[iDC] MySpace staff cuts
Andreas Schiffler
aschiffler at ferzkopp.net
Thu Jun 25 04:21:42 UTC 2009
<unlurk>
If the Internet should or shouldn't be about making money is really
besides the point. To "run the net" costs money - boatloads of money -
hence one cannot disjoin the internet from "things that have to do with
money" including making some from nothing but electrons flying around in
wires and semiconductors.
I think it is helpful to provide some context to where these costs are
coming from ... just calling out bandwidth isn't doing this justice. Let
me try to develop a chain that needs to be put into place for something
to happen. Assuming we want to engineer the average June 2009 page view
after time-traveling from the stone age, we'd need to build and operate
this:
Client Device/Connection - Last Mile Provider - Cloud Providers/Telecoms
- Hosting Facility - Server Device - Operating System/Software -
Programmer/Designer - Content
Next let me try to estimate some cost numbers for each item, say for the
US, for one year, for fancy commercial stuff.
[Disclaimer: These are just crude order of magnitude estimates without
much research backing them up. Maybe we can crowd-source better numbers!]
Client Device/Connection: 150M online devices at $100/year for power,
maybe 30M new devices/year at $500 a device = 30B
Last Mile Provider: 10M new hookups/year at $1K a pop (pays for provider
infrastructure and personnel) = 1B
Cloud Providers/Telecoms: 10 providers, 10B each/year in revenue, 25% is
internet (pays for provider infrastructure and personnel) = 25B
Hosting Facilities: 10 big/100 small facilities, 10M setup+10/100M in
power/cooling costs = 2B
Server Device: 1M servers at $1000 each = 1B
OS/Software: 1M servers at $2K each = 2B
Programmer/Designer: 300K people at 100K/year each = 30B
Content: priceless ... not really, 10B stock images/sounds/blogs at $1
each, 100M books/videos at $20 each = 12B
Now let's split this into two groups (a) what crowd sourcing/open source
can affect in terms of price and (b) what needs to be payed to "the
system" anyways:
(a) open/crowd-sourceable: Last Mile Provider, OS/Software
(Linux/apache), Programmer/Designer (phpBB/mozilla), Content
(wikipedia/flickr) = 50B
(b) corporate system: Client Device/Connection (PC/Power Utility), Cloud
Provider/Telecoms (ATT/Akamai), Server Device (HP/IBM) = 56B
So even if open/crowd-sourcing is 100% effective, the corporations who
run "the net", make "the gadget" and provide "the juice" still need to
come up with the other half of the bill. Thus I conclude it will never
be a profitless enterprise. The current preoccupation with advertising
and user generated content is in my view partially a fad (yes, many
people don't care about many of the services) and partially an economic
reality (it pays, as Google demonstrates so well).
To cut something out of (b) many, many people would need invest into
devices that use less power and last much longer, build community mesh
networks and mini-clouds, and consume less server-based streams.
And another note on the original discussion about mySpace layoffs - one
of the biggest chunks of the cost in the chain is the personnel as one
can easily see in the above estimate. So if a company wants to loose
less money (YouTube) or make more profit (mySpace), they just fire most
of the people who made the software but keep the servers running. This
will go without anybody noticing anything (this works for at least a
year - been there, done that).
--Andreas
</unlurk>
Michael H Goldhaber wrote:
> Jean, all,
>
> Why weird? The idea that the Internet exists to make money is the
> prime mistake, as I have been arguing for years. It is about exactly
> what YouTube so directly provides: a means for individuals to compete
> for attention. Some relatively few companies such as Google have found
> ways at least temporarily to profit but most of the Internet is not
> about money at all. Far more "transactions" are pure attention
> transactions. Twitter and Facebook are two examples of platforms that
> allow attention transactions that their founders and other hope will
> make money somewhere down the road. Maybe that will be the way YouTube
> did, by being bought by Google. Now Google is stuck with an albatross,
> but if it cuts it off all YouTube users will be angered, and that's
> just about everyone.
>
> People on this list seem mostly to have adopted the perverse attitude
> of Wall Street: the Internet should be about making money for
> corporations. The only difference is that most here see that as bad.
> Both Wall Street and you fail to consider that something else is
> really going on, that most corporate hopes will not pan out, the
> would-be profiteers are mostly just patsies for the attention seekers
> and payers. Even Google is probably much more useful for the new
> economy than not. Its making money is beside the point.
>
> Let me add: this new economy is not primarily about advertising or
> about collecting info on audience members, except in Norman Mailer's
> sense of "Advertisement for Myself."
>
>
> Best,
>
> Michael
>
>
> On Jun 24, 2009, at 8:33 AM, Jean Burgess wrote:
>
>> Sean, thanks for this concrete example. It points us to something I
>> find very interesting.
>>
>> On the one hand, you have the massive unpaid workforce of people who
>> through their various activities co-create the value (however
>> defined) of platforms for user-created content. On the other, you
>> have the profound inability of most of these platform providers to
>> make any real money out of that activity - once you factor in
>> bandwidth costs, and at least thus far.
>>
>> YouTube is a particularly sharp example of this -where UGC is both
>> the driver of YouTube's growth and a ruinous waste of bandwidth
>> because nobody wants to run their ads alongside it: it's
>> unpredictable in content and not clearly enough located in any
>> particular national (that is, US) market.
>>
>> For platform providers like YouTube Inc, the "users" who provide
>> content (and who have to a very significant extent built the thing we
>> call YouTube) are, I suspect, seen as mere placeholders (one day, the
>> "real", monetisable content will replace all those pointless
>> skateboarding cat videos). The trouble is, YouTube now has a culture
>> of its own: and its "attention economy" is in practical terms
>> incompatible with commercial media logics.
>>
>> I really do think this is a weird situation.
>>
>> Cheers
>> Jean
>>
>> On 24/06/2009, at 2:17 PM, Sean Cubitt <scubitt at unimelb.edu.au
>> <mailto:scubitt at unimelb.edu.au>> wrote:
>>
>>> What’s so fascinating is just how small the workforce behind a
>>> global player can be; pointing toards the economic scale of content
>>> production by users
>>>
>>> Extracted from a longer piece at
>>> http://www.theage.com.au/technology/biz-tech/myspace-cuts-twothirds-of-global-workforce-20090624-cvw1.html
>>>
>>> June 24, 2009 - 10:15AM
>>> Social networking site MySpace plans to cut 300 jobs, or two-thirds
>>> of its overseas work force, in an effort to rein in costs and focus
>>> on countries where it has many users and better business opportunities.
>>>
>>> The move comes a week after the News Corp. unit said it would cut
>>> 420 jobs in the U.S., or nearly 30 per cent of its domestic work
>>> force. Combined, the cuts will reduce MySpace's employee base by
>>> nearly 40 per cent to about 1,150.
>>>
>>> "Our goal to tap into as many international markets as possible
>>> drove us to create too many offices around the globe, and with them
>>> came inefficiencies," chief executive Owen Van Natta, a former
>>> executive at rival Facebook, said in a memo sent to employees.
>>>
>>> Regards
>>>
>>> sean
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