iLike launched as a standalone service in 2006, initially focusing on a combination of a web service and an iTunes sidebar. In early 2007, it debuted as one of the first music apps on Facebook, and soon attracted millions of new users per month. What made iLike so successful? The service not only offered free streaming, but also tracked users’ listening habits and served up social recommendations. The service also attracted bands and labels, who used it to create buzz for new releases.

At one point, it had 10 million monthly active users on Facebook alone, generating some 1.5 billion page views. The company got $17 million in funding, including a $13 million investment by Ticketmaster, and briefly seemed like the next big thing in online music.

However, iLike struggled not only with licenses for its music, but also with its reliance on Facebook as a platform as well as its overall business model: Turns out, serving up free, ad-supported music is really, really hard, and concert ticket referral fees never really made a big difference either. iLike eventually sold to Myspace for a reported $20 million in 2009, and has since been living alongside the more popular Myspace Music service, slowly withering to obscurity.

Of course, iLike isn’t alone with this fate: Imeem, which offered a very similar service, was also absorbed and eventually shuttered by Myspace. Napster’s assets were sold to Rhapsody last fall, and the service eventually shut down in December. And Apple shuttered Lala’s streaming service after it bought the company in late 2009 to power its cloud platform.

All of this should be a warning to music services like Rdio and MOG, which currently are trying to grow their user base with free music. Insiders have long predicted that even Spotify, arguably the biggest of this new crop of streaming services, can’t be profitable with the licenses offered by the labels. And if there’s any lesson to be learned from iLike, it’s that a large user base alone isn’t enough to succeed.

Image courtesy of Flickr user Hitchster.

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• Connected world: the consumer technology revolution
• Defining the next era of social music
• Forecast: the future of the digital music industry

Uberpaper founder Dmitry Shapiro

“In a world full of algorithms, we can get a skewed sense of the world when it comes to news,” Shapiro, the tech executive known for founding Veoh and most recently for serving as the CTO of MySpace Music, said in a phone conversation Thursday. “News is an extremely important part of how we experience the world around us. If news has been overly processed by personalization algorithms that essentially pander to us, we can start to believe that the world is a certain way, when it really isn’t that way at all.”

News that’s purposefully impersonal

That problem is exactly what Shapiro’s latest project Uberpaper was built to combat. Uberpaper, which launched to the public this week, pulls all the news from Yahoo News’ API and presents it in a way that manages to be both clean and image-rich: Imagine Flipboard meets Pinterest, but all in a liquid user interface design that works in any web browser. The only social elements to the site come in the form of a simple “Thumbs Up” or “Thumbs Down” button that users are meant to use to show how well-reported or relevant a story was, as well as the ability to comment.

Users can choose to view Uberpaper in 10 different languages, and sort the news according to topics such as World, US, Business, Technology, Sports, Politics, and so on — just like an old fashioned newspaper. In fact, the experience of finding out what’s happening in the world by reading a traditional physical paper is a big thing Uberpaper is trying to replicate. Shapiro put it this way:

“With technology, I think we threw the baby out with bathwater when it came to newspapers. Online news sites today show their content very much like search does — it’s kind of database-y, and formatted in a very linear way. We wanted to bring back the aesthetic of a newspaper, and the serendipity that comes with scanning the news that way.”

Uberpaper screenshot (click to enlarge)

Keeping social in its place

However, Shapiro is quick to point out that he is personally a big fan of social media sites, telling me, “I love Facebook and Twitter, and I’m on those sites all day long. They’re wonderful places to share news, and I don’t think Uberpaper is competitive in any way to them.” Rather, he says, Uberpaper is meant to be a place where people can find fresh news to ultimately go back and share with their friends on Facebook and Twitter — to bring something new to the table, rather than re-sharing stuff that’s already been discovered.

For now, Uberpaper only pulls in news through Yahoo News’ API, which was chosen because it has a very broad base of news sources and topics. More news sources will be folded into Uberpaper in the future, but the expansion process will be very well-considered, Shapiro said. “We’re going to be really cautious as we add additionally sources. We very much want to make sure that we’re not slanting the news in partisan ways, or toward any kind of topic, really — it should be broad and generic.”

Uberpaper was built by the same team led by Shapiro that built Anybeat, the social network that encourages people to use pseudonyms that launched this past autumn. Anybeat, which has $1 million in funding, is still in operation, but right now it and Uberpaper are being run as separate products. Uberpaper doesn’t make any revenue right now, but down the line advertising could be brought in to run alongside the news.

A long shot that’s worth taking

In all, I think Uberpaper is great: Simple, straightforward, and clean, while perpetually brimming with new content. It’s certainly coming out in a tough space — many people already feel like they have more than enough sources of news — but I could see Uberpaper becoming a much-frequented bookmark for news junkies. And in my opinion, any service that’s aiming to put an end to the echo chamber is fighting the good fight.

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• NewNet 2012: companies and technologies set to disrupt
• Connected world: the consumer technology revolution
• Players and Strategies for Real-Time In-Stream Advertising

News Corp. founder Rupert Murdoch caused a stir over the weekend with some comments he made on Twitter after the Obama administration criticized the SOPA anti-piracy bill, in which the octogenarian billionaire accused Google of being the “piracy leader” and “stealing” content from movie companies and others. Whether he was trolling the social network or not, these comments reinforce the sense that Murdoch doesn’t understand how content works in a digital era — one in which, as venture capitalist Fred Wilson noted in an unrelated blog post, trying to impose scarcity is a sign of an increasingly broken business model. That fundamental misunderstanding has cost News Corp. a lot, and will likely continue to do so.

In one of his first comments, Murdoch criticized President Obama for siding with “Silicon Valley paymasters” who threaten software (and presumably content) creators with “plain thievery.” Then he attacked Google for being what he called the “piracy leader online,” and for streaming movies for free while selling advertisements around them — something that appeared to be a reference to copyright violations on YouTube. Finally, the News Corp. chairman said he had searched Google for links to the movie Mission Impossible and found several sites offering free links.

Sure misunderstand many things, but not plain stealing. Incidentally google blocks many other undesirable things.—
Rupert Murdoch (@rupertmurdoch) January 15, 2012

It’s more than a little ironic that Murdoch made these comments just a day or so after admitting that his company screwed up royally with Myspace, the social-networking leader it paid more than half a billion dollars for in 2005 — only to be forced to sell it last year for just $35 million after mismanaging it into oblivion. In a message that seemed to be a response to his many critics on Twitter, he admitted that the simple answer to the entity’s massive failure was that News Corp. had “screwed up in every way possible,” but the company had “learned lots of valuable [and] expensive lessons.”

Failing to learn the lessons of digital content

Were any of those lessons about how content works now, in an age of digital abundance and the “democratization of distribution,” as Om has called it? Murdoch isn’t saying, but his repeated attempts to lock up content in as many ways as possible don’t bode well. In addition to exporting his paywall model from the Wall Street Journal to British papers like the Times of London — where readership immediately plummeted by as much as 90 percent — News Corp. has also launched expensive projects like the iPad newspaper The Daily, which took the bizarre step of posting articles to its website as images with no links.

Perhaps the News Corp. founder doesn’t mind blowing hundreds of millions of dollars on (arguably) failed experiments like that — or like the news portal/aggregator code-named Project Alesia he spent a year trying to build and then shut down. But as author and journalism professor Jeff Jarvis describes in a post about Murdoch, he would be better off trying to understand the digital content market a little, instead of trying to recreate the scarcity entities like the Wall Street Journal have had in the past.

Financier and digital veteran Fred Wilson of Union Square Ventures has written a couple of posts that sum up this problem quite well. In the first one, which he wrote earlier this month, Wilson complained he was forced to find a pirated version of the New York Knicks game online because he couldn’t find any way of actually paying a rights-holder to watch the game in a more legitimate way — despite paying hundreds of dollars a month to his cable company, and subscribing to the pay-per-view NBA service, and routinely buying tickets to Knicks games. As Wilson put it in his post:

I’ve long believed that piracy is largely a business model problem not a human behavior problem. If you give people a legal way to consume the content they want, they will pay for it. But when you make it impossible to legally consume the content they want, they will pirate it.

Make it easy — and reasonably priced — and people will pay

In a post on Sunday, the New York-based venture capitalist described another episode in which he and his family tried to find something to watch through their cable company’s “movies on demand” feature, as well as through Netflix, Amazon’s video service and some other methods. Unable to find anything worth paying for, Wilson said they wound up watching a free TV show — and reiterated his point that the kind of artificial scarcity the media and entertainment industries rely on is broken:

I am sure there was a time when scarcity was a good business model for the film industry… I understand their muscle memory in terms of the scarcity business model. But restricting access to content is a bad business model in the age of a global network that costs practically nothing to distribute on.

This is the simplest possible rebuttal to Rupert Murdoch’s claims about Google and the web, and how it engages in what he sees as rampant piracy. While there will always be people who prefer to find ways of accessing content without having to pay for it, the simple fact is that many more people who do so are like Fred Wilson, and would be more than happy to pay for that content if someone made it easy to do so, and charged a reasonable price. The recent experiment by comedian Louis CK was a great example — it proved that millions of people will pay for something even if it is available for free.

Can Fox and the Wall Street Journal and other mainstream media outlets operate the same way, and simply hope that people will pay them for their content if given the chance? Perhaps not, but one thing is for sure: If even well-off venture capitalists are admitting they pirate content because they can’t find any way to pay for the things they want to watch, Murdoch and his scarcity-mongers are in deep trouble — and railing against Google is going to get them exactly nowhere.

Post and thumbnail photos courtesy of Flickr users World Economic Forum and Paul Sapiano

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• Connected world: the consumer technology revolution
• Finding the Value in Social Media Data
• Content Farms: The Players, The Benefits, The Risks

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• Connected world: the consumer technology revolution
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Unless you’ve been living under a rock for the past few days, you know that Google on Tuesday rolled out its biggest effort yet to crack the social-networking market. Google+ is an ambitious collection of social features and tools, all bundled into something the company is taking great care not to describe as a Facebook competitor. Whether Google wants to admit it or not, however, that’s exactly what Google+ is — and the biggest hurdle for the web giant is that a collection of cool features doesn’t make a network. People do.

In a nutshell, Google+ (which the company says is just the beginning of a gradual rollout of other related social elements across the network) is focused around the “stream,” which is a very Facebook-like collection of posts, comments, photos and other content from your social “circles,” as Google calls them. There’s also a separate news-based stream called Sparks, and a video-chat feature called Hangout (which Om says should have Skype worried more than Facebook), but the circles and your interaction with them is the core of the experience.

The silo problem

As Marco Arment of Instapaper notes in a blog post, this is where the big problem (or challenge) lies for Google: At the moment, the only people in its social network are those who already use a lot of Google services, and only those with a Google profile can really participate fully. As far as I can tell, there’s no easy way to pull contacts in from Twitter, and there certainly isn’t any easy way to connect to Facebook — which isn’t surprising given the history between Google and the Zuckerberg empire. As a result, your Google+ life feels a little like you’re living in a silo.

This is a point I tried to make in a previous post about Google and its social efforts: If you can’t extend your online activity to a broad selection of your actual social graph, it won’t be useful enough to keep you coming back and will ultimately fail (FriendFeed, a service I liked very much, was heading down this road until it was bought by Facebook).

If you’re a social network, you live or die based on the network effects you either create or take advantage of. It’s nice to have cool features, but features — broadly speaking — aren’t what make people keep using a social service (yes, we’re looking at you, Ping). To use a retail analogy, features and user interface can get people in the front door, but they can’t turn them into die-hard customers. What really makes them keep coming back are the people they can connect with, share with, comment to, and otherwise interact with.

Good design is nice, but not enough

That’s not to say Google+ isn’t good-looking, because it is. In fact, the user interface is extremely well done, as others have noted, and is substantially better than many other Google services, which usually go for what could charitably be called the “utilitarian” look. For Google+, the company apparently turned to former Apple designer Andy Herzfeld, and it shows. But the truth is most people don’t give a damn about good design, or at least not enough to choose a specific network based on looks (although Myspace  is arguably an example of how bad design can drive users away).

Google+ also does a lot of things right when it comes to the structure of the network. One of those is the whole idea of “circles,” or specific groups that you can add people too (the defaults are Family, Friends, Acquaintances, and Following but you can also add your own). If there’s a killer feature in Google+, it’s probably this: the idea that users don’t want to necessarily share everything with all the people in their network, but want to share specific things with certain groups. Facebook has lists, but they are cumbersome to set up and use, while Google makes creating “circles” incredibly easy.

Circles are great, but who’s in them?

Ironically, this idea of having different groups in which users can share different content originally came from Paul Adams, a former Google designer who published a highly regarded Slideshare presentation about the concept last year, describing it as the missing element of most social networks (i.e., Facebook). It’s ironic because Adams is now working at Facebook (he said in comment on Twitter that seeing Google+ being used in public was “like bumping into an ex-girlfriend”).

Unfortunately for Google, adding people to circles is still kind of kludgy, because if they don’t already have a profile on Google then you can only add them as an email contact, which hardly seems that appealing. Google may have millions of users, but that doesn’t help if I don’t know that many of them — I checked when I got Google+ and I only know a handful of friends who have a profile.

The bottom line is that Facebook has the one killer feature of a social network: namely, almost all of my friends and family are using it. That’s a mountain for Google to climb, and it could mean that Google+ becomes like a grown-up version of FriendFeed: a niche network for techie types. Of course, Myspace — which used to be the world’s leading social network with a value of $580 million and was just sold for $35 million — is a great example of how even network effects can turn against you if your business model is flawed. So even Facebook probably shouldn’t get too complacent.

XKCD cartoon used by permission

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• Mobilize 09 Wrap-up
• Players and Strategies for Real-Time In-Stream Advertising

Tumblr, the combination blogging platform and social network, has been growing rapidly of late — so rapidly that it is now racking up about 8.4 billion pageviews a month, according to a blog post from president John Maloney. One of the big drivers for this growth appears to be teenagers, who are using the site as a kind of combination of Facebook and Twitter, to share photos and other Internet “memes.” But will Tumblr ever figure out how to make money from this massive user base? Other social networks have grown just as large and still failed.

Hitting the 8 billion pageviews mark would be a milestone for any Internet company, since that puts Tumblr in the top 25 websites in the world, according to Quantcast. By comparison, the popular classified site Craigslist gets more than 20 billion pageviews a month. And Tumblr’s growth continues to accelerate: according to founder and CEO David Karp, the network posted more than 400 million pageviews in a single day last week, which amounts to about 5,000 every second. If that kind of pace continues, it would put the company at around 12 billion pageviews a month.

Of course, pageviews alone are not a great benchmark for websites, since they can be inflated in any number of ways. When it comes to actual visits by unique individuals (as measured by Quantcast’s tracking), Tumblr is seeing about 355 million a month. By comparison, Facebook gets almost that many every day.

In other words, Tumblr isn’t going to overtake Facebook any time soon. But the pace of its expansion is still incredible: the site has grown by more than 50 percent in the last couple of months alone, and its traffic is now double what it was just six months ago — and that’s despite a massive outage six months ago that had some wondering whether the network would be able to recover. The outage doesn’t seem to have even caused a blip in usage.

Tumblr President Maloney says that one of the big drivers behind the network’s rise is teenagers, and that can be seen in the Quantcast data as well. About 16 percent of the site’s users in the U.S. are between 13 and 17 years old, and more than half are between 13 and 34 years of age. My own anecdotal experience confirms this: for my two daughters, both of whom are in that key 13-to-17 age group, Tumblr has almost overtaken Facebook in terms of the role it plays in their online lives. My 17-year-old spends hours sharing photos and Internet memes with her friends, and “Tumbling” has become a verb in our house.

As I’ve written before, Tumblr seems to have found a sweet spot between traditional blogging platforms like WordPress (please see the disclosure below) and social networks or “micro-blogging” platforms like Facebook and Twitter. While it’s relatively easy to set up a WordPress blog, creating and using a Tumblr blog makes that process seem complex by comparison. But even more important than that is the Twitter-style “following” that the site allows, and the fact that content can be “reblogged” on your own site with a single click — both of which can drive content on the network to “viral” levels in the blink of an eye.

This is why so many media outlets have begun experimenting with Tumblr blogs, including the New York Times (and GigaOM, which has started a blog we use to share interesting items we come across during the day). Newspapers like the National Post have seen incredible traffic from a single post that got reblogged and commented on thousands of times, and media advisor Steve Rubel recently nuked his WordPress blogs and moved everything to Tumblr to take advantage of the real-time nature of the platform.

All of this growth is wonderful for Tumblr, which was started by David Karp four years ago, when he was just 20 years old — but the big unanswered question is whether the network can actually bring in revenue to match that growth. Everyone wants to be the next Facebook, which many early observers doubted would ever find a way to make money and now brings in revenues estimated at $2 billion. But MySpace also grew to massive levels, with more than 76 million users at its peak, and was bought by News Corp. for $580 million, only to rapidly decline after it failed to figure out how to make money.

So far, Tumblr has experimented with selling custom themes and other features, but it hasn’t shown any signs of being able to turn on the revenue tap in the way Facebook has — in fact, not that long ago David Karp was saying he had no interest in putting ads on the network. With $40 million in funding, he may have the luxury of not having to worry about funding for awhile, but Tumblr will have to answer that question at some point or risk becoming the next former red-hot growth story.

Disclosure: Automattic, the maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

Post and thumbnail photos courtesy of Flickr user Gabrie Coletti

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• Players and Strategies for Real-Time In-Stream Advertising
• Finding the Value in Social Media Data
• A 2011 Connected Consumer Forecast

Is 2011 the year of online music? It sure seems that way. From the introduction of iCloud and cloud music offerings from Amazon  and Google  to Spotify’s rapid growth in Europe to this week’s public offering by Pandora , digital music has never seemed more interesting.

Or more social. As Om wrote in his post earlier in the week, hot new social music site Turntable.fm is proving to be highly addictive for many lucky enough to get a beta invite, and it is a sign that a more immersive, more alive web has arrived.

There’s no doubt that music is the most social of all media online. Even before the Internet, music has always been as much about who you listen with as what you listen to. P2P sites like Napster hinted that online music had a social side, but it wasn’t until just a few years later, when Myspace  became the center of the online music universe, that the first era of social music had arrived (see the table below for the three “eras” of social music).

In the span of a few short years, it became necessary for almost any music artist — big or small — to have a Myspace page, and users loved to express themselves by uploading MP3s and creating playlists.

Over time Myspace declined, but the social playlist arrived. While Myspace was limited to one social network, sites like Last.fm — and later iLike and Rdio — enabled users to create playlists and share them with their friends through integration with popular social networks like Facebook and Twitter, taking social music outward.

Social playlists proved extremely popular, and they continue to form one of the foundations of success for companies like Spotify. But as Turntable.fm has shown, a new era of social music may be upon us, one that’s less about scaling wide (as is the case with social playlists) but more about going deep.

The third era of social music is about immersion, as sites like Turntable.fm and Outloud.fm make online music seem more like off-line social music sharing (remember that?) by adding more immediacy and intimacy to the experience.

But it’s not just about immersive social curation (which defines Turntable.fm). It’s also about more-immersive social creation. Users of social music creation and collaboration sites like SoundCloud  — which allow immediate feedback from your community down to the details in an individual track — are growing very fast, proving that the act of making music can be just as social as consuming it.

As a new era of social music arrives, it’s a fair question to ask whether these sites are too immersive as compared to more-lightweight, more-passive experiences like Pandora or Spotify. For some, they are, and they may require too much of an investment of time and interest to ever see the same wide popularity of basic social playlist and streaming sites.

But for those looking for deeper interaction around music online, don’t worry. You may become less productive in this new era, but your time has arrived.

For more analysis on the new era of social music, see my weekly update at GigaOM Pro (subscription required).

Image courtesy of Flickr user Denim Dave

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• Defining the next era of social music

But not all effects are equal, and assessing the valuations and competitive positions of social media companies depends on knowing which network effects are actually at work and how those could play out.

First, let’s look at a few of the different network effects currently in social media:

• Core network effect utility: There’s a difference between economies of scale and the magic of adding connections to a network. Groupon is building a user base, a sales force and relationships with thousands of merchants, but until it uses its sales data to offer personalization, targeting and other marketing programs to merchants, it won’t achieve much beyond scale. Even then, once critical mass is achieved, additional connections don’t add as much value.
• Viral growth: LinkedIn and Facebook initially grew their networks the old-fashioned way: Users invited other users to join. Viral pass-along is a key growth driver for social commerce and games, but now services and apps can hitch a rideon existing social networks, leveling what was once a steep playing field.
• Business model that reinforces the effects: While there are minimal network effects for its search users, there are huge ones for its advertising network. Google’s $25 billion in extremely profitable search advertising depends on attracting advertisers to its dominant search audience and insuring a liquid marketplace via bidding and enforced relevance to create an unbeatable paid search business. Plus, Google lets developers using its services and APIs tap into that revenue stream with minimal effort.
• Participant lock-in: Technology platforms create positive business opportunities for developers. But they can also achieve customer lock-in for their originator by making those same developers dependent on APIs. End users can be locked in, too, via familiarity (e.g., the QWERTY keyboard) and data storage (e.g., contact info, photos, message repositories) that raise switching costs for members.

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• The Near-Term Evolution of Social Commerce
• How to Reach Social Media Critical Mass
• Facebook Patent Hints at Social Search Plans

And the general consensus is that it has been knocked out by a combination of two interlinked factors: Its progress was slowed by dealings with its corporate parent News Corporation, which led to it being outmaneuvered by a younger, hungrier, smarter rival in Facebook.

That’s the main thrust of this substantial and interesting profile of the company by Reuters reporter Yinka Adegoke. It’s a long read, coming in at a little more than 4,000 words, but is probably the best summary I’ve read of the ups and downs of a website once deemed hot property but now looked at with derision.

But the article also points out that it’s not as simple as News Corp clumsily handing Facebook the keys to the social networking kingdom. In fact, the piece suggests, perhaps it was actually Google rather than Facebook that unintentionally dealt the killer blow to Myspace.

Think back to 2006: That’s when they signed the $900 million, three-year advertising deal to turn Google into Myspace’s exclusive providers of text ads and search. It was a great cash prize for Murdoch’s purchase, but actually ended up being a weight around its neck. The deal’s targets required Myspace to crank up page views and increase already-heavy advertising space at precisely the same moment that Facebook was pushing forward with a clean and easily-understood design.

As Adegoke reports:

Around this time, the Google agreement, which had been hailed as a major coup by Chernin and Levinsohn as well as Wall Street, started to be viewed by Myspace executives as a double-edged sword. The Google deal required a certain number of Myspace user visits on a regular basis for Google to pay Myspace its guaranteed $300 million a year for three years. That reduced flexibility as Myspace couldn’t experiment with its own site without forfeiting revenue.

“It was a good deal in the short-term but in the long term it ended up not being so good,” said a third former Myspace executive close to advertising sales. “We were incentivized to keep page views very high and ended up having too many ads plus too many pages, making the site less easy to use than a site like Facebook.”

This moment is often overlooked, but it turned out to be absolutely crucial. And, of course, it’s kind of darkly amusing that Google — in trying to find a partner who could help it in the confusing world of social web — managed to give a huge boost to one of its nascent rivals.

It suffocated Myspace with love — perhaps something for Larry Page to think about as he reorganizes Google to try to retain its commanding position online.

Photograph used under CC license courtesy of Flickr user Mavadam

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• How Niche Social Networks Could Catch Hold
• Communications, Platforms, Privacy Ruled NewNet in Q4
• How Media Companies Can Compete Online

The real truth is that both remain effective but neither is free, and never was. So let’s examine how a startup making consumer apps or online services can get that much-coveted first million or two users as cheaply as possible.

SEO never was free. Big companies spend thousands of dollars on optimization tools (e.g., BrightEdge, Covario, SEOmoz, Yield Software) and search specialist agencies like iCrossing and 360i. These tools and services help companies with tagging and linking, making their content and apps more discoverable and indexable by search engines. But more importantly, SEO still works.

Search guru Danny Sullivan advises multiple marketing tactics, and says he sees SEO working for plenty of companies. His own relatively new content site gets 20 percent to 40 percent of its traffic from search. Q&A sites like Quora and Stack Overflow have grown primarily through search and word of mouth. In this interview, Stack CEO Joel Spolsky concedes his sites’ user interface is so bad he depends on Google as his front end.

Likewise, while it’s true that Facebook has clamped down on free promotions, the biggest Facebook success story wasn’t built on free viral tactics. Social commerce giant Groupon’s president Rob Solomon told me in an interview that Groupon didn’t do much SEO. It bought some paid listings and display ads from Google, but most of its marketing budget went for Facebook advertising. Along with SEO, most consumer startups should continue to use Facebook, but expect to spend some marketing dollars there.

Of course, there are plenty of other tactics to consider when building an online audience. To see more, read my weekly update at GigaOM Pro.

Image courtesy of flickr user loop_oh

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• Google Needs to Fix Its Spam Problem, Even if It Hurts
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Three things make me think so:

1. A handful of social networks delivering specialized functions have big audiences.
2. Facebook’s effort to add specialization to its network is immature.
3. Other networks can harness social services through open APIs — if they’re careful.

Though Facebook Groups, a solution to niche social networks, is incomplete, the company is providing APIs and services to app developers to build their own, like BranchOut‘s career network within Facebook. To be sure, it can be risky to depend on another company’s platform. Last week, Twitter locked out UberMedia and TwapperKeeper for using unapproved URL shorteners, and for archiving and re-licensing data without an official Twitter deal. Last year, Facebook and Google blocked each other from harvesting contacts, and Apple had to remove Facebook connectivity from its Ping social network due to the “onerous terms” Facebook wanted as compensation for Apple’s presumed heavy usage. The takeaway: Specialist social networks should negotiate before implementing.

Hunch co-founder Chris Dixon suggests that developers should trust platform companies who are open with their product roadmaps, or at least exhibit predictable strategies. Platforms without established revenues, such as Twitter or Foursquare are less transparent. Compared with them, for instance, Facebook’s business model is clear: It sells advertising and collects a percentage of spending on virtual goods via its Credits system, and usually only bullies big competitors.

Companies should use Facebook and the others for customer acquisition, then ease off technology dependencies. For example, use Facebook log-in initially, and then migrate users to an OAuth-based process later by suggesting they update their password for security. After importing social graph data, build up your own database of friend connections by tracking specialized communications.

Promising niches require specific audiences or contexts. For examples of this, and to read more on why niche social networks can grow, read my latest column at GigaOM Pro.

Image courtesy of flickr user James Cridland.

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Rumors of a potential sale have been making the rounds almost since the day Rupert Murdoch bought the site back in 2005 for $580m, but the real question is: Who, precisely, would want to buy Myspace right now?

If the site’s looking to spin off, it needs to find investors who think there’s a serious, profitable future in its business. Those investors are scarce; Myspace has neither the scale of Facebook (figures suggest MySpace now has around 65 million users worldwide, compared to Facebook’s 500 million) nor the utility of LinkedIn. If it wants to sell or merge, on the other hand, it needs to find a company that thinks it’s worth buying, and there are very few companies who might around these days.

In its earlier days, the natural home for the site, perhaps, was a company like MTV: a brand desperate to capture the youth market, the music world, and stay connected to its audience. With Myspace’s mojo gone, that seems unlikely now. Other potential purchasers? Once, that might have been Facebook, maybe, but the company is way too big to care today. AOL (which wouldn’t be a terrible fit) has already been burned enough with Bebo. And Google, though desperate to buy its way to social success, would surely not want to touch damaged goods.

Really, Jones’ comments are the final admission that News Corp. was always the wrong deal, and Rupert Murdoch the wrong buyer.

Of course, it made some kind of sense at the time. Murdoch’s greatest skill is selling exclusivity — peddling material you can’t get anywhere else, whether that’s through deal-making or rule-breaking.

His newspapers and broadcast channels have followed this master plan well, offering Hollywood movies, opinionated news, titillating tabloid reporting, financial insight and major sports deals as a hook to get people buying.

That scheme was always going to be headed for trouble once the Internet started rolling, since it’s pretty good at killing exclusivity. But, for a while at least, Myspace promised exactly what Murdoch was looking for: By becoming the go-to place for musicians on the web, it was a way to stuff the cat back into the bag and create exclusivity where it didn’t exist previously.

The trouble is, if your advantage is that you’re better than everybody else, then you have to work really hard to stay that way. Otherwise, all it takes is some kid from Harvard to come up with something less ugly and you’re suddenly passé. We all know how that ended up: Murdoch’s Internet empire is left manufacturing exclusivity by using paywalls or iPad-only news.

So what does Myspace have left that it can offer buyers? Musicians and fans don’t care any more. They sell their music through iTunes, talk to their fans on Twitter and let YouTube take care of videos.

All Myspace really has to offer is an out-of-date reputation and the personal details of some 65 million users who — for the large part — don’t care what happens to it.

That leaves its best options are probably lower tier competitors like Hi5 or Friendster, or somebody who really just wants to purchase a huge but rapidly expiring database of identities. Perhaps its best exit is to end up just how it started: as a vast spam trap.

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As I read about the layoffs at Myspace — the company today confirmed that it is shedding close to half of the company, or about 500 employees, including virtually the entire international operation — I couldn’t help thinking of the legendary 1986 science-fiction film Highlander, which starred Sean Connery and Christopher Lambert as warriors fighting to become the world’s sole remaining immortal. The tag-line for the movie was “There can be only one,” and that certainly seems to be the case when it comes to social networks. The cuts suggest Myspace will be the next to give up its life so Facebook can reign supreme.

News Corp. has tried hard to make something of the company it acquired for close to $600 million in 2005. It has changed chief executives repeatedly — to the point where it has almost become comical – and it has refocused several times, with the latest incarnation targeting the entertainment market. The latest redesign pitched the network as the place where people can follow their favorite musicians and other celebrities, then not long afterward, the network added the ability to integrate user accounts with Facebook — a final sign of how completely it has surrendered to its former foe.

The layoffs also appear to be a sign that no one is rushing forward to take the company off the hands of its corporate parent. News Corp. has made it clear that it is looking to unload the operation, but so far there have been no reports of interest. While some content portals such as Yahoo might be more attracted to the social network once it cuts its costs by 50 percent, the best News Corp. can probably hope for is a Bebo-style deal, like the one that saw AOL shed its own failed social network for a fraction of what it paid (Criterion later sold it to a group of investors who have apparently brought in Bebo founder Michael Birch to try to resurrect it somehow).

Myspace’s latest CEO, Mike Jones, did his best to put a positive spin on the downsizing, saying the company has seen 3 million new user profiles created in the past few months, and that traffic — particularly mobile traffic — has increased. But the reality is, the social network has been in decline for years now, and there are no signs that it can recover any of that lost ground. In the history of modern technology companies, there are very few that can claim they laid off half of their staff and still went on to become successful. The best-case scenario for News Corp. is that it either manages to sell the company to someone, or runs it on a shoestring for a while, then quietly shuts it down.

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Post and thumbnail photo courtesy of Flickr user Mark Strozier

Earlier this week, Gravity, a Los Angeles-based startup, launched a new service called Twinterest and outlined its intent to help personalize the web through what it calls an “interest graph.” This isn’t the first time the start-up — which has garnered $10 million in funding from the likes of Redpoint Capital and August Capital — has sought the limelight by making bold (and woolly) claims.

The company, which was started by Amit Kapur, Steve Pearman and Jim Benedetto — all former Myspace executives — came out of stealth in December 2009. Gravity initially wanted to reinvent the concept of conversations then data-mine these conversations to build interest analytics, and eventually build a business against these analytics. Suffice to say, I wasn’t a fan of the service, and took a dim view of its prospects. When it launched earlier this year in beta, the service was indeed a letdown.

Since then, the company has come up with a new strategy, and is now using Twitter feeds to build the Interest Graph, which it says it will then use to help personalize the web. Sometime in the future, Gravity CEO and co-founder Amit Kapur says, he wants to give publishers the ability to personalize content for each one of their readers.

One of the key building blocks for this “interest graph” is a new offering from Gravity called Twinterest. It’s a service that taps into the Twitter fire hose and hopes to map my interests and essentially connect them to some of the folks I might know. I tried it out and got some surprising results. For instance, the service says I have 476 interests including Country Music, Bernie Madoff, Appalachian State University, Debarge, Soviet Union and Anakin Skywalker.

Those “interests” are just straight up wrong. The rest of my “interests” remind me of a phrase we used to use often when growing up: Looking London, Going Tokyo.  What’s even funnier is that the service suggests that I should friend Rapleaf on Twitter (ironic, considering some of my writings about that San Francisco-based company). Gravity wants us to help fine-tune this “interest” data, so it can personalize the web in the future, but the Twinterest results so far make quite an un-interesting graph.

The inaccuracies in the interests displayed by Twinterest are symptomatic of some of the problems associated with natural-language processing services, which try to extrapolate my interest level in topics from proper nouns mentioned in tweets. I remember tweeting that I was listening to Debarge on the radio and feeling nostalgic. That doesn’t mean I’m interested in them.

Many services that propose to make sense of the Twitter feed and draw inferences have to deal with a whole can of worms. For starters, any service that proposes to build an interest graph or some sort of ranking, needs to do the following:

• Analyze the content shared by a user.
• Analyze the content of a user’s tweets.
• Analyze what others a user follows as a potential signal of interest.
• Analyze who follows a user to get a sense of authority of the user on that interest.

Gravity (and other services similar to them) have to figure our ways to do the aforementioned four things at scale, then build a taste graph for every single Twitter user. That’s not easy, nor cheap. One assumes Gravity has been able to do that — and have put some of their venture dollars to good use. But then as more data points are added to the mix, say Facebook, the complexity (and costs) of Gravity’s Interest Graph is only going to go up.

I think the challenge with services that use Twitter to draw inferences about me is that they only have an incomplete picture of me. My Twitter identity is very tech-centric. It ignores some of my real-world interests, and frankly, I don’t care to share a few things with the rest of the planet. In other words, Twitter can’t really help mirror the real me.

That said, it’s simple enough to build a content-discovery system based on the interest graph, and predictably, that’s why the company is building a news discovery service, The Orbit. I don’t think it’s really a very valuable service – i.e., it’s a terrible business idea. The idea of an interest graph is something that was initially championed by Hunch, which instead of doing natural-language processing, decided to start with a combination of machine learning and statistical learning.

Eventually someone will figure out a way to mine the web and build a personalized web experience. Gravity seems pretty far from it. This is something the guys who own the data – Facebook, Twitter, Google – will likely do.

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Post and thumbnail images courtesy of Flickr user Luis Markovic

Sometimes it just doesn’t pay to fight the inevitable. In the case of Myspace, that means admitting the unpleasant — but at the same time undeniable — fact that it has lost the social-networking race to Facebook. The News Corp. subsidiary has been doing that gradually over the past few months, and the latest move in that direction came today, with the launch of a new feature that Myspace CEO Mike Jones called “Mashup with Facebook,” which allows users to import their Facebook profile, favorites and content into Myspace.

As a number of outlets have already reported, Facebook login integration with Myspace has been available for some time now (at least since yesterday), allowing new users to sign up by using their Facebook profile in the same way many others do. Myspace also launched something called “sync with Facebook” in August, which allows users to connect their status updates and other activity with their Facebook profile or pages, and to push content from Myspace to the larger social network. Jones said Myspace was also planning to add Facebook “like” buttons to the site soon.

Dan Rose — Facebook’s VP of partnerships and platform marketing — pointed out during the news conference that thousands of other websites have already integrated with Facebook’s platform. But Myspace isn’t just any other service; it’s the company that media kingpin Rupert Murdoch paid $580 million for in 2005, convinced that buying what was then the leading social network was the route to social-media riches for News Corp. Instead, traffic to the site has plummeted, despite refocusing on music and a recent heavily promoted redesign.

Myspace CEO Mike Jones reportedly told The Telegraph at the Monaco Media Forum last week that Myspace has effectively given up the social-networking race, and now sees itself as a “social entertainment destination” (Om wrote the social network’s obituary in February, after the departure of former CEO Owen Van Natta). Jones, meanwhile, said during the press call that he’s excited about Myspace’s refocusing as an entertainment destination, and that he sees the new feature as “complementary” to Facebook.

More than anything else, this integration feels a lot like the profile and content-importing deal that Facebook struck with Orkut recently, which also sounded like a great way to suck even more life out of a smaller competitor. The recent moves by Myspace seem to be increasingly desperate attempts to avoid impending doom. In a recent conference call about News Corp.’s financial results, President Chase Carey said the site’s lifespan was being “measured in quarters, not years.”

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Myspace’s relaunch is smart in its focus, but a little thin on innovation. It already accommodates Facebook and Twitter updates, but it’s questionable whether much of its audience will use the social network to aggregate social communications. That said, Myspace has adapted feed-based user interfaces in what appears to be a unique fashion: Users can toggle between magazine- and TV-like modes as well as a conventional stream. This mix of active and passive entertainment discovery — users already get update streams from friended bands, studios, entertainment personalities, etc. — could prove a useful launch pad for Myspace fans to spread comments and recommendations outside, as well as within, Myspace.

What’s Still Needed

Myspace still has a large — if declining — U.S. audience that’s younger and more socially diverse than the web average. Besides keeping that audience entertained, Myspace must innovate on the following:

• New ad vehicles. Two years ago, Myspace attracted attention with a campaign for luxury brand Cartier that integrated musicians like Lou Reed and Marion Cotillard. Today, MySpace gets rich homepage campaigns (with trailer, showtimes, behind-the-scenes info) for movie openings — Lionsgate’s “Saw 3D” for Halloween, of course — and big banners on its channel homepages from the likes of Samsung, Sprint and Fox Television. However, it needs to create unique social sponsorship opportunities involving games, contests, interaction with stars and re-distribution outside of Myspace.
• Social commerce. Myspace delivers full-track music streaming that enables affiliate purchases on Amazon. But it needs to build out a marketplace for artist merchandise, and should consider adopting gimmicks such as Groupon-like daily deals and group purchasing. Easy-to-build storefronts from Payvment would make sense, and Myspace should be a leader in cross-category virtual currency for games and downloads.
• Outbound syndication. Myspace wisely acquired iLike, a viral music service popular on Facebook, but it needs more ways to spread its and its users content outside its own site. It should copy, partner with, or acquire GetGlue, a startup that offers Foursquare-like check-ins, badges, and the like for web entertainment content.

Read the full post here.

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