As you know, I recently opened a myspace account and I love it. I have made connections with friends that I haven’t seen and talked to in years. While I was visiting in the hospital yesterday an article in USA Today caught my attentions and I want to comment on it.
As you already know, Facebook, MySpace and other social-networking sites have been the rage of the tech industry for more than a year. These companies are valued in the billions of dollars and are considered blueprints for how to build a website.
The question is, How are they going to consistently produce profits to match their soaring valuations?
Online ads
It is estimated that $50 billion will be spent this year through online ads. Big-name advertisers are drooling over millions of young, affluent consumers who are spending more time on their online profiles than in front of TV and movie screens. They are particularly smitten with the prospect of tailoring ads to people’s specific interests.
DID YOU READ THAT RIGHT? Young people are spending more time online than they are in movie theaters or watching TV. Wow!
That would never been believed just 5 years ago.
Facebook is said to be the crown jewel of the field, it is valued at $15 billion but barely turns a profit. Facebook has 70 million active members.
Estimates say there will be as many as 250,000 sites that call themselves social networks within a year, compared with about 850 today.
MySpace and Facebook are working on ways to make their sites work together or share information. “We’re taking those walls down,” says Amit Kapur, MySpace’s COO.
MySpace made a $900 million, three-year deal with Google in 2006, MySpace has been profitable. And it has given News Corp. a nice turn on its $650 million acquisition in 2005; Richard Greenfield, an analyst at Pali Capital, expects MySpace to haul in $700 million to $800 million in revenue in fiscal 2008, mostly in advertising.
MySpace last month forged partnerships with major record labels Sony BMG Music Entertainment, Warner Music Group and Vivendi’s Universal Music Group to offer its 117 million members tickets, ring tones and artist merchandise.
ZenithOptimedia estimates online ad spending worldwide will soar 26.5% this year, to $47.7 billion.
BEWARE OF THE ADVERTIZERS!
Ronnie
check it out www.myspace.com/ronniegcollins