Insider Chatter by Donna Bogatin

There he goes again?

Michael TechCrunch Arrington is engaging in his signature controversy is good for (his) Web traffic modus operandi, spinning unreliable tales purported to be from inside “sources,” anonymous, of course.

Ashkan Karbasfrooshan attempts to theoretically “dissect” the TechCrunch self-made news of MySpace supposedly seeking to ditch a $900 million (well) done ad deal with Google–while nevertheless assuring, that he, of course, “does not doubt Michael Arrington’s sources.”

I DO doubt Arrington’s “reporting,” however. I have recently spoken directly to MySpace execs about the deal and today asked News Corp., directly, if there is any desire on the part of MySpace to replace Google with a different partner in its $900 million ad deal.

A Fox Interactive Media spokesperson confirmed to me:

There’s no truth to rumors that Fox Interactive Media is interested in getting out of a strategic search deal with Google.

Astute readers will also note that ”truth” is likely missing from the Arrington rumor that:

The vast majority of social network traffic that Google serves ads into is controlled by MySpace - this was a direct complaint about that deal.

Arrington’s assertion? analysis, declaration? brings to mind the double speak he recently took Fred Wilson, Union Square Ventures to task for. After all, a MySpace-Google ad deal that concerns serving Google ads on the MySpace platform is, by definiiton, about serving ads into traffic “controlled” by MySpace.

Moreover, Google is tickled to serve ads into any and all traffic, regardless of who is said to “control” it: An Internet powered, universally, by AdSense is, after all, a Google goal.

What is the MySpace goal for its Google deal? To help make the $900 million pact be a win-win:

Peter Chernin:

We we are regularly working with them to continue to improve their performance. We think they are an important partner to us and we want to see them continue to grow their revenue and that has all sorts of things — you know, it’s trying to do a better job monetizing the data, it’s — we’re constantly looking at the placement of the search box on the page, the size of the search box, where we deliver the ads, how to get higher click-thru rates. And I would say that we have a very positive working relationship and to be fair, I think an improving working relationship over the past year with Google.

So we are working together. We’d like to see them improve their results and we expect — but it is important to note that deal, from their own modeling and certainly what they told us, they expected it to reach break-even towards the end of the deal, not right at the beginning.

One MySpace ad sales exec believes it is up to Google to “sell” better.

Read my first-hand, directly sourced, reports: MySpace To Google: Learn How To Sell Advertising, OMMA Report and MySpace To Google (Round 2): Text Clicks Do NOT Rule! VideoEgg Report and MySpace to Facebook: NO ‘Reach, Relevancy, Results’! OMMA Report

ALSO:  Like.com to Entrepreneurs: It’s the Revenues, Stupid! and Why Silicon Alley VCs Should Do Blogging Due Diligence, Too

PLUS: Facebook Meltdown: Is Twitter Next? and Microsoft Steals VideoEgg’s Thunder? Google Ultimate Loser and FriendFeed: Got Google Millions? Who Needs Revenues!

CONTACT DONNA BOGATIN

Esther Dyson continues her “friending” ode to Mark Zuckerberg, courtesy of the Wall Street Journal.

When I heard Dyson declare to Web 2.0 startups in New York City last June (on the heels of Zuckerberg’s unveiling of “Facebook Platform” to the world), “Throw out your development, go use Facebook,” I asked if it would really be prudent for the Web to capitulate to Facebook, as the self-described Internet “court-jester” advised. I warned startups of how Facebook is a wolf in sheeps clothing, citing Zuckerberg’s F8 Platform own Terms of Service.

MY advice to Web entrepreneurs to create their own, proprietary, self-sustainable, independent businesses is proving prescient. SEE: Scrabulous At Risk? Zynga $10 million VC Game: Facebook Roulette   

I also have been warning, since May 2007, of Facebook’s non user-friendly privacy policy and practices. My concerns about Mark Zuckerberg’s non-negotiable data mining machine have also proven on the mark. SEE: The REAL Google (and Facebook) Nightmares: Eternal Data Traps

Nevertheless, Dyson’s admiration for the Harvard drop-out’s “social graph” can not be contained. For Dyson, the Beacon affair is not a privacy quagmire, but a mere Facebook PR faux pas! Dyson applauds how Beacon “familiarized millions of users with the notion that they can control information about themselves online, and determine to whom it is visible.”

REALLY? NOT according to the poor soul who had his Christmas “ruined” due to Mark Zuckerberg allowing Facebook to inform his 100 best friends of his ”surprise” diamond gift for his wife. 

Google, Yahoo, Microsoft? Who cares! Dyson assures “a more profound revolution is taking place on the online social networks,” particularly the one named Facebook.

Who needs MySpace? Zuckerberg prohibits Facebook application partners from even mentioning the name of his biggest nemesis!

MySpace is STILL the space, though, in terms of both traffic and monetization, as Arnie Gullov-Singh, VP Product Mangement, Fox Interactive Media, underscored this morning at the OMMA Behavioral conference in New York City.

Who needs Facebook? “I don’t get it.” Gullov-Singh shared about Facebook’s Beacon and social ads: “How will marketers ever get reach, relevancy and results?”

Moreover, what is really in it for the consumers? “Do any of my friends care that I bought an airplane ticket to come to NYC?” Gullov-Singh pointed out, rhetorically.

Facebook’s latest ad tricks are tools ”thought up by engineers,” Gullov-Singh scoffed.

The ultimate MySpace indictment of Facebook marketing: “LOW RETURN ON ENERGY!”

MORE: LinkedIn Preps Spy Network: Is YOUR Company Safe? and How Web 2.0 Meetups Displaced the New York Software Industry and MOBILE Visions? Microsoft, Yahoo, AOL Open Up: NOT Google! OMMA Report and Henry Blodget Tech Ticker Puts Yahoo Finance at SEC Risk and MySpace To Google: Learn How To Sell Advertising, OMMA Report

CONTACT DONNA BOGATIN

Forrester’s cheerleading squad is now claiming a “groundswell” for social networking advertising in a recession. How so? Marketing on UGC sites is cheap, among other “reasons.” YES, users’ spaces are indeed a cheap ad venue, but for good reason, just ask Google!

Here at Insider Chatter, I have been chronicling the hard battle being waged by social networks to raise the financial stakes in attempting to acquire high-quality, high CPM brand dollars.   

Multiply.com launched almost four years ago to “effectively define the new field of social communications,” according to founder and CEO Peter Pezaris. NOT in the mass media eyes of the 60 Minutes show, however, which recently accorded Harvard drop-out Mark Zuckerberg social media stardom, with not a word about the leading social network MySpace, let alone Pezaris’ Multiply (SEE: Mark Zuckerberg Confirms: Facebook is NO Google Killer).

Pezaris is not deterred, hoever, convinced of the superiority of his own platform.

Last Fall, on the heels of Multiply’s $16 million Series B round, I spoke with newly named Multiply board member, David Scott Carlick, Managing Director of the Digital Media & Internet team of Vantage Point Venture Partners, Multiply investor, and Pezaris, about the site’s plans to “educate” high CPM paying brand advertisers about the value of reaching users in their personally created environments (SEE: Multiply.com Raises Consumer Media Stakes AND $16.6 million VC: INTERVIEW)

I touched base with Pezaris this year to learn about Multiply’s progress. For now, Multiply is focusing on continuing to improve the user experience and plans to launch a premium, subscription service, Pezaris told me.

The Multiply CEO also shared with me how he REALLY feels about the social networking landscape, “We’re still  the only site around that leverages real-life social networks to share personal media, despite what some of our competitors claim,” Pezaris claimed to me.

I asked Pezaris for clarification on his definition of what a “real-life social network” is and to identify which Multiply competitors are falsely claiming to be such social media platforms.

Pezaris explained to me why he believes Multiply is the real social thing, the only one: 

MySpace offers very crude privacy controls which are unsuitable for exchanging personal media in all but the most basic use case scenarios.  Your entire profile on MySpace is either set completely public so that anyone in the world can see it, or completely private, so only your direct contacts can see it.  You have one switch to throw, and it’s either ON or OFF.Contrast this with Multiply, where everything you add to the site has individual fine-grained privacy controls, making the content available extended circles of friends, and friends-of-friends, through trusted, bi-directionally confirmed relationships.

For the exhibitionists of the world, there is no shortage of sites that can deliver your content to a wider audience of strangers –MySpace, YouTube, Flickr to name a few. But none of these sites add  significant value for the “regular guys” like myself who want to share their personal lives with *more* of the people that I actually know in real life, and *fewer* of the people I don’t.

Facebook?  Although you have better privacy controls on Facebook than on MySpace, they are still crude. The world is still binary — either someone is your contact or not.  There is no way to share your media with selected  individuals without first making them a contact of yours. This artificial pressure to add contacts degrades the quality and accuracy of your personal “social graph” over time — anyone who has used  Facebook or LinkedIn has seen these effects.

Multiply, in contrast, allows you to meaningfully and appropriately communicate with tier-2  and tier-3 contacts based on a proprietary “Calculated Proximity Index” system which ranks users in the system in order of how close they are to you in your real-world social graph (this is similar to  how Google’s PageRank works, only applied to social networks).  This recognition that friends-of-friends are important to you for the  exchange of personal media is how we keep our representation of your real-world social circles more accurate.

Multiply’s messaging system is sometimes compared to Facebook’s newsfeed. Some people have referred to the Facebook system as drive-by social spamming, but whatever it is, it’s not suitable for meaningful communication around personal media. Multiply, has an Inbox that combines all of the media sharing and communication that happens within your personal network in one place. You can filter this message-board like application to show you only those items you are interested in, and you can go back in time as far back as you want (unlike Facebook) – want to see all the  videos that have been posted by contacts of yours? No problem. Want to see all the replies to posts you made that you haven’t read yet? Click click done.  Want to see everything that’s being discussed in your extended network of friends-of-friends, including notification where the ongoing real-time discussions are? That’s where Multiply adds *real* value.  And each one of these settings is but a couple of clicks away, and saveable in a personal/private RSS feed, unique to you. On Multiply, not only is there a page 2, we even keep track of when people see what you want them to see.

Pezaris’ bottom MySpace and Facebook line:

How much is a brand ‘friend’ worth online? Priceless, really, in the digital eyes of OMD Digital US Director, Scott Hagedorn. In his opening keynote at the Digital Media & Measurement conference in New York City, Hagedorn briefed an audience of about 200 ad agency execs, brand marketers, consumer researchers…on how Doritos aims to ‘crash the Superbowl,’ again, thanks to YOU!

The 2007 Doritos Super Bowl UGC campaign generated $36 million in ’ad equivalency’ and helped drive a double digit year over year increase in sales, according to Hagedorn. Despite such hard performance metrics, however, Doritos is paying more attention to making Superbowl friends, rather than money, this super go around. What a difference 15 months makes? Isobar has struggled in the past to convince client Adidas of the value of 60,000 MySpace “friends.“Hagedorn underscored that online friends rule and he proudly beamed that Doritos is winning the friending race, with Doritos’ 15, 819 Super Bowl 2008 friends dwarfing even Burger King’s 3000 friends!

If the MySpace rasion d’etre is to promote the unfettered creation of user-generated content, wouldn’t advertisers be missing out on the real MySpace experience if they advertise against “non” MySpace content. Moreover, do MySpace friends even visit the “non” MySpace protected areas in MySpace?, I asked John Trimble, SVP Branded Sales, FOX Interactive Media, in the Fall of 2006. Trimble made a “protected area” brand sales pitch at an IAB Summit, asserting that MySpace is where the “sizzle” is and putting the “best” MySpace face forward, a sanitized one.

Fifteen months later, as MySpace plows ahead with its safe, “non” MySpace “mainstream,” content agenda, The New York Times now also wonders if News corp.’s crossover dreams are compatible with the desires of Tom Anderson’s 221,416,999 friends: 

The original content may draw advertisers who are wary of placing a marketing message next to a messy profile page, but it is unclear whether the users who make MySpace the most-viewed Web site in America will want to watch TV episodes and chat with friends on the same site.

The MySpace nemesis, Facebook, believes it has accomplished an integrated social network brand advertising coup, by using Facebook users, often unbeknownst to the users themselves, as smiling product spokespeople in high-quality brand ads on users’ “friends’” Facebook profiles.

What about Multiply.com, a site launched almost four years ago, which “effectively defined the new field of social communications,” according to founder and CEO Peter Pezaris?

Multiply.com obtained a $16.6 million Series B round of venture capital financing last fall and I chatted with Pezaris and David Scott Carlick, the Vantage Point Venture Partners Managing Director which joined the Multipy board as part of the firm’s investment.

Pezaris and company continue to put forth a strong value proposition for users, but what about for high quality brand advertisers that are essential for the success of Multiply’s traditional media monetization model? 

Carlick told me in September he looks to Multiply–and all the social neworking players–to further educate brand advertisers about the under utilized power of reaching consumers in new, peer-to-peer environments where the users create all the content. Multiply sported Google AdSense, but Carlick derided it as “backfill” which does not enhance user experience. Both Carlick and Pezaris indicated to me they envisage a Multiply monetized by high quality brand advertisers seeking to directly engage with real people as they interact with friends and family in their own personal online spaces.

MySpace and Facebook are apparently succeeding in educating brands about the real power of real people.  

Where does Multiply stand four months later on its drive for higher CPM, brand advertising? Pezaris’ own Multiply profile page sports low CPM style banner ads for the likes of ringtones and domain name sales AND “backfill” Google AdSense.

Pezaris is now touting “numerous changes to Multiply with a focus on site optimization, such as an Ajax based interface for browsing therough photos within an album.”

Pezaris is particularly proud of his focus on the Multiply user experience, come what may. The Multiply CEO told me:

One side effect of this change is that we are knowingly deflating our page view numbers and ratings and rankings. Unlike other social networking and media sites that are primarily focused on numbers for the sake of a quick sell out, we are in this for the long haul and user experience continues to be our number one product development priority!

Which social networking sites are looking for a “quick sell out”? MySpace is long sold and Facebook is not for sale, we hear time and time again. BUT, what about Multiply.com, really?

What is the real end game time table for Pezaris and Multiply investors? How/where/when does the real money kick-in for the Multiply.com business model? Multiply does not have the levels of traffic or brand recognition that MySpace and Facebook enjoy.

How long will investors continue to fund Multiply.com? Will Multiply soon be looking for a “quick” way out?

ALSO: Multiply.com Raises Consumer Media Stakes AND $16.6 million VC: INTERVIEW and Lending Club $108 billion Market Opp ex Facebook: Goodbye Banks! EXCLUSIVE INTERVIEW

PLUS: Scrabulous At Risk? Zynga $10 million VC Game: Facebook Roulette and AP On LinkedIn: Social Networking Gold Mine at $5 per User? and Why Zynga, NOT Scrabulous, Has a Lucky Facebook Charm and Facebook Davos PR Blitz: Beware Scoble Hype, Users Still at BIG Risk

CONTACT DONNA BOGATIN

News Corp.’s “New York Post” is “reporting” the Microsoft 1.6% Facebook equity stake is throwing off some love for News Corp.’s MySpace, $65 billion worth.   

Poor Microsoft, nevertheless? Despite delivering $4.3 billion in net income by selling up a real world Microsoft software storm last quarter, ardent Microsoft detractors continue to plea the consumers are hostage to Microsoft case, even though steadfast Google supporters insist Googley barabarians are at the Microsoft (Bill!) Gates!

How “evil” is Microsoft deemed to be now? “Castrating” is the latest lob against Vista price points.

Will Microsoft ever neutralize the loyal “borg” dissing legions? CEO Steve Ballmer has $240 million riding on Mark Zuckerberg’s creation to instill some cross-over tech love. Hey, Zuckerberg is revered as the new millenium’s Bill Gates, a nicer (sandal-sporting) one!

On the other side of the golden Facebook coin though, the vaunted social graph may be getting more than it bargained (strong-armed) for in Microsoft’s hundreds of millions.

After all, who knows? Microsoft may end up making Facebook UNCOOL, rather than the other way around!

READ MORE: Microsoft Vista: Are 88 million Computers Really Doomed? and Facebook: Microsoft’s Ballmer Gets $240 million Boobie Prize?

PLUS: Facebook, the Web’s State Fair vs. LinkedIn, the Chamber of Commerce and Facebook STILL a Danger to Children: Zuckerberg, Attorney General Cuomo in PR Push

ALSO: NBC, MediaZone Olympic Marathon First: Free, Live Streaming of Trials

CONTACT DONNA BOGATIN