Myspace - the next Prodigy?
Over the last year, there's been a tremendous amount of focus on the "Widget economy". Newsweek has even dubbed 2007 as the "Year of the Widget." While the concept of a "widget" might seem trivial to many outside of Silicon Valley, the ability to automatically embed …
Context & Ripple Effects
The widget economy has been building all spring: Newsweek branded 2007 the 'Year of the Widget,' Business Week examined how widget makers split the spoils just days ago in its Sharing the Widget Wealth piece, and Mpire's widget-driven model showed embeddable apps becoming a real distribution channel rather than a novelty.
Against that backdrop, Redeye VC's Prodigy comparison lands at an inflection point for Myspace. The company has been adding destination features — the Myspace News launch in March framed news itself as a social play — while the same-day blog chatter is uniformly about Facebook: Fred Wilson on the Open Facebook, a prediction that Facebook becomes the world's largest social network, and Paul Kedrosky calling Facebook the Microsoft Office of social apps. The open-versus-closed contrast is what makes the Prodigy analogy bite.
First-order effects
- Widget developers choosing where to build now face a fork: Facebook's openness versus Myspace's walled garden, and VentureBeat's coverage of iLike's traction on Facebook shows where third-party music apps are already finding audiences.
- Myspace's own feature additions, like Myspace News, are defensive moves inside the walls — they keep users engaged but do nothing to attract the developer ecosystem that the widget economy rewards.
Second-order effects
- If widget distribution concentrates on whichever platform shares revenue and opens APIs most readily, advertisers and media partners will follow the developers, pressuring Myspace to loosen control of its pages or watch inventory migrate.
- Rival social destinations — including the 'grown-up' social networks Business 2.0 profiled last December — get a window to position themselves as the open alternative while attention fixates on the Facebook-Myspace duel.
Third-order effects
- The Prodigy precedent points to a structural pattern in consumer networks: the incumbent with the largest audience loses when a challenger converts the network into a platform others can build on, making openness, not raw membership, the durable moat.
- If that pattern holds, social networking consolidates around one or two platform winners with long-tail app developers attached, and closed destination sites risk the kind of obsolescence that ended the first generation of online services.
The trend: Social networks are shifting from closed destination sites to open application platforms, and 2007's widget economy is turning developer access — not member counts — into the deciding advantage between Myspace and Facebook.