A couple of days ago the NY Times had an article about MySpace’s approach to big profit. The domain name MySpace.com was purchased in 2002 by Chris DeWolfe. The site originally was used to sell a motor skooter. DeWolfe had experience in online marketing such as e-mail blasts and pop-up advertising. MySpace took a different approach.
With the popularity of Friendster, he used the model of friends communicating with each other via social networking. MySpace was co-founded by Tom Anderson, the company’s president. MySpace became very popular and last year was sold to Rupert Murdoch’s News Corporation, which bought MySpace and Intermix for $649 million.
MySpace now has the second most page views per month, second only to Yahoo. So the topic now is how do they make profit? MySpace earns money through sponsorships and advertisements. Text based advertising such as those by Google and Yahoo wasn’t sure they could provide enough advertisements to fill the pages of MySpace. Also it unfocuses its audience and advertisers would not get their full marketing potential by just marketing on MySpace.
MySpace will have to tackle bigger businesses and evolve into a bigger marketing model in order to turn a huge profit. There is a lot of potential, but marketing has to be effective in order for it to work. There is a controversy now between Fox and MySpace where businesses create profiles for a price. Large companies would have friends, but small companies would not. There’s a lot of work that needs to be done, but there?s a great opportunity for MySpace.
