Facebook challenges MySpace (The Guardian)
Social networking
Facebook challenges MySpace as place for the cool set to hang out
Helping people stay in touch with friends online has become the latest battleground for moguls Richard Wray, communications editorThursday
June 21, 2007The Guardian
"I've added you as a friend on Facebook..." This plaintive introduction to the web's fastest growing social phenomenon has been appearing with growing frequency in email inboxes across the world as what started life as a way for American college friends to stay in touch has become one of the internet's hottest properties.
The rise of Facebook, created by Harvard drop-out Mark Zuckerberg three years ago, is challenging the dominance of MySpace in the social networking market, which may go some way to explain why that site's owner, Rupert Murdoch's News Corp, has considered exchanging it for a 25% stake in online portal and search giant Yahoo!
Yahoo! saw the potential for Facebook when it tried to buy the business last year. After an initial $1bn offer was rejected out of hand by Mr Zuckerberg, Yahoo! said it could raise that to $1.6bn - but he made it plain that he had no desire to bail out just yet. At the time, many internet watchers scoffed at the youthful "frat nerd" for not cashing in his chips, but today analysts reckon the business could be worth several times what Yahoo! initially contemplated.
In the UK alone, Facebook has gone from the 469th most popular website, in May last year, to 18th. Half the visits to the site, according to internet statistics company Hitwise, come from people in the 18-24 year old bracket, but the real growth over the past six months appears to have come from 24-35 year olds. The site seems to have reached what sociologists term a "tipping point", with usage blooming and even the name entering into the vocabulary of everyone from switched-on teens to Radio 4 listeners.
Network effect
The rapid growth in Facebook is due to the decision of Mr Zuckerberg, who created it while at Harvard to help students deal with the sometimes unfriendly atmosphere in Cambridge, Massachusetts, to open the network to all-comers. Before last autumn the site was effectively invitation only, with users needing to have an academic email address. Then in September the company threw open its doors to everyone.
"The growth started slowly in late September, early October last year and has really taken off since then," according to Heather Hopkins, vice president of research at Hitwise UK. "There is a network effect as more people join and get more of their friends to join."
It is adding more than 100,000 users a day and already has 27 million active users, with more than half of those returning daily. MySpace is still considerably larger, with 60 million users in the US alone, but Facebook is catching up. The growth has gathered pace due to the fact that new users are given the option of allowing Facebook to access their email account to look for friends who are already using the service, then email contacts who are not part of the network to invite them inside.
The success of Facebook has not gone unnoticed at News Corp. Asked earlier this month by the Wall Street Journal - which he is looking to buy - why he had not made an offer for another North American newspaper group, Tribune, Mr Murdoch said it was because readership of its newspapers was declining. "That's because everyone's going to MySpace," quipped the reporter. "I wish they were. They're all going to Facebook," the media mogul retorted.
That was taken by some media watchers as evidence of a growing dissatisfaction with MySpace. When Mr Murdoch bought the company in 2005 for $580m (£290m), the deal raised eyebrows among investors. But in August the following year, Mr Murdoch tied up a $900m deal with Google to provide adverts for MySpace. That deal has been a double-edged sword. The MySpace site has become cluttered with advertising. As it has become more commercial, its focus has also switched. According to Hitwise, many people visiting MySpace have been looking at record label or music sites before going onto the network. After leaving, the most popular sites next visited by MySpace users tend to be music sites and online retailers. "People are really using it to discover artists and bands and gigs and discuss fashion," says Ms Hopkins.
Online ad boom
Mr Murdoch's tie-up between MySpace and Google gave him a way into the world of online search advertising, by far the largest part of the booming online ad market. But it was only a foot in the door. There is a feeling among analysts, especially in the US, that News Corp needs to get further into the search market. Which is where a potential deal with Yahoo! becomes attractive.
Problems in rolling out the latest version of its ad platform, Panama, has made Yahoo! vulnerable. It has held tentative discussions with Microsoft and its Facebook dalliance shows an interest in social networking, which is why a swap of MySpace for a 25% stake in Yahoo! was worth a try. Talks between Mr Murdoch and Yahoo!, however, have hit a snag. Earlier this week, Yahoo! chief executive Terry Semel stepped down after intense pressure from investors. His replacement, co-founder Jerry Yang, will want time to get to grips with the problems in the business before re-opening negotiations with anyone.
But the allure of the internet advertising market for Mr Murdoch is not going to go away. PricewaterhouseCoopers will today publish its latest Global Entertainment and Media Market report. It shows that last year, online advertising worldwide grew 37.9% to $31.6bn, accounting for more than 7% of the total advertising market of $407bn. Globally the internet will remain the fastest growing advertising medium, with compound annual growth of 18.3% up to 2011. By that time the online advertising market will be worth $73bn, accounting for 14% of the global advertising market of $531bn. That's still a lot to play for.
Face to face
· Take everyone you've ever known - work colleagues, former schoolfriends, close family members, your boss, your ex-partner - and put them in a single room. Then give them intimate access to every corner of your life, from your trivial thoughts to your most recent holiday snaps and your plans for the weekend. Then sit back and watch the social experiment unfold.
· Financiers have been betting on which social networking site would make the leap to the adult world. Its viral power, elegance of its design and the flexibility and openness of its features have made Facebook the hot favourite to do so.
· Facebook, like most internet successes, taps into innate real life traits - curiosity, sociability and sharing. If MySpace is as messy and chaotic as a teenager's bedroom, Facebook is the frenzied networking of a cocktail party, delivering an unending reel of "news" on the lives of your friends.
· Like most technology, from email to the BlackBerry, Facebook promises to save you time but ends up eating it. It allows you to keep your friends and even your enemies close - but not so close you have to spend time personally interacting with them. You can remain in touch with minimum effort for maximum return. But it's worth considering if you really want your boss to see that photo of you drunk in the gutter.
Facebook challenges MySpace as place for the cool set to hang out
Helping people stay in touch with friends online has become the latest battleground for moguls Richard Wray, communications editorThursday
June 21, 2007The Guardian
"I've added you as a friend on Facebook..." This plaintive introduction to the web's fastest growing social phenomenon has been appearing with growing frequency in email inboxes across the world as what started life as a way for American college friends to stay in touch has become one of the internet's hottest properties.
The rise of Facebook, created by Harvard drop-out Mark Zuckerberg three years ago, is challenging the dominance of MySpace in the social networking market, which may go some way to explain why that site's owner, Rupert Murdoch's News Corp, has considered exchanging it for a 25% stake in online portal and search giant Yahoo!
Yahoo! saw the potential for Facebook when it tried to buy the business last year. After an initial $1bn offer was rejected out of hand by Mr Zuckerberg, Yahoo! said it could raise that to $1.6bn - but he made it plain that he had no desire to bail out just yet. At the time, many internet watchers scoffed at the youthful "frat nerd" for not cashing in his chips, but today analysts reckon the business could be worth several times what Yahoo! initially contemplated.
In the UK alone, Facebook has gone from the 469th most popular website, in May last year, to 18th. Half the visits to the site, according to internet statistics company Hitwise, come from people in the 18-24 year old bracket, but the real growth over the past six months appears to have come from 24-35 year olds. The site seems to have reached what sociologists term a "tipping point", with usage blooming and even the name entering into the vocabulary of everyone from switched-on teens to Radio 4 listeners.
Network effect
The rapid growth in Facebook is due to the decision of Mr Zuckerberg, who created it while at Harvard to help students deal with the sometimes unfriendly atmosphere in Cambridge, Massachusetts, to open the network to all-comers. Before last autumn the site was effectively invitation only, with users needing to have an academic email address. Then in September the company threw open its doors to everyone.
"The growth started slowly in late September, early October last year and has really taken off since then," according to Heather Hopkins, vice president of research at Hitwise UK. "There is a network effect as more people join and get more of their friends to join."
It is adding more than 100,000 users a day and already has 27 million active users, with more than half of those returning daily. MySpace is still considerably larger, with 60 million users in the US alone, but Facebook is catching up. The growth has gathered pace due to the fact that new users are given the option of allowing Facebook to access their email account to look for friends who are already using the service, then email contacts who are not part of the network to invite them inside.
The success of Facebook has not gone unnoticed at News Corp. Asked earlier this month by the Wall Street Journal - which he is looking to buy - why he had not made an offer for another North American newspaper group, Tribune, Mr Murdoch said it was because readership of its newspapers was declining. "That's because everyone's going to MySpace," quipped the reporter. "I wish they were. They're all going to Facebook," the media mogul retorted.
That was taken by some media watchers as evidence of a growing dissatisfaction with MySpace. When Mr Murdoch bought the company in 2005 for $580m (£290m), the deal raised eyebrows among investors. But in August the following year, Mr Murdoch tied up a $900m deal with Google to provide adverts for MySpace. That deal has been a double-edged sword. The MySpace site has become cluttered with advertising. As it has become more commercial, its focus has also switched. According to Hitwise, many people visiting MySpace have been looking at record label or music sites before going onto the network. After leaving, the most popular sites next visited by MySpace users tend to be music sites and online retailers. "People are really using it to discover artists and bands and gigs and discuss fashion," says Ms Hopkins.
Online ad boom
Mr Murdoch's tie-up between MySpace and Google gave him a way into the world of online search advertising, by far the largest part of the booming online ad market. But it was only a foot in the door. There is a feeling among analysts, especially in the US, that News Corp needs to get further into the search market. Which is where a potential deal with Yahoo! becomes attractive.
Problems in rolling out the latest version of its ad platform, Panama, has made Yahoo! vulnerable. It has held tentative discussions with Microsoft and its Facebook dalliance shows an interest in social networking, which is why a swap of MySpace for a 25% stake in Yahoo! was worth a try. Talks between Mr Murdoch and Yahoo!, however, have hit a snag. Earlier this week, Yahoo! chief executive Terry Semel stepped down after intense pressure from investors. His replacement, co-founder Jerry Yang, will want time to get to grips with the problems in the business before re-opening negotiations with anyone.
But the allure of the internet advertising market for Mr Murdoch is not going to go away. PricewaterhouseCoopers will today publish its latest Global Entertainment and Media Market report. It shows that last year, online advertising worldwide grew 37.9% to $31.6bn, accounting for more than 7% of the total advertising market of $407bn. Globally the internet will remain the fastest growing advertising medium, with compound annual growth of 18.3% up to 2011. By that time the online advertising market will be worth $73bn, accounting for 14% of the global advertising market of $531bn. That's still a lot to play for.
Face to face
· Take everyone you've ever known - work colleagues, former schoolfriends, close family members, your boss, your ex-partner - and put them in a single room. Then give them intimate access to every corner of your life, from your trivial thoughts to your most recent holiday snaps and your plans for the weekend. Then sit back and watch the social experiment unfold.
· Financiers have been betting on which social networking site would make the leap to the adult world. Its viral power, elegance of its design and the flexibility and openness of its features have made Facebook the hot favourite to do so.
· Facebook, like most internet successes, taps into innate real life traits - curiosity, sociability and sharing. If MySpace is as messy and chaotic as a teenager's bedroom, Facebook is the frenzied networking of a cocktail party, delivering an unending reel of "news" on the lives of your friends.
· Like most technology, from email to the BlackBerry, Facebook promises to save you time but ends up eating it. It allows you to keep your friends and even your enemies close - but not so close you have to spend time personally interacting with them. You can remain in touch with minimum effort for maximum return. But it's worth considering if you really want your boss to see that photo of you drunk in the gutter.
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