Social networks

One upon a time (sometime last century) the music industry had a business model. Record companies signed up bands, paid them an advance (against which they offset all expenses – like recording albums) and sold records to adoring fans. Sometimes this didn’t work, but the profitability of a handful of albums offset the many failures. Problem was, as a band, you were either a rich rock star or an invisible failure. The gap between artist and audience was also immense. Not any more. MySpace.com (bought by NewsCorp for US $580 million) is yet another example of how the Internet is changing the rules of markets and connecting people (and, crucially, groups of people) who would like to know about each other. MySpace, in case you’ve been away in space, is a social networking or community site that converts electronic word of mouth into, among other things, album sales and concert tickets. The site has around 30 million pages of which about 400,000 belong to bands. It also has more ads than any other site on the entire web (12% if you’re counting) and is signing up 3.5 million new users a month. Sometimes the site even ranks ahead of Google in terms of monthly page views. So what’s going on here? Well for one thing, Generation Y isn’t watching much TV anymore. In fact programmed media, TV schedules, record companies, albums and mass-marketing are becoming irrelevant, replaced instead with TiVo, P2P, AOL, iTunes and sites like Myspace. For example, a band called Hawthorne Heights recently sold 500,000 copies of their debut album without being signed to a major label and with almost zero TV or radio airplay. What they did use was MySpace, which connected the band to potential fans who could download free tracks, buy albums, T-shirts and concert tickets. Watch this space …

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