MySpace Heads Downhill, Whilst S&S Seek A Tweens Social Solution

Remember a social networking site called My Space? It transformed Lily Allen from a bedroom performer into a star and the Arctic Monkeys from an obscure Sheffield band into headliners. It once had the market share of social networks and was the place to socialise, but today it is shrinking, looks like yesterday’s news and is no longer the hip and the place to be seen.

MySpace have already tried to refocus the service on music, but perhaps music alone and a ‘music destination’ is just not enough.

Analysts ComScore claim that MySpace lost more than 10 million unique users worldwide between January and February this year, reducing the number of users from 73 million down to 63 million. Worse still is the year on year drop which equates to some 50 million. Some may say these figures are very respectable and they would be if the trend was in the ascent but in the decline they could so begin to freefall.

MySpace has already announced plans to cut some 500 of its workforce and Rupert Murdoch's News Corp 2005 purchase is starting to turn into a dog and some would now value it at around just 15% of the £330 it cost.

Facebook and YouTube have established themselves as the social hotspots today with many now falling by the wayside. MySpace even faces further competition from streaming services and blurring of media MySpace looks destined to become either very niche or quickly forgotten part of News International.

Meanwhile there are plenty of social wanabees and last week Simon & Schuster Children's Publishing has launched an online interactive book club for tweens on Everloop, a recently launched social media platform for tweens. Simon & Schuster had launched the club to connect tweens with favourite books and authors and will begin with "Dork Diaries: Tales from a Not-So-Fabulous Life," by Rachel Renee Russell and "SPHDZ Book (hash)1!," by Jon Scieszka. Book club members will be able to engage in online discussions with authors.

Connecting young readers and authors is hard as sites like Facebook are very conscious of the dangers of social networking and bans a reported 20,000 children a day from using the service. So along comes Everloop to fill the gap between the ages of 8 and 13 and ties every child to an adult but just because the adults like it doesn’t mean its hip to the kids and it still has to police this ultra sensitive market? Once a child is no longer a tween then by its own rules it moves on and probably to Facebook. If Everloop succeeded it could be huge, if it fails it goes the way of Bebo, AOL and others who have been down this path.

The problem for publishers is that they are struggling to build up a network and build a service. When the figures don’t meet expectation they then have to determine whether its down to them, or the service.

The Daily: Exclusive iPad News

Imagine a digital newspaper created specifically for the tablet world and published by News Corp and Apple. No print version, no online just a newspaper delivered direct to your tablet for that Apple preferred price point of 99 cents a week.

Rupert Murdoch, is determined to find the digital solution to newsprint that pays. Murdoch's Times recently claimed 100,000 paying customers for its web edition and the Wall Street Journal claims over 2 million readers, but will he now create a new competitor that will effectively compete with these? The US media claims that ‘The Daily’ will be launched at the end of this month and has been under development in the New York News Corp’s office on their 26th floor and has some 100 journalists onboard today.

The difference is that the Daily is solely focused to be a tablet paper and specifically today an iPad one. Murdoch is aligning with Steve Jobs and is gambling that people will be prepared to pay for what is openly free elsewhere online and that a tablet paper beats a newspaper app designed for the iPad and his own alternative newspapers. With no print and no online the paper is targeted at that Apple price point of 99 cents a week and the will obviously include Apple’s share and any taxes! Finally, the biggest gamble is that they can create a new brand.

The move is brave but with Apple backing could generate the adoption by many iPad fans seeking to be different and read the ‘Apple Daily.’

Meanwhile taking a more traditional route The Economist has launched its iPhone and iPad apps. It will be available every Thursday with all articles being cached for offline reading and also includes an audio edition.Existing print subscribers will get the new rendition free with the digital only edition being charged at $110 a year in the US. Dome content will be free and single issues can be purchased within the new app.

Newspapers and Paywalls

We wrote only this week about the poor figure The Times had since their paywall went up and now sister papers, the Sun and The News of The World, appear to be moving towards implementing their own paywall policy in October. Some would say why not and better to get the cash in the door than give it away free. Others would point to the poor figures from the Times paywall and ask, is it wise.com?

The material in the Sun and The News of The World isn’t highbrow or necessarily intellectually stimulating and therefore it could be said that advertising would be a better route to get revenues. However, if readership numbers online tumble, the adveristing will surely follow in the same direction.

Some believe that the video and celeb trash stories will still generate readership and after all the Sun and The News of The World have lived on the back of this for ever.

It appears the Murdoch is determined to erect his paywall.

Meanwhile the New York Times still is to implement its promised paywall but it apparently testing a paywall on the Telegram & Gazette in Worcester, MA. The paper hides certain local content behind the paywall and gives the rest away. The theory obviously is that local content is valuable. Interesting thought in today's internet world.

News Corp Buys Skiff

News Corporation continues on its somewhat unclear digital strategy and the company has announced the acquisition of the digital Skiff platform from Hearst. Skiff delivers digital newspaper and magazine content to tablets and e-readers, with the capability to deliver high-resolution graphics, rich typography and dynamic updates. News Corp has also taken a stake in Journalism Online which is designed to help online press establish pricing and payment structures and set up the “metered mode” to enable a certain amount of content to be given away free.

So what is Skiff? When Hearst first showed it off it was certainly a big format eInk reader but with the emergence of the iPad and the queue of ‘wantabes’ its hardly a smart reader anymore. Like the Plastic Logic reader it simply took too long to get off the launch pad and by the time it got close it was in danger of looking tired and old. A black and white TV, in a HDTV Technicolour world.

It’s unclear whether News Corp. will develop Skiff as a mere platform or continue to develop it as a device. However it is clear that they are serious about making content pay.

News Corp has struggled with its digital strategy, most notably their acquisition of MySpace and their ability to tie together the disparate parts of their digital empire. The other aspect that is interesting is News Corps ability to go in what appears the opposite direction to the market and their competitors.

News Corp Cuts Cloth as Friedman Moves On

News Corp. has had to act in the face of disastrous results and the press is now awash with stories of their various initiatives’. These include; forming a consortium that would charge for news distributed online and on portable devices, a potential move from ‘fortress Wapping, the sale of their free London paper and a pay reduction for Rupert.

Chief Digital Officer Jonathan Miller is believed to have met with news publishers including New York Times, Washington Post, Hearst Corp. and Tribune. Ever since William Dean Singleton, chairman of the AP and chief executive of MediaNews Group Inc., spoke in April against the "misappropriation" of news on the Internet, the momentum to look at charging has been growing. Robert Thomson, Wall Street Journal has gone as far as to call the news aggregators who believe in free content, "parasites or tech tapeworms in the intestines of the Internet."

Although newspapers have built an online readership, the revenue hasn't followed and Internet ads are still not significant. However, erecting pay walls may prove counter productive and just fuel infringement. Instead News Corp. is proposing a single online registration for readers to use across all news sites and to track the stories each person reads. They believe this accumulated demographic would appeal to advertisers but a consortium of newspaper publishers also risks raising issues of antitrust.

Murdoch needs to move fast to stem the flow of a red balance sheet and wishes the new charging model to be extended to tabloids such as the Sun and the News of the World where they believe they can capitalise on the perceived popularity of celebrity stories, scoops and what some may regard as high reader interest and low quality content.

News Corp are also looking to move from ‘fortress’ Wapping in the East end of London which grew to fame through often violent picketing in 1986. It has apparently agreed to occupy about 180,000 sq ft of the Thomas More office scheme, which is big enough to accommodate the majority of its Wapping workforce. This would free up the Wapping site for residential development but even with the Olympics in 2012 the timing in the current climate may prove a bit premature.

Mr. Murdoch’s son James has announced that they plan to close the 3 year old London Paper, which posted a $21 million pre tax loss for the year. The London Paper handed out over 500,000 copies a day, compared with 400,000 for the free London Lite, which is owned by Associated Newspapers. Mind you giving away papers is easy so the numbers are irrelevant really.

Cuts at News Corp. have included large-scale job losses at the social networking website MySpace. In response the 78-year-old Rupert Murdoch's pay has apparently dropped 28% down from $27.5m, to $19.9m (£12.1m) . Although Murdoch's base salary of $8.1m remained unchanged, his performance-related bonus slumped from $17.5m to $5.4m. He did received a $6m in pension contributions and share awards and his son James Murdoch, who oversees News Corp's operations in Europe and Asia and chairs BSkyB television, saw his total remuneration drop from $10.9m to $9.2m.

Finally. Just as if the news wasn’t bad enough, OpenRoad Integrated Media, a new New York based eBooks marketing and publishing start-up, has raised $3 million in funding. What is interesting is that the company was founded only this year by Jane Friedman, former CEO of HarperCollins Publishers Worldwide. She left Murdoch last year and with Chris Lederer, former CMO at HarperCollins aims to go beyond books into “integrated media”. So even Rupert’s ex employees are now striking out to make it on their own.

So where is HarperCollins going and is it a long term News Corp asset or a liability in these changing times?

News Corp Delivers Bad News

You may own MySpace, the Times, The Sun the News of the World, the Wall Street Journal, the Australian, Twentith Century Fox and HarperColins but you are not immune to bad hair days. Rupert Murdoch's global media empire, News Corporation, delivered a thumping great $3.4bn (£2bn) net loss for the 12 months to June.

What went wrong? Was it just down to newspapers and advertising revenues? Why did operating profit drop by a staggering 32% to $3.6bn. Cable TV couldn’t counter a slump in income from films, newspapers, books, magazines and online.

In the final quarter of the year, News Corp made a $203m loss, compared to a $1.1bn profit for the same period in 2008.

MySpace, has clearly been outshone by Facebook and could slip to the degree that the likes of Friends Reunited did and shedding 400 staff could be seen as merely treating the symptoms not the underlying cause. The UK newspapers, had a 14% drop in year-end advertising revenue whilst profits in it’s global newspapers business fell from $786m to $466m. Even the bright news that Twentieth Century Fox film studio recorded annual profits of $848m, that was a drop from from the previous year's $1.24bn.

The bad news goes on. The question is what is the remedy? Is it just experiencing a bad day or does it has serious problems and is the balance of media interests now imbalanced? The one thing that is certain is that it can’t reverse bad news across such a wide diversity of interests quickly and that would suggest that some may have to be sacrificed for the larger game.

Digital Views From News Corp's CDO

Jonathan Miller, News Corp.'s new chief digital officer, is reported in Daily Finance.com saying that he envisions a future where at least some of the TV shows and movies on Hulu, the premium video site co-owned by News Corp. (NWS), NBC Universal and Disney (DIS), are available only to subscribers.

Miller is in charge of coordinating News Corp.'s efforts to find new ways to get consumers to pay for digital content generated by News Corp.'s properties , which not only includes Fox but The Wall Street Journal, HarpeCollins and much more. He also said that newspapers will have to do to convince readers to pay for articles that they're used to getting free on the web.

He has expressed the novel idea of bundles not only of content but also against locations such that you could have a Washington bundle, a New York bundle and offer these at a single price.

Interestingly prior to joining he flipped his Wall Street Journal subscription to a cheaper one from Amazon. He now sees the other side of the table where the Post loose him asa subscriber and Amazon gain him as Amazon subscriber. Not good for the Wall Street Journal won loss both the customer management and the money.

Are News Corp to Have Their Own Colour Reader?

Rupert Murdoch is widely reported saying that News Corp is investing in a mobile digital device for reading newspapers on a larger screen than the typical ebook reader device.

News Corp is apparently investing in a potential Kindle rival which would not only have a larger screen but importantly, four-color capable display. This means they are either pre announcing something that isn’t here today or on the horizon, a colour ink device, or they are following the lead taken by Fujitsu which however has a full colour not four colour display.

So is it investor city talk or does it have substance. If News Corp were to back a new reader could it hold its own against what is getting a crowded space. Is he looking to back colour so he can exploit all his family of assets; TV, video, news and books through one device? Time will tell but when Murdoch wants some would say Murdoch gets.

A gauntlet if ever there was one, but he didn’t stop there.

In reference to the newspaper business model problems Murdoch is reported in the Wall Street Journal saying that ‘People are used to reading everything on the net for free, and that's going to have to change." He also questioned whether the newspaper industry should continue to allow online news aggregators, such as Google Inc., to aggregate newspaper content without being compensated for it.

MySpaceMusic Team a Formidable One

We have seen the music industry turn itself upside down and inside out since Napster first undermined their business model. Now we have the latest twist as MySpace prepares to launch MySpaceMusic, a joint venture with the unlikely grouping of News Corp., Warner Sony BMG and Universal Music Group. They have opted for the increasingly popular advertising model plus selling digital downloads of music through a partnership with Amazon.com. An interesting group, that of the major record producers, only misses EMI. However, the smell of money has attracted the likes of Sony Pictures, McDonalds, State Farm and Toyota will be among the first sponsors of the site.

The Music companies hope that the service will weaken Apple’s market dominance and although it would appear everyone is backing it they are also backing everything else!

So what will be different? It will not be the only service to have a significant catalogue of millions of songs. It won’t be the only service to enable users to create their own playlists. Perhaps it is the only one which enables users to post one of those playlists, with 10 songs, to their public MySpace profiles, where their friends can listen and save those songs to their own pages. But is that enough? To transfer music to another computer or a mobile device users have to buy songs on the site through Amazon’s digital music store. Mobile ring tones will have to be bought News Coproration’s Jamster. So is it enough and why not go direct Amazon or Jamster?

Where it may gain traction is in the fact that it is estimated that around five million artists use MySpace to interact with fans. MySpace Music will enable them to post their entire catalogues and share in the resulting advertising and download revenue. MySpace is reported as saying that it may allow artists to sell merchandise and concert tickets from their pages and keep a share in the profit.

My Space, My Music, My Book?

Could MySpace with its captive audience extend to capture the music download market?

The online social networking site owned by News Corp, is reported in sources including Wall Street Journal, Financial Times and CNET.com as being in talks with the major music companies to launch an ad – paid free music service.

This could effectively open up the free music to a huge market, obviously generate significant ad revenues and blur still further social sites and media. It would certainly capture the attention of the widest audience and turn MySpace into an even greater phenomenon. It would also act as a launch pad to catapult News Corp potentially into many new acquisitions.


We read last month that HarperCollins plans to team up with its sister company MySpace, to build and launch a new "create and share" space, http://www.myspace.com/harperteen where kids on the site can write prose and share it with friends on MySpace. Given the ownership of HarperCollins and their digital drive, will we next hear about My Space giving ebooks away on an advertising paid model?