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MySpace debates if it should allow commerce
MySpace bans commerce between its members because it doesn't want to jeopardise the corporate advertising that accounts for the vast majority of its profit.
- Los Angeles Times-Washington Post
- Published: 00:15 September 1, 2007
Christine "Forbidden" Dolce, Tila Tequila and Bobbi Billard each have accumulated more than a million admirers on MySpace.com, making them among the handful of most popular people on the networking website.
That may have something to do with the amount of skin they show on their pages. More obscured than their bawdy photo galleries, however, are their attempts to cash in on their online fame by using MySpace as a storefront to sell perfume, poker and soft-core porn.
The cyber pin-ups can't come right out and peddle their wares because MySpace bans most commerce. But any suitor would have little trouble finding additional online pathways to the three hotties by following "hints" they drop on their MySpace pages.
And these detours are the subject of intense debate today at MySpace, Rupert Murdoch's prized internet property.
MySpace bans commerce between its members because it doesn't want to jeopardise the corporate advertising that accounts for the vast majority of its profit. Allowing its members to promote their wares would only clutter up the place.
"We don't want users' pages to start looking like Nascar," MySpace chief executive Chris DeWolfe said.
But behind the scenes, the issue is being hotly discussed as DeWolfe and his team of executives at the biggest property within News Corp's Fox Interactive Media grapple with the imperative of squeezing more money out of MySpace.
MySpace doesn't want to encourage the likes of Dolce, Billard and Tequila. But its ban on commerce is difficult to enforce. If the policing efforts fail, shouldn't it at least try to make money from the online sales it makes possible for others by taking some sort of a cut?
Murdoch, who paid $580 million for MySpace's parent company in 2005, said this month that he wanted to drive up Fox Interactive profit by a factor of 20.
Fox Interactive brought in $10 million in profit on sales of $550 million in the fiscal year ended June 30, but Murdoch said he would be surprised if that didn't jump to at least $200 million on sales of $1 billion in the year just begun.
Pressure
While Murdoch is applying pressure from above, Facebook.com is rising up from below. Since the rival networking site dropped restrictions preventing anyone other than students from becoming a member, its registered-user rolls have soared far faster than those of MySpace.
Facebook has fewer restrictions on advertising and sales, forcing MySpace to re-examine its own practices. But MySpace can't afford a persmissive policy for commerce if it comes at the expense of corporate advertising.
"We would be foolish not to focus the majority of our time, from a revenue standpoint, on optimising our ad products," DeWolfe said, pointing out that as the "highest-trafficked site on the net" in terms of page views, MySpace is well positioned to tap into an online advertising market that is projected to soar to $40 billion in 2011.
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