Social media must prove profitability

By April 23, 2009 3 Comments

As you may have seen Chris DeWolfe is stepping down as CEO of MySpace, following the exit earlier this year of COO Amit Kapur and two other senior execs.

Om Malik sees this as the beginning of the end for MySpace as a broad based social network as the site has lost its buzz to Facebook and is posting flat revenues.  He also cites the fact that NewsCorp tried last year to sell MySpace to Yahoo as a sign that Murdoch has lost faith in the site’s ability to make good money, particularly when the Google search deal runs out in Q4 FY10.

He does however believe that there is a profitable future available for MySpace Music, although they still have a few things they need to get right.

By this analysis MySpace is a passing fad which is giving way to Facebook.  And now of course, Facebook is losing it’s buzz to Twitter.  All this without any meaningful profits being generated.

One of the criticisms frequently levelled at social media is that it is all just passing fad, lacking both durability and business model.  And therefore not worth very much.

I’ve been saying for a while now that the next big social media exit will likely go to a business that is generating significant profits.  Twitter may well prove me wrong, but with this sort of analysis in circulation I think the chances of me being right are increasing.