Wednesday, April 19, 2006

Murdock and MySpace

WHEN RUPERT MURDOCK'S News Corporation purchased for nearly $600 million last year, many in the media world were surprised that Murdock would spend so much for what amounted to little more than a place for high school teenagers to hang out on the web. But since News Corp. bought the site last July, the number of visitors to the site has jumped from 16 million to nearly 30 million, positioning Murdock's firm among the giants of the internet. Another brilliant move by Murdock? Maybe.

The Economist recently had a piece on Murdock's recent investment and the mag says the Myspace move may not turn out as rosy as some may think. The reason: Myspace has some inherent problems, not the least of which is that it has become a haven for sexual predators. (It doesn't help that a significant number of users -- many in their mid-teens -- use the site to post photos of themselves in less-than-complete attire). As a result, parent groups and school administrators around the country are beginning to take a closer look at the site. Several school districts have restricted access to the site as have some public libraries. Parents are petitioning local legislators to have the site more carefully monitored. One of the key objections to the site is that you can register as a 'fake' person -- claiming you are a 16-yr old high school student, when in reality you are a 56-yr old pervert. This is a significant problem.

But a more important problem for Murdock involves advertisers. In recent weeks, several high-stakes advertisers have begun taking their ads off the site, fearing consumer backlash. That could be devastating for Murdock since ad dollars are the key to turning this investment into profit. For it's part, News Corp. has just hired a 'czar' to monitor content on the site -- a move clearly designed to ease advertisers' fears.

At it's root, Myspace is a site for people to keep in touch. 75% of Myspace users are under the age of 18 (yet I know so many people in their 30s who use the site -- why?), and most are using it in a way that is hardly objectionable. For my money, I don't understand the fascination with communicating with friends and strangers via the internet (did I just say that when I run a blog? I'll argue that this is a different kind of communication and hope you buy it). I'd rather go to a coffee shop and talk to my friends in person, but that's just me. However, I do have a fascination with the financial implications of internet business so I'll be watching to see what Murdock does to make his $600 million investment pay off.


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