There's no question that the social networking site MySpace has grown into a monster (see BusinessWeek.com, 11/15/05, "Users Crowd Into MySpace"). It had 17 million unique monthly visitors when News Corp. (NWS) acquired it last year. Now the site, where people communicate via home pages laden with messages, photos, blogs, music, and more, has 54 million unique monthly users, according to researcher comScore Media Metrix.
"NEXT-GENERATION PORTAL." Now, MySpace is beginning to create its own ecosystem of third-party companies that are developing features and applications for the giant digital community, according to a new report from analyst Richard Greenfield of Pali Research. He says the idea is to encourage other companies to use their creativity and expertise to come up with things for MySpace users that MySpace itself hasn't. That could be anything from letting people add to their MySpace home pages from a mobile phone or creating a slide show of their favorite MySpace photos.
The move is an important milestone for MySpace. Only the largest and most vibrant of tech communities are capable of creating that sort of network effect. Classic examples of tech companies that have created such ecosystems include Microsoft's (MSFT), with its Windows operating system, and Apple Computer (AAPL), with its iPod digital-music franchise (see BW Online, 7/19/06, "iPod Accessories Gone Wild"). Software developers have created thousands of applications on top of Windows over the years, and the iPod has generated a sizable industry of companies that create accessories for the music player and a dizzying variety of podcasts.
MySpace is encouraging the development of its nascent ecosystem. "MySpace has always seen itself as a next-generation portal. There are enormous opportunities to develop in and around MySpace. We focus on leveraging the expertise and resources from within the Fox Interactive Media network and with third-party partners alike to expand and enrich the community even further," said a spokesman for Fox Interactive Media, the News Corp. division that includes MySpace.
MULTIPLIER EFFECT? The effort by MySpace could help it continue its torrid growth. "The MySpace ecosystem could help the site grow even faster than it otherwise would, increasing the usefulness and awareness of the site at no cost to News Corp.," Greenfield says.
One early example of an outside company that's developing special features for MySpace is the wireless upstart Helio, which is owned by Internet service provider Earthlink (ELNK) and Korean wireless broadband pioneer SK Telecom (SKM). Helio allows users to access MySpace from the mobile Helio phone with the touch of a button. Helio has exclusive rights to mobile distribution of MySpace for an undisclosed period of time.
For now, its subscribers are the only mobile phone users with the ability to exchange MySpace messages of unlimited length while they are on the go. They can use their phones to snap pictures or video and wirelessly post them to Web pages. "We understand the power of social networking, and MySpace is clearly the leader in the field," Helio spokesman Rick Heineman said.
LEVERAGING ITS AUDIENCE. The MySpace ecosystem includes several tools that extend the range of communications tools at hand. Slide, which can be found at www.slide.com, allows users to turn content at MySpace and other sites such as eBay (EBAY), into slide shows. And a free piece of software available from MyWhatSpace (www.mywhatspace.com) lets MySpace members send messages to multiple MySpace friends at the same time. It also allows users to create subgroups of MySpace friends, and send all of the members of the subgroup a message. Neither company was available for comment.
The MySpace ecosystem remains in the early stages. It's certainly nowhere near as large as the iPod's, let alone the massive one around Windows. But it's an encouraging sign for a business that has lots of users but relatively little revenue. As MySpace helps other companies create revenue for themselves, its ability to attract and retain members should be strengthened, boosting its power among advertisers.
Rosenbush is a senior writer for BusinessWeek Online, based in New York
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