forms of communication.

    Weird stat on search engine traffic to social networks September 6, 2007

    Posted by jeremyliew in facebook, myspace, Search, social networks.
    8 comments

    Facebook is now making (very) limited public search listings available to people who are not logged in to Facebook on an opt out basis.

    Additionally, they will soon be allowing search engines to crawl these Public Search listings. Presumably the business rationale it to increase traffic from search engines.

    Myspace has allowed search engines to crawl profile pages for some time.

    Oddly enough though, according to Comscore, in July 5% of Facebook’s visits came from Google but only 4% of MySpace’s visits came from Google. It may be that there won’t be much of a lift in traffic from this move after all.

    Facebook for engagement; Myspace for self expression August 28, 2007

    Posted by jeremyliew in business models, engagement, facebook, myspace, self espression, social media, social networks, widgets.
    4 comments

    As Techcrunch, Mashable, Venturebeat and others have noted, Facebook is preannouncing a number of changes to its APIs, including a shift to user engagement as the way it presents apps in the directory:

    This week you’ll see us shift our application directory metrics to a focus on user engagement. This will help inform users as they make decisions on which applications to add as well as shift developer focus to engagement rather than total users. More specifics will be available as we roll out these changes this coming week.

    The focus on engagement is a reflection of how app developers are already behaving today, especially when compared to the widgets being built for MySpace.

    Both Facebook and Myspace disallow advertising in the widget/apps appearing on profile pages. But Facebook allows application developers to control the canvas page and place ads on those pages, while giving access via the APIs to the social map. As a result, there are already quite a number of companies reputed to be doing over 100m “pageviews” (canvas views) per month, including iLike, Flixster, Rockyou, Slide, Texas Holdem, HotOrNot, and others. [disclaimer - Rockyou and Flixster are Lightspeed portfolio companies]. The companies with a lot of installed facebook apps are all already pursuing engagement, even before Facebook’s change in the application directory. It’s in their business interest to do so.

    In comparison, Myspace is still primarily about self expression. Click through rates from widgets on Myspace are dramatically lower than on Facebook apps. And more importantly, when a user clicks through on a Mypsace widget, they stay for less pageviews than a Facebook app. Because the interaction takes place off site (off Myspace’s site) and because there is no access to the social map, the primary activity is for a new user to create their own widget. There is limited ability for a user to interact with an existing widget because there is such a low level of shared data between the widget and Myspace.

    Facebook has only a third the pageviews and UU of Myspace in the US. All else equal, you would expect all of the the top Myspace add-on sites according to Mashable to have over 100m PV/month if Facebook has already been able to generate so many at that scale:

    2006 Top Myspace add-on sites

    But according to Comscore, only half of the these ten sites have more than 100m pageviews/month, and in at least some cases (e.g. Youtube), the primary traffic driver is not MySpace.

    PVs for myspace addons

    Given the striking difference in engagement levels, its not surprising that all the other social networks are considering a platform strategy of their own.

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