Wasted space: When I see an analysis like this in Advertising Age regarding MySpace and Facebook, it makes me realize why reporters aren’t entrepreneurs, VCs or successful investors — and don’t quite get what’s going on with Facebook or MySpace, either.
First, they still don’t understand what the dot.com bust was all about (a collapse of a run-away speculative public financial market — not a bust in the potential business opportunities the Internet offers). Second, they fail to understand that when sites like Facebook or MySpace reach the scale and niche dominance they’ve achieved, they become a platform (or network) that is more than merely a media channel, but is an entire media ecosystem. MySpace has reached a critical mass among independent (and even “signed”) musicians in several genres. As lame as some people may think it is, when artists couple their MySpace address with their website address when they market themselves, the “network” value has already left the stratosphere. The same is true with the university (and now high school) “market.” Facebook is the platform, not a media channel, for these folks. (For the record, I doubt they’ll replicate such success with the corporate marketplace.)
As for media companies or VCs losing money on investments in social media…So what? As long as these un-profit companies are kept out of the public financial marketplace, the folks who will lose their shirts know their risks — and their potential for return. They know the odds. They know they’re placing bets.
Bottomline: I think “marketers” and “advertisers” and those who write from them should not confuse the financial aspects related to current and potential valuations of such companies when trying to understand the role such social media ecosystems play in the lives of those who live within them. Some will succeed as financial ventures, others will fail miserably. But the “platforms” and “networks” being created today will not go away even when they become the DNA for whatever follows them…and savvy advertisers and marketers and media companies can’t wait around for everything to sort itself out.
One last thing: Despite my conviction that we’re not in a “repeat” of the specific type of boom we saw in the late 1990s (as it relates to public markets), I do find some amusing (alarming?) similarities to what’s taking place today and then. But that is another topic for another day and another post. It’s about the business of what’s taking place: not the phenomenon of what’s taking place.