Myspace buys a Trojan Horse into Facebook – but Facebook could still profit

Myspace buys a Trojan Horse into Facebook – but Facebook could still profit

iLikeThe tech news sphere has gone crazy over the news that Myspace is buying music-based startup iLike. Why should you care though? Here’s why it’s an important deal.

Myspace has been losing ground to Facebook for a while now, throw in the company’s financial woes and it’s clear it needed a shot in the arm to boost its performance and help provide some focus. Myspace is pushing the angle that this deal is all about ‘socialization of content’; in other words, getting Myspace’s finger in as many pies as possible across the web. The most important of those pies is Facebook.

Music focus

The one area where Myspace has been developing well is in music promotion. As well as being the defacto web presence for musicians (gig promoters and record labels pretty much expect bands to have a Myspace profile), the music industry-backed Myspace Music offers free streaming audio and videos. If Facebook is doing better than Myspace at being all things to all people it makes sense for Myspace to focus on something it does well.

By acquiring iLike, Myspace gets to take that music focus and spread its influence across iLike’s huge web presence. iLike offers a music-based social network as well as support services for musicians, including an embeddable music player and the ability to create custom iPhone apps. It has an app for Facebook, an iTunes plugin as well as presences on a wide range of social networks across the web.

Trojan Horse

Acquiring iLike gives Myspace a ‘trojan horse’ into making money from Facebook. iLike’s music app is hugely popular on Facebook, allowing users to listen to music, browse local concerts and download free MP3s from big-name artists. Cnet reports that iLike may start charging for MP3 downloads through Facebook as soon as this week. This would be embarrassing for Facebook, to say the least.

It’s worth noting that Facebook can make life difficult for iLike if it wants to – it wouldn’t be difficult for them to block iLike completely or at least change terms and conditions for app developers in ways that frustrate Myspace and iLike’s plans.

Facebook’s retaliation?

Facebook might have a better way to handle the situation though. Ben Parr at Mashable speculates that Facebook aims to make Facebook Credits a ubiquitous online virtual currency. This would give Facebook control over transactions that take place over their platform.

If Facebook Credits become the only way to make money over Facebook, they would be getting a kickback out of Myspace and iLike’s business both financially and psychologically – “You can buy from Myspace on Facebook, but Facebook’s in control here”. That would be a much more civilised way of moving forward – kicking the iLike app off Facebook completely would be tremendously bad PR.

Your move, Facebook.

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