Friday, April 13, 2007

MySpace Widgets: part II

To see the previous posts that lead up to this check Blocking photobucket: not as stupid as you think as well as the oiginal post MySpace's Doom by my friend Ravi Mishra that launched us into this discussion.
I would like to clarify my position on the MySpace economy and contrast the difference between throwing the gates wide open to 3rd parties and having a controlled and healthy environment for 3rd party widgets.
First, I fully support other companies making money from "MySpace add-on widget plays" yet i also think that in Photobuckets case MySpace made the right move in blocking them. I think that Photobucket took the easy way out and refused to innovate, instead they attempted to cut into MySpace's rightful revenue without providing any extra or new benefits then the status quo. Since, VCEL's current business model is based on providing a service to MySpace and other Social Networking site users and supporting it via advertisement, i clearly have a vested interest in MySpace having an open and healthy environment for 3rd party services. The difference is that VCEL's approach is distinctly different from Photobuckets. A side by side illustration of the two different approaches to driving Ad based revenue from MySpace users will illustrate the difference between a healthy 3rd party service that is complementary and a parasitic play (photobucket) that is not in the hosts (myspace) interest.

VCEL's approach:
VCEL provides mobile widget applications that enables mobile access to MySpace, for example a j2me mail app that lets you read/write MySpace private messages directly on your phone. This enables a superior user experience with MySpace for mobile users thus increasing MySpaces reach. It also keeps the quality of the content high since messages sent from a mobile are alot more likely to be real communication versus spam. Which drives more Brand Loyalty to the MySpace brand not to mention the constant teen addiction of checking your messages as often as possible.
Ad supported revenue:
VCEL serves ads into the loading screens, the 8-12 second delay while the app fetches content from MySpace. The ads are minimally invasive because they are displayed during loading screens which are normally a "dead" space that users dont enjoy. Since VCEL drives more myspace users to use the service on mobile devices myspace benefits from VCEL. Our role for myspace is analogous to the role of IE, Mozilla,Safari and MySpace. MySpace cant live on the pc without IE, mozilla, safari etc similarly VCEL provides a mobile "browseresqe" type of software that enables users to use myspace on the go. It just so happens that VCEL's approach to improving mobile browsing experiences is ad supported.

Photobucket's approach:
Photobucket provides a free hosting service for media content as well as some tools for embedding that content into multiple social networks ( with MySpace clearly leading the pack by a mile). Users host photos and video clips on photobucket and then display the albums on their myspace page.

Ad supported revenue:
Embedding an ad directly into a player that is smack in the middle of a MySpace profile on the PC , is competing with MySpaces existing advertisements. It is cutting into their pie. Photobucket does not provide anything new that cant be easily found elsewhere to myspace or its users yet aims to directly compete and thus take a slice of MySpaces own ad revenue.

The difference is that whereas VCEL is capturing more users for MySpace on the mobile or converting its established users to also use the service on the go, photobucket is not expanding myspace use very much with this new approach. Embedding video clips is a service that many other sites provide without embedding an ad into the clip. So in the case of VCEL myspace stands to expand its mobile reach and keep the quality of content high. With photobucket they gain nothing new and have their own ad revenue negatively impacted by photobucket. So keeping the gates closed to blatant attempts to get at a slice of MySpaces ad revenue makes sense to me, however not blocking services that actually expand the use of myspace and extend its reach service is clearly the right choice for them in the long run.

If you disagree with my position or think that im missing something, i would love to get your input. Cheers.

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