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Monday, November 20, 2006

The Universal End of MySpace

If you're a regular reader of this blog, you know that it doesn't take a crystal ball to predict the demise - or at the very least, the steep plummet - of media darlings whose publicity flames out within a short time of their meteoric rise.

It wasn't too long ago - right here, in fact - that I argued the case for insanity with regards to Rupert Murdoch's $800+ million purchase of MySpace.com. As if that digital folly weren't enough, I had a good, long laugh when Google overpaid for YouTube.com by a full $1.6 billion.

The fact that these dopes not only paid, but actually overpaid for these acquisitions proves that P.T. Barnum was only half right: There's actually two suckers born every minute.

Okay, so let's say you disagree with me. Let's say that your drugs are better than mine and that you actually can envision a means by which MySpace and YouTube are truly worth that kind of money. Is there enough in that pipe to tell me, how either are going to generate real revenue once advertisers figure out there's no payout there?

As of this writing, the average internet clickthrough rate is about 1/4%. In case that doesn't display accurately, let me spell it out: one quarter of one percent. Which means that of at least 400 people have to see your ad before one even thinks about clicking on it. Who knows how many of those clickers actually make it to your site, let alone buy once they get there. You want real numbers? Between real humans and spiders, robots and "black PR," you're lucky if one in ten thousand viewers ever get to your site by clicking a banner.

Yet that's the only revenue plan that these so-called "community" sites are able to offer.

Now comes another huge, dark force that both MySpace and YouTube never counted on. A revenue drain so immense that it completely escaped both companies' frame of mind. A force so powerful that anyone with any real marketing or internet experience would have seen it from 200 gigabytes out:

Lawyers.

That's right, the biggest threat to these billion dollar bloat jobs is the good old, analog guy in the three piece suit, whacking them upside the head for really big bucks. This time out (and believe me, there will be more), the shysters are lining up on behalf of Universal Music. Claiming copyright infringement and downright ripping off of protected intellectual property, armies of attorneys are massing on the digital frontier, ready to invade cyberspace -- and they'll be taking no prisoners.

Of course, if Murdoch and Google had just put a little more thought into how Branded Community® really works, the lawyers never would have gotten out of the gate. For that matter, they never would have had to rely on dismal advertising schemes to generate revenue, either.

Did I mention that response rates in a Branded Community® generate between 4% and 6%? Or that they can build double opt-in users with 100% deliverable e-mails at the rate of 1,000 new members per week?

If the big boys truly wanted to build sustainable, revenue-generating, brand-building communities, they would have invested in true Branded Community® for all of their brands, a platform which has quietly been profitable since 1998 - without ever coming close to a lawsuit.

But then, real Branded Community® doesn't make headlines. It makes money. And that seems to be somewhat of a lost art online these days.

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