Murdoch was Bubble Boy with Myspace purchase

If ever there were an example of what happens in a bubble economy it is News Corp.’s purchase of Myspace for $580 million in 2005.

Now the social network that was a media sweetheart has been sold for $35 million to Specific Media, an advertising network. In other words, it lost 94% of its market value in six years. Myspace did earn back its purchase price early on with a lucrative ad contract with Google, but it has never lived up to its expectations.

The reality check of Myspace comes at a time when a market value of $100 billion for Facebook is being discussed by supposedly sane people -- that is about 170 times the price Murdoch paid for Myspace.

And although Facebook shows a lot of promise, remember that the market value being discussed is 50 times revenue. I remember when a really good newspaper property might sell for two or three times revenue. That was before Bubble Boy.

Why 10% of your web traffic is worth more than the other 90%

(La versión en español se encuentra aquí.)

The blessing and the curse of the web is that everything is measurable. For reporters working in newsrooms that measure the traffic of articles on a minute-to-minute basis, it can be discouraging to see fluff trump substance.

In some newsrooms, reporters are competing for raises and bonuses based on the traffic to their stories. Editors encourage the practice, because they too have their compensation tied to traffic numbers.

It´s easy to get lots of page views with a gossipy piece about a celebrity, but is the site serving its community and adhering to its editorial standards by chasing the numbers?

That is the million-dollar question for journalists working in the digital world.

Worthless users and worthless page views

To illustrate the value of loyalty over volume,  I´m going to use some graphics from the website of the Digital Journalism Center, whose articles are published in Spanish and whose audience is Latin American journalists interested in training opportunities.

The chart below depicts the loyalty of the 15,000 unique visitors to the Digital Journalism Center´s website in the past year, using the Google Analytics tool.

Our site is typical of websites in terms of loyalty: two-thirds of the visitors came to the site only once during the year. Ten percent came only twice.

Visitor loyalty to centroperiodismodigital.org

I urge you to look at the loyalty numbers of your own site using Analytics or some other tool. You will see a graphic that follows this same pattern: the majority of your visitors are casual, infrequent. They probably find you through search engines or some other reference.

Virtually all sites follow this "power law distribution" described by Clay Shirky in his book "Here Comes Everybody."