But don’t worry — I’m not gonna predict that millions and millions of people are ready to abandon Facebook for the next hot thing. In fact, this isn’t even about anything that Facebook, or its users are doing. Instead, it’s about the perception that Facebook can help to sell media products that no one wants to buy.
You see, when MySpace was still on top of its game, there was a moment when people thought it could help save the entertainment industry. Countless bands were on MySpace, and many of them found it to be an invaluable tool for communicating with their fans. That’s when folks in the music industry got the idea to use MySpace not only for promotion, but actual distribution as well.
First up was Snocap, the music startup founded by Napster’s Shawn Fanning. Snocap wanted to sell MP3s directly on musician’s MySpace profiles, complete with a widget and a rather complicated backend. Snocap’s pitch was that indie bands would be able to avoid the middle man and directly sell to consumers, and reputable online music platforms like CD Baby joined to give their 200,000 musicians a chance at raking in the dough.
Only, the money never came. CD Baby founder Derek Sivers wrote an eye-opening account of his dealings with Snocap in 2007, detailing how he hired six people to exclusively work on the cooperation — only to receive a measly $12,000 check for eight months of music sales on MySpace. Snocap eventually closed shop when its assets were acquired by Imeem in early 2008.
Imeem itself got acquired by Myspace in late 2009, only to be folded into MySpace Music, a service the social network launched in cooperation and co-ownership with the four major record labels. The primary goal of MySpace Music wasn’t to sell tracks like Snocap, but to make money through advertising. And guess what: That didn’t work either. MySpace Music burned through “a lot of money,” observed Greg Sandoval from CNet last summer, reporting that MySpace was thinking about switching to a subscription model.
What does Facebook have to do with all of this? Both sites are obviously quite different, but the similarities are striking if you look at the way folks in the media business are projecting all of their hopes on them. Case in point: I got a pitch for a startup last week that wants to sell VOD rentals from independent filmmakers on Facebook, much in the same way that Snocap wanted to sell music downloads.
The startup in question, Berkeley-based FlickLaunch, actually has a pretty neat feature: Film makers can decide to give any number of views of their movie away for free, only asking users to press the Like button if they want access to the title. That way, 1,000 free views become 1,000 promotional messages in people’s Facebook news feeds, which could potentially reach a huge crowd for free. FlickLaunch also has the benefit of launching at a time when major studios are looking to Facebook as well to boost their online VOD sales. Warner Bros. (s TWX) has been experimenting with renting The Dark Knight and Harry Potter on Facebook, allowing users to pay for the movies with Facebook credits.
However, none of that matters if the product isn’t right. Internet users have for the most part rejected one-off VOD rentals, and opted for Netflix-like (s NFLX) subscription plans instead. Netflix has captured 61 percent of the digital movie market, according to recent data from the NPD Group. Apple’s (s AAPL) iTunes store, which is the biggest online platform for VOD rentals and sales, only has four percent of the market.
Of course, you can convince yourself that all you need is a better social media strategy to make online VOD take off and put all your bets on Facebook. Or you can face the facts: Facebook may be a great platform that has much to offer for the media business. But it won’t help you sell things no one wants to buy, much like MySpace didn’t help the record labels to preserve a failing business model.