Chernin on MySpace: Growing Slower Than Expected

I was wrong - News Corp.’s Peter Chernin talked at length about MySpace and Fox Interactive Media on today’s quarterly earnings call. As expected, FIM revenue for fiscal 2008 (ending June 30) will be down about 10% from the original $1 billion projection. Revenue for the third fiscal quarter was $210 million, up 55% from a year ago but down 10% from the second fiscal quarter. For FIM to reach the new $900 million target, it needs to earn $270 million in the current quarter.

Key challenges to monetization, according to Chernin: huge quantity of ad inventory; the fact that ad models that marketers are used to (read: banners, search) don’t work as well in social media; and the difficulty of quantifying the economic value of a “friend” vs. other metrics from the TV and radio space that marketers are used to looking at.

Chernin acknowledged that growth is coming slower than expected at FIM. While he and other News Corp. execs did not explicitly say how much of FIM revenue is attributable to MySpace, in the past they have put it at about 80%, which works out to about $720 million in MySpace revenue in the current fiscal year.

Uh-Oh for Facebook Developers

23,857 Facebook applications later, the elephant in the room is making itself heard.

According to an analysis by Jesse Farmer, creator of the Adonomics application-stat-tracker, “the excitement over the Facebook Platform and its promise have waned. Application companies are branching out to other social networks not because they necessarily show more promise than Facebook, but because the future of the Facebook Platform has become murky.”

In a lengthy blog post, Farmer lays out the reasons for his viewpoint. First, activity in the Facebook developer forums has fallen off. Second, application activity has dropped off.

While he concentrates most of his argument on the forum activity, where developers post questions and talk business, it’s the application activity that marketers need to pay attention to. In one chart, he shows that between October 2007 and May 2008, the percentage of applications with at least 100 daily active users vs.  the total number of Facebook applications has dropped from around 27% to around 18%.

That speaks to the signal-to-noise ratio of Facebook but also to the challenge of promoting and virally spreading an app. Facebook has clamped down on developers that take advantage of friend networks, which is good, but it’s clear from this analysis that the viral infrastructure is also starting to crumble.

Whether this is a Facebook-only phenomenon or if it will spread to MySpace and other social networks is worth watching very, very closely.

MySpace Revenues - What Will News Corp. Say Today?

This afternoon News Corp. reports quarterly revenues and many people expect Rupert, Peter et al to comment on the state of things at Fox Interactive Media and MySpace. Not too long ago, the Wall Street Journal reported that FIM would fall $100 million short of the $1 billion revenue goal for fiscal 2008 that Rupert Murdoch had set last June. Since then the media has been all over the idea the social networking is failing to monetize as quickly as everyone had hoped.

In recent earnings calls NWS has been a lot more open about the finances at FIM. However, I have a sneaking suspicion that this call won’t answer many questions. NWS has one more quarter until the end of the fiscal year and I’m not sure how much they will offer in terms of guidance. A lot about FIM and MySpace is in flux, what with the ad sales reorganization and the launch of the new ad tech unit under Adam Bain. Plus, NWS has plenty else to talk about in other aspects of its business.

We’ll see in a couple of hours.

BBC Clips Facebook for Lax App Security

The BBC posts the results of an investigation into the security of personal information on Facebook. It created an application designed to mine user data and made up a fake profile. Then, it used the application to gain access to the personal information of “Bob Smith,” including his name, hometown, interests and school.

That applications can do this shouldn’t be surprising, since nearly every application requires you to allow it to access your profile in order for you to install it. Still, the reminder of this fact is unsettling.

For its part, Facebook defends its practices, saying in an online Q&A: “Access by applications to Facebook user data is strictly regulated and if we find that an application is in violation of our terms and policies, we take appropriate action to bring it into compliance or remove it entirely.” It also repeated the idea that users have the ability to report a rogue application.

The problem is that the way someone might become aware of their private information being misused is by it being, in fact, misused. What Facebook needs to do (and I’ve said this before) is to prevent personal data from being misused in the first place.