2006, Brought to You by You
IMAGINE paying $580 million for an ever-expanding heap of personal ads, random photos, private blathering, demo recordings and camcorder video clips. That's what Rupert Murdoch did when his News Corporation bought MySpace in July.
Context & Ripple Effects
News Corporation’s March move into MySpace put a major media owner behind a service built from members’ profiles, posts and uploads. By December, that ownership case was under strain from reports that some teens were already moving on from MySpace and from a QuickTime-based worm that altered profiles and spread through pages.
The $6 billion figure circulating around Rupert Murdoch’s assessment was reported, not confirmed. Against the completed $580 million acquisition, the story captures the gap between a platform’s volume of user material and the difficulty of turning that activity into a durable media asset.
First-order effects
- News Corporation’s MySpace investment becomes dependent on retaining contributors and keeping their profiles safe, rather than on controlling a conventional catalog of finished media.
- MySpace must address a profile-altering worm while asking Apple for a QuickTime update, making platform security part of the service’s immediate credibility with users.
Second-order effects
- A reported multibillion-dollar valuation raises the premium placed on MySpace’s audience and user contributions, even as evidence of teen churn makes that audience less straightforward to value.
- News Corporation has greater incentive to turn MySpace’s member activity into a managed media business, because scale alone does not resolve retention or security risks.
Third-order effects
- If media owners keep buying participatory networks, the strategic asset shifts from professionally produced inventory toward the systems that host, organize and protect user contributions.
- The model concentrates value in platforms that can preserve user participation while imposing enough technical and editorial control to make that participation commercially usable.
The trend: Media companies are treating user-generated networks as core distribution assets, with retention, trust and platform governance determining whether their scale holds value.