IP Democracy: Are Hot Web Sites Like Hit TV Shows?

The Washington Post’s Yuki Noguchi has this article today about how teens may be turning away from MySpace, raising the prospect that hot Internet properties are like fads that fade.

She talked to DC-area teens who have moved on from MySpace to Facebook and other social networking sites.

Such is the social life of teens on the Internet: Powerful but fickle. Within several months’ time, a site can garner tens of millions of users who, just as quickly, might flock to the next place, making it hard for corporate America to make lasting investments in whatever’s hot now.

It’s true that hot youth-oriented sites wax and then wane. Xanga, which was the rage three years ago, generates only eleven minutes of use per user per month today, compared to an hour and 39 minutes per month in October 2002. Friendster, which had a usage per user peak of one hour and 51 minutes in October 2003, generated only seven minutes of usage last month.

This meteroic rise and ultimate dwindling puts me in mind of hit TV shows. At their best, hot TV shows can dominate the cultural consciousness, generating huge (although that’s a relative term given the increasingly fractionalized) audiences and scads of ad revenue. If it weren’t for the artificially (i.e. regulation-induced) complex nature of the TV programming marketplace, with most producer profits earned in the back-end during syndication, a hit TV show that soars and then fizzles (remember “Twin Peaks”) could be a very profitable enterprise. In other words, a TV show that becomes a hit but doesn’t stay a hit could make lots of money.

Moreover, hit TV shows can become the springboard for more money-making ventures, even when they fade (“Cheers” spawned “Frasier”). The trick for any given TV production company is to keep the creativity and business ingenuity going, and not rest on past successes.

The same thing holds true for hot web properties such as MySpace. MySpace is bound to fade—the Internet is a very contestable market, as economists say, and rivals can step in at any time, particularly for something as technically simple as social networking. But there’s little doubt that News Corp. has a chance to make money with MySpace while it’s still popular and the company is doing everything it can to exploit MySpace while it’s still warm.

The trick for News Corp., or Google, which just paid $1.65 billion for YouTube (another site highly vulnerable to competition) or any other entertainment business on the Internet is figuring out where they go from here. They can’t just sit back and expect to rake in the dough, hoping that their hit sites stay hot. They have to move forward and leverage their hits to create the next big thing.

News Corp., with its stable of TV networks, movie studios and print publications, knows this dynamic very well. They know, as Noguchi says, “it’s hard to make an audience stick.” So not to worry — even if MySpace go the way of Xanga or Friendster, if any company can use MySpace to build other robust Internet businesses, its News Corp.

Posted by Cynthia Brumfield on October 29, 2006 9:42 AM to IP Democracy