It's all about scale

19 Nov 2007

Bebo's leap of faith into free media is worth watching.

The firm, rated the third largest US and biggest UK social network site, has allowed advertisers open access to its 40 million-strong customer base.

This means big media firms such as the BBC, CBS, MTV and ESPN can run their content with their media players - and keep 100%of the ad revenue.

That's a great one for consumers, and an inevitable move by the TV companies, but rather begs the question of Bebo.

Ultimately Bebo's move is for the same reason that Rupert Murdoch is dumping WSJ's online subscriptions. The Journal has built a profitable niche business out of selling access to business types who will readily pay for it. Murdoch wants to turn this into a mass market business for the millions who can't and - as the tycoon himself says - won't pay.

It's all about scale. But whereas WSJ will be beating a well-worn path to profit, Bebo has stepped into the unknown. Its big challenge will be to see whether integrate the TV content with its members' online interactions.

Bebo's experiment is in direct contrast to the inertia at YouTube. The tech blog quotes a US venture capitalist complaining at a conference last week: "You've got the single best monetizing machine that can't figure out how to monetize all those eyeballs."

Asian broadband providers should keep a close eye on Bebo's bet. Many are shopping on both sides of this street, selling subscription TV while also building out ad-supported web portals.

Somewhere along the line the two are destined to collide.

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