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Napster Goes Social May 7, 2010

Posted by kewroad in social networks, Uncategorized.
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Despite the news last month that social networking site Bebo was closing its doors and the continued decline of MySpace over the past year, the opportunity around social networking sites is considerable when done right. According to a recent report by Nielsen, the total time spent on social networking sites by users worldwide grew more than 100% over the past year, as Facebook and Twitter posted large gains in unique users.

Napster, the pay-to-use streaming and download web application, which has recently lost market share today to both legal and illegal alternatives, yesterday announced the integration of social media tools to give a new attraction to its online activities. Napster will now allow users to share their music interests with online friends and consume social media content from applications like Facebook, Twitter, YouTube and Flickr.

The runaway success of Facebook is indeed based on the relationship forged between Internet users who declare themselves “friends” but also on the preferences expressed by each user. This strategy of socialising existing services is likely to be adopted by many consumer facing industries in the future and these changes to the Napster service are significant and offer functionality that is likely to resonate with their intended audience.

However, with Facebook continuing to grow and looking at new ways to monetise their user base what’s to stop them doing the reverse and entering the digital content market and blowing services like Napster out of the water, or perhaps even just buying them? The digital opportunity is huge but toppling the current major players requires innovation and differentiation rather than emulation.

AOL slams the door on social networking April 8, 2010

Posted by kewroad in social networks.
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Yesterday AOL announced that it planned to sell or shut down the social networking website Bebo. The news comes a few months after the digital media giant announced that it would cut one-third of its work force in an attempt to save $300m a year.

Despite this, the move to sell Bebo, one of the top 10 social networking websites, seems surprising at a time when social media is on the rise.  However, Bebo’s global unique visitors in February totalled 12.8 million, which was down 45% on February 2009. In comparison, Facebook had 462 million visitors, MySpace nearly 110 million, and Twitter 69.5 million according to figures from ComScore. Clearly the ability to attract advertisers and ultimately revenue is becoming more difficult – one of the core reasons for the purchase at the time in many industry commentators opinions.

At the same time AOL continues to invest heavily in digital content. In March this year it bought the local US news site Patch for $50m as part of its ongoing plans to invest in local news digital content. It also acquired StudioNow Inc. , an online platform for quality video creation and distribution, which is going to be integrated into its content management system Seed.com.  The interesting concept behind Seed.com is that users can upload original photos, music and or written content and get paid a certain percentage of the profits. However, AOL retains the rights to the product which allows the company to exploit successful content across its digital media platforms or to sell distribution rights to broadcast/music/publishing companies.

This can potentially generate high revenues, especially if the company can successfully utilise its business connections with Time Warner. Following on from this, it is not surprising that AOL has decided to refocus its core business strategy on content management and creation and avoid heavy investments in the highly competitive social networking market.  The company is trying to reposition itself as a major digital content provider and it shifts its direction towards niche markets, localised information and user generated content.