Now that you’ve spocked yourself, let’s discuss. Spock got quite the launch today with breathless discussions around how some ~20% of all searches on Google are people searches. And how this kind of tightly focussed search could be huge and take share from Google, and blah, and blah, and blah blah. I grew bored and irritated within minutes. Why? Because I couldn’t figure out how this site was going to make money. Why? Jeremy beat me to the write-up and he’s a much better writer than I am. As (almost) every man, woman, and child in the world knows, Google makes enormous amounts of money off those pretty little text ads that come up with every search.  Most of those are to sell things online. Others are to get you to visit their content site which then makes money from pretty graphical banners or more text links from Google. What kind of search hardly has any ads and likely (hardly) makes any money? people searches!

Which brings me to the point of this rant. I wonder if Spock had (has) a plan to make money. I wonder what they pitched in their initial business plan (slides). Was it showing how much Google made on average per search? Or the total size of the search ad market? Or maybe it wasn’t any of these things. Maybe it was just that they’d figure out how to make money later. I’ve always found that quite puzzling. The whole notion that it doesn’t matter how you make money as long as you’re doing something that people like– you can figure out the money thing later. It reminded me of what I saw the first time around. You know, the free delivery on 50 pound bags of dog food that are being sold below cost anyway. That service definitely made a lot of people happy. (Certainly not their investors in the long-term) .

I might end up being way off-base here. Spock might make a ton of money in the end. Maybe everyone will claim their pages like crazy, it’ll be an amazing database and they can just sell generic advertising based on profile info. Who knows. Clearly the sites bandwith and technical costs aren’t astronomical like YouTube, etc. It’s not my intention to slam Spock. But for a brief moment at 7AM this morning as I was going through my feeds in Google Reader, Spock crystalized the question I often ask about a lot of “Web 2.0″: How in the world will this thing make money?!? Have they even thought about it?

Sidenote: I now feel slightly irritated at myself for writing this post. I went to Spock and read about the founder(s).  One of them, Jay Bhatta, is a fellow Rutgers alumnus.  Maybe if I knew that this morning I wouldn’t have written this stupid post. go knights!

Why MySpace is so over, and why Facebook will only gain momentum.

I’ll submit that there are two fundamental reasons why Facebook is superior (defined as better for today and tomorrow) to MySpace.

The first is simple: Facebook gets that kaizen (continuous improvement) is the new baseline rule of the Internet Economy. It seemed that what American car companies learned from our Japanese friends, MySpace decided to learn the hardway from a 20-something kid who dropped out of Harvard. When I started using MySpace seriously over the past few years it started well enough. It was cool to add my friends to my profile, discover new music, and reminisce about an insane weekend by posting on a friend’s profile. And then the spam started. And never stopped. First it was the ridiculous comments and bulletin posts. Then the ton of webcam XXX girls started asking to be my “friend.” I suspected this had to be a temporary hiccup, right? There’s no way that they’d allow this to continue– especially, since it could be solved so easily using a warning system. But sure enough, MySpace allowed the spam to go on for what seemed like ages. It’s only now months and months later that there’s finally a “Mark as spam” button next to friend’s requests, etc. This would seem like a fairly easy fix– add community policing to weed out the robotic spammers, but it took forever. Insult to injury? Oh yes. While I was forced to sort through spammers on my own, MySpace insisted on loading up as many ads as they could, by making any action on their site load the maximum number of pages possible. While I shouldn’t have had to leave a page for most actions, MySpace found away to make me load 3-4 pages for each action. Sweet. That generated a little brand love. And those non-annoying ads. Wow.

If one problem was just a failure to deliver a frustration free usage experience, the second was a total lack of cool new features. While they may exist, I can’t recall a single new, really cool feature that MySpace ever introduced for me. In fact, other companies came up with cool things like photo widgets you could embed into your profiles, but MySpace worked on blocking these outside services. So the people who were working on making your site stickier and a more interesting experience for users was the exact group that MySpace went after. Nice.

Let’s contrast this with Facebook. I’ve never had any frustrating usage experiences that I can think of. To not completely lapse into tedium, I’ll just quickly list the ways Facebook made my experience better and improved it: mobile version, AJAX to minimize unnecessary page loads, lack of spam, the mini-feed!, a crisp design, and most recently a cool open platform that added a whole bunch of really cool applications. Facebook never stopped improving their users’ experiences. Just like Japanese auto makers not only sought to fix any problems they saw, they relentlessly believed in searching for minor (and major) improvements.

My second reason is a little more complicated:

Facebook tries to be useful. MySpace tries to be entertaining.

Facebook defines its mission as being a social utility. They try to connect you with the people who matter to you, so you can do and learn things that are useful to you. The newsfeed best exemplifies this. While at first incredibly controversial, I now believe most users love this feature. I love coming home at the end of the day, logging in, and reading all the important, random, funny, and usually bizarre things on my mini-feed. Why? Sheer entertainment value aside, I feel like it does actually pull me closer to these people. While I might only talk to some of them a few times a year due to distance or schedules, being able to find out what they did on their weekend, where they’re going on their vacation or if they just changed their status to single, makes me feel a stronger connection to them. Birthdays are displayed front and center, and have resulted in dramatically improving my brand equity scores for the “cares” attribute Reading the “wall-to-wall” posts keeps me in the loop on which old friends have recently seen each other and what kind of trouble they’re getting into.

I also know that this is just the first step. I fully expect in a year or so to use Facebook (or whatever is next if they stumble) to find a friend to vacation with, to see a movie with, to tap into for advice on a big decision. I believe all this data on connections is simply huge, and it’s a certainty that Facebook is working on figuring out how to use this data to improve our (online) lives.

MySpace on the other hand seems to be all about entertainment. I’ve already shared that it has stopped entertaining me and now mostly annoys me, but all the same. MySpace is about changing the look of your profile, blasting the newest song, and endless profile comments. It reeks to me of mindless entertainment. Sorry. I realize the MySpace portion of point two is a lot shorter than the Facebook section, but I’m struggling here.

Random other wrap-up point. MySpace makes more money today than Facebook. No kidding.

If you’ve ever spent more than 5 minutes on the sites, it’s easy to figure out why that is. There’s (ugly) advertising plastered all over MySpace and next to no ads on Facebook. Most of the ads you’ll find on Facebook are the simple flyer ads on the left hand side. They’ve recently made the news for having abysmal click-thru rates. I’m not surprised, but considering that they seem to be basically a throw away, I don’t care. Facebook is clearly determined to figure out the product, then worry about the advertisements. I think they can easily do both, but I get what they’re doing. I believe that Facebook will continue to grow faster than MySpace, and when they decide to focus on advertising, will have no trouble increasing their revenue. Today it’s clearly an afterthought.

What’s really interesting to me is whether or not this move away from page views to time spent triggers a mindset change in advertisers and publishers. I believe that it’s pretty stupid to charge advertisers every time their ad is seen, without regard to how long it was seen for. For those unfamiliar with how it works today, if this site sold advertising, I might charge you $2 for every 1,000 times I showed your ad. Whether I have a site that you spend 20 seconds reading, or a site that you spend 20 minutes a day reading, each time you see a page (and an ad) that’s one impression. Let’s look at how advertising works on TV. Two factors come into play on TV– number of people who see the ad, and how long the ad is (15 or 30 seconds).

I’m officially proposing that add a layer where each impression comes with a time guarantee as well. So you get the number of impressions you bought, but you’re also guaranteed that say the one million impressions are displayed for at least 30 seconds each. That number is arbitrary, after a little research I’m sure an ideal number could be figured out. As there are more and more ajax, flash and video sites, you’ll have people staying on a page for longer and longer periods of time. This potentially works out better on balance for both advertisers and publishers.

This is just a microscopic step in the direction that I think internet advertising is going. But it amazes me that we haven’t really evolved over the past decade. I’m hoping that this move triggers a wave of rethinking of ad models and what advertising looks like for those in the Valley and with advertisers. It’s sorely needed!

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