Friday, August 21, 2009

Why MySpace will Spank Facebook on Media

A couple of months ago I spoke on a panel at Digital Media East along with the Ali Partovi, the CEO of iLike. We were asked what we would do if we were Owen van Natta, the CEO of MySpace. There was a broad consensus amongst the panelists that MySpace should focus on its music/media core competence.

Ali suggested that MySpace buy Twitter. I suggested that MySpace buy iLike! Which drew a laugh from the audience, but this is definitely the right move for MySpace, and not for the reasons covered in the press.

MySpace Knows What You Like

On MySpace, people have friended musicians and other entertainment properties. Those media profiles in turn reference each other as influences. They essentially have a linked social graph of what people like to listen to and watch, how they have friended each other, and also how those entertainment properties relate to one another as influences.

With iLike This Can Now be Monetized

This is incredibly, incredibly, incredibly valuable! People that like to listen to some random band also for whatever statistical reason are also inclined to like a new TV show or drink Coca Cola. Or whatever. There is a ton of research in this area for ad targeting. And with acquisition of iLike, MySpace can now pump these existing musical preferences through iLike's system and have the most extensive media recommendation engine.

So when an entertainment company wants to launch a new band, TV show, or movie, they can plug into this MySpace recommendation system and be able to easily reach the people that are likely to purchase the new content. With the special bonus that these people can also be reached on their Facebook profiles in addition to MySpace.

And it Will Look Better than Facebook

An individual's Facebook profile is much more accessible and pleasant than a MySpace profile. But for a media property, a live, fun MySpace profile is far more suitable than a Facebook Fan Page with its dull, frozen FBML/FBJS interface.

MySpace all of a sudden is one hot property! Congratulations to Owen van Natta - definitely linked recommendations was going to be the next step at, so he had a key insight on how to leverage MySpace's hidden asset.

Saturday, August 15, 2009

Commercial Open Source Redux

A big congratulations to SpringSrouce, a commercial open source company with an estimated $20M in annual revenue after years of effort sold for 20x trailing revenue. Pundits such as Matt Asay point to this as another success, after pointing out that in the Commercial Open Source Failure piece I wrote for BusinessWeek that I also missed the XenSource and Zimbra exits, two companies with <$10M in revenue that also sold for >20x trailing revenue.

I am in full agreement that these companies all had great technology in interesting spaces, but lets be clear that these are technology acquisitions, not business acquisitions like MySQL and JBoss. I do not think that Citrix and Yahoo! are patting themselves on the back about their acquisitions of XenSource and Zimbra. At least VMWare using SpringSource as an accelerator into cloud computing makes a lot of sense.

As the New York Times pointed out last week, the trend here is that enterprise IT spending has fallen into the gutter and is not going to climb back out. And even with the open source marketing message, commercial open source companies are selling proprietary software with direct sales, marketing at tradeshows, and supporting it with support staff into a market whose growth is almost on par with the rate of inflation.

These companies are fundamentally no different than the enterprise software companies that preceded them, which is the main point I am making and the point that no one in all of these "rebuttals" wants to address. Yes, a few will be successful as businesses, and for the rest there will be technology acquisitions, some exorbitant. But in the end the enterprise software market as we knew it is history and is morphing into cloud computing.