Distributed Revenue-Sharing Ad Platforms Are the Paradigm For Monetizing Social Media

I’ve been critical of AdSense of late, but let’s give credit where credit is due — AdSense, i.e. a distributed, shared-revenue advertising platform, represents the new paradigm for monetizing content. That’s why I remain skeptical that MySpace, despite being the current center of gravity for social media and despite its current off-the-charts traffic growth, will necessarily be a boon for News Corp.

Robert Young has an interesting post on GigaOm which got me thinking about this — Robert argues that traditional media companies should focus on building “socially-integrated media empires,” with News Corp’s acquisition of MySpace being the touchstone example:

At the end of the day, the media conglomerates should view social media much like they did the rise of cable TV. Cable eventually took half the market away from traditional broadcast TV, so the media conglomerates vertically and horizontally integrated their way into cable in order to buy back market share. They should do the same with social media by pursuing a strategy of social integration. Rupert Murdoch already made his first move, and it looks like NBC is about to take their first baby steps. Welcome to the new world of socially-integrated media empires!

As I said to Robert in a back-and-forth in the comments of his post, the notion of a socially-integrated media company assumes that media companies can “own� social media in the old media sense.

As I’ve argued before, the reason why News Corp is struggling to monetize MySpace is that most people who visit MySpace are not visiting “MySpace,” the News Corp media property â€â€� they are visiting EACH OTHER.

Contrast what News Corp is trying to do by directly monetizing the content it “owns” on MySpace (with the issue of ownership leading to incidents like the Billy Bragg brouhaha) with what Google did with AdSense.

AdSense has been so successful because it does not attempt to own either the content platform or the content itself â€â€� note that Google does not run ads on Blogger per se â€â€� they provide bloggers with a distributed, self-serve, revenue-sharing ad platform to run the ads themselves, and then Google takes a (big) piece of the action. But they don’t have to own Blogger to do it â€â€� owning Blogger simply allows Google to provide the blogging platform for free and thus drive more content creation that feeds AdSense.

News Corp needs to stop thinking in terms of “owningâ€Â� MySpace’s page views â€â€� advertisers don’t want to advertise on those pages because News Corp doesn’t control the content. And MySpace users don’t want the ads appearing on “their” pages uninvited.

It would seem the real opportunity is for someone, News Corp or a third party, to offer MySpace users a platform like AdSense to monetize their content. In this scenario, MySpace is merely a free host, like Blogger � it gives them no advantage in providing this distributed ad platform.

As Robert pointed out in response to this idea:

Currently, if users place those ads on their pages, they would be in technical violation of MySpace’s TOS. It would be very interesting to see how they deal with such a situation.

News Corp could simply buy the new ad network, of course. But that wouldn’t really resolve the core issue.

It would indeed be very interesting to see what would happen. There is a BIG opportunity to monetize MySpace and social media — just not in the old 1.0 way.