Date: April 22nd, 2:05PM PST
Location: Mahalo HQ, Santa Monica
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The First Ten Things the New CEO of MySpace Should Do
There has been a lot of speculation on the future of MySpace since today’s news that Chris DeWolfe may step down as CEO.
A few disclaimers: First, I’m personal friends with Chris and think the world of him. He is a visionary, a great leader and a true gentleman. In our business, everyone has their run and his has been one for the ages. If he is stepping down, I wish him the best and I salute him for an amazing run. Second, NewsCorp is an investor in Mahalo and has one of Mahalo’s six board seats. Complicating things even more, the new CEO of digital at NewsCorp is Johnathan Miller, who is also on the Mahalo board and who bought my last company, Weblogs Inc.
Today, I’m not going to speculate on who will be the next CEO of MySpace–or if there is even going to be a new CEO of MySpace.
I know nothing. 🙂
What I would like to do today is talk about the top 10 things the new CEO of MySpace needs to do in order to revitalize the site. That’s a long version of me saying “this is what I would do if I was CEO of MySpace”–something I’m not prepared to say (at this time). 🙂
1. Buy a search engine
Search engines are the greatest advertising platform ever built because they capture a user’s exact intent at that very moment. In order to use a search engine, you must type something into a box and hit search. This means you can cognitively align a person’s intent with an advertiser’s message. Compare that to a social network, where you login and are given a menu of communications choices including responding to messages, finding new friends and connecting with existing ones. Social networks, as far as advertisers are concerned, are closest to chat rooms, instant messaging and email. In other words, advertising in social networks is very challenging when compared to something like buying keywords in a search engine.
What’s the logical strategy? Simple: buy a search engine and dump traffic to it.
At some point, people leave a social network and do a search. So why not capture the 5% of users leaving MySpace for Google by building your own search brand? If it’s got a high-quality results, some percentage of folks will stick around. I’ve been saying for years that MySpace and Facebook will add search engines, and with MySpace’s Google deal ending, now is the time for MySpace to invest heavily in search.
Not sure about this strategy? Check how much of Yahoo, AOL and Microsoft’s traffic comes from email and how much of that traffic winds up on their other services (spoiler: it’s a lot).
One of the most shocking things I learned during my time at AOL was that most of their traffic came from folks using communication tools like AIM and email that had very low advertising value. These users were quickly dumped–ummm… directed–to services with high CPM (i.e. content).
2. Admit Facebook is beating you on the Web and focus on owning mobile
Let’s face the facts: Facebook is a much better platform on the Web. MySpace has a lot of work to do just to match Facebook’s offering. However, Facebook and MySpace both suck on mobile phones. Translation? Mobile SNS (social networking services) is up for grabs in the United States.
On my recent trip to Japan, it became very clear to me that the majority of social network activity was occurring on mobile phones–not desktop PCs. No one has built the ultimate iPhone and BlackBerry social networking tools, although some folks are starting to get there. Geolocation tools, combined with the social graph, are the Holy Grail of social networking.
MySpace should build a mobile team that is incentivized strictly on the number of mobile page views they generate.
3. Double down on global efforts
There is a huge opportunity to build the first truly global social network and Facebook is well on their way to doing so. Never has a name space service (i.e. login system) had a global foot print. Never. The value of a global rolodex of everyone on the planet is incalculable at this point because no one has ever done it. That’s why Facebook’s investors and management team seem so delusional at times: they actually believe they can build this global login system/rolodex/name space.
MySpace has some great international assets as part of Newscorp and they must figure out a way to make owning a MySpace account essential for every person on the planet in the way Facebook has. That means a LOT of focus on mobile.
4. Parallel rebuilding of the MySpace platform
When you’ve got a juggernaut of a business, like MySpace, you can’t do something radical to the platform and technology because, obviously, you could risk a business that is about to break a billion in revenue. As such, MySpace needs to build an entirely new platform with an entirely new tech team in parallel with the “MySpace Classic” team. This is obviously a massive undertaking on a management level because you need to create a path for these two platforms to merge while managing two technology teams serving three different masters: the past, present and future.
One of the main reasons why AOL bought Weblogs, Inc. was because of the Blogsmith platform we created. When I conceived of the idea for Weblogs, Inc., I insisted that we build our own platform because the offerings of folks like Moveable Type at the time were highly unscalable (at the time). Many folks criticized me for insisting that we build out own platform, saying that we were an editorial company and should therefore outsource that function. It was very clear to me from an early point that there were three defensible part of the business: the platform, the brands and the relationships with the bloggers. We focused very hard building a killer platform with strong blogs built by the most dedicated bloggers.
The same lessons face MySpace: they need to realize that their platform is equally as important as their community. In fact, the relationship between the two is symbiotic. For too long, MySpace has rested on their community and not advanced their platform enough. Now’s the time to build a product and platform-driven company, while maintaining the community aspects.
5. Focus on Building a Huge Social and Casual Gaming Business
Mark Pincus is killing it with Zynga. He doesn’t want me to talk about it, but the word is out: he’s making a ton of money and has a huge base of users. You don’t have to be genius to figure out that casual gaming inside of social networks is a huge win. Who did you play the last 10 games with: strangers or your friends? Exactly. Most folks like to play poker, basketball, Scrabble, videos games, etc. with their friends. If you’re not friends before you play the game, you’ll certainly be after you finish.
6. Build a MySpace Virtual Currency
The SNS services in Asia are making most of their money selling songs, avatars and in-game objects. This trend is coming to the United States and MySpace is perfectly positioned to leverage it. MySpace should allow folks to buy MySpace Coins and use them to buy backgrounds, videos, mp3s and video games. MySpace Coins should be integrated into the casual gaming business I’ve discussed above. People should be able to bet these coins in Texas Hold ‘Em Games or Scrabble.
If I was MySpace, I would buy one of the social network gaming companies, or better yet an existing web-based casual game company with titles that haven’t been ported yet. (You would get a much better price, obviously).
Every month you’re active on MySpace should automatically earn you one MySpace coin. Streaming an MP3 to your homepage could be worth one Gold Coin, and buying it for download in MP3 format could be 10 Gold coins. You could buy 10 gold coins for a $1. It might cost five gold coins to signup for Scrabble or buy a Batman background and theme for your page. You get the idea: monetize all the goodies. That’s what places like CyWorld and World of Warcraft do.
Will it work in the United States like it has in Asia? No one knows; that’s why it’s got huge upside.
7. MySpace should launch a full-blown email service with a partner.
MySpace should partner with Microsoft, Google or Yahoo to make a white-labeled version of their software. Everyone should instantly get email@example.com with a great email service. Partner with one of the big services on this and split the ad revenue. Can you imagine how much the bands on myspace would love to have firstname.lastname@example.org? Genius!
Note: This is already well underway, I understand.
8. MySpace’s new CEO should build a team bonus program based on unique visitors and page views
Perhaps MySpace has this already, but when clearing house and resetting compensation–which any new CEO is going to do–the new CEO should take extra care to make all compensation growth-based. I’m sure NewsCorp is very focused on the bottom line, but the truth is, NewsCorp has more than made it’s money back on MySpace. NewsCorp should not be trying to squeeze a profit out of MySpace.
NewsCorp’s goal should be: The March to One Billion Members.*
* That’s what Ted Leonsis of AOL was trying to inspire the team to do when I spent my year there in his group. Zuckerberg is on this mission now and I’m fairly certain the first company to hit one million members will be Facebook. The company that gets to one billion members first is worth $50B. Really, $50B.
9. Meet with top members and run a gazillion focus groups
Seriously, who knows what the top members and rank and file of MySpace are thinking right now? They’re watching their friends use this new Twitter thing and message them on Facebook. They must be wondering if MySpace is going the way of Friendster and AOL and they’re right to think that.
MySpace needs to get fresh products and services to their members every month. There needs to be a sense of urgency and excitement around these announcements, like Steve Case’s letters to members at AOL or that Steve Jobs’ keynotes. The new CEO has to really bond and work with the MySpace membership–whoever they really are!
10. Buy or build a network of high-value content sites
No one knows this, but we almost sold Weblogs Inc. to NewsCorp. They were in the running up until the day we signed the contract with AOL. Truth be told, MySpace would have been a wonderful home for brands like Autoblog, Engadget, Cinematical, TVSquad and Joystiq. When you say “MySpace users,” you’re basically saying “all of America.” Having a content network with high-value content about cars, gadgets, gossip, TV shows and movies is a no-brainer.
Once you’ve established a robust network of niche content sites, your advertising folks can upsell MySpace advertisers on them–or upsell MySpace to the advertisers on the niche sites. Not sure if this would work? I am, because I went on the sales calls to the top 25 advertisers in the world who wanted to buy Enagadget and Autoblog and watched AOL sales folks upsell them on AOL Autos and AOL’s Technology Channel. The niche sites were MORE desirable than the mothership, truth be told–and rightfully so since the niche sites had the mavens.
The MySpace team has a done a wonderful job of creating one of the great brands of the new millennium. However, the MySpace story–and social networking overall–is probably in its second or third inning. There is much more upside in the future of MySpace than there is in its past.
It’s important to note that these are just the ideas that first come to mind and clearly there are many more things that need to happen. This is just a top-level overview from someone who has spent the last 15 years in the Internet business and who’s thought a lot about the challenges and opportunity in front of MySpace.
Feedback (Your Job)
1. Please let me know which one of these ideas is most important.
2. Please let me know which idea has the most upside.
3. Please let me know what amazing ideas I didn’t add to this list.
all the best,
Your Pal Jason
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