Wednesday, March 14, 2007

The Demand Function

As an economist, I must beg Kevin Tressler pardon, for I am about to call him a moron. He is in fact a moron economically speaking, or a terrible reader I might gather.

As an amateur mass communication scholar and someone who studied under Scott Caplan, I have to disagree with the assertion that MySpace is on the decline for one primary reason that I know Mikey K will appreciate: economics. MySpace currently boasts 84 million registered users, and in 2007, collects another 2 million users per week (that's about the size of the population of Houston, TX.) In accounting for repeat log-ins and visits, the site registers 48 million unique visitors per month. Here's the home run, though. More than 70% of MySpace users fall in the coveted 18-24 demographic, making MySpace an advertisers wet dream. Free access to the golden demographic - yeah, I'm willing to bet MySpace is secure for a long time.

Let us start with the article that Sullivan mentions. What we’re talking about in economics here is demand. The demand function, Tressler blithely tries to tackle with statistics that leave even more questions. He wrote, “Currently boasts 84 million registered users.” Of which how many come back? Of which how many are still active? Okay, he tries to counter that argument as he knows it will come up with, “In accounting for repeat log-ins and visits, the site registers 48 million unique visitors per month.”

Here’s a pose as to why there are so many users. What about substitution? For a musician to construct a functional website that allows people to download and look at their music and work that costs money and/or time. So, there’s a whole bunch of your users right there.

But that’s not even the point of the article. The article is about the future of MySpace. So, what happens when – as Michael Hirschorn says:

But what's remarkable soon becomes ordinary. MySpace remains cool — thanks to surprisingly deft stewardship by its new owner, News Corp. — but nothing is cool forever. And once the tantalizing pull of millions of people you could possibly be best friends with wears off, you're left with some by now pretty ordinary functionality: blogging; instant messaging; photo, video, and audio uploads; networking tools. Thanks to the inexorable process of Web innovation, such stuff goes from 'OMG' to 'Whatever' in no time flat.

So, Kevin is right, it’s economics. But Kevin obviously either sucks at economics or doesn’t bother to read entire articles because he doesn’t understand that the question is about what is going to happen to the demand function, and what will MySpace add that will allow their product to re-enter the product cycle. For those who don’t know, MySpace is in the end of the realization stage.

The Demand Function will change because people won’t think MySpace is cool anymore. Users won’t think it’s cool anymore because the functionality of MySpace will be surpassed by something else. Again, this question and reasoning of the article was regarding MySpace’s future, not it’s present. So, why is he "willing to bet MySpace is secure for a long time"? Does Kevin think the internet innovation is over?

Normally I would not create such a tirade, but I refuse to allow anyone to sully economics for the application of some silly contrarian argument.
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