Is Youth-Market Social Networking a Solid Investment?

Consumer-market trends invariably are moving targets, so it’s difficult to anticipate what the next big fad will be, how long it will last, and when it will recede into oblivion. Youth markets are especially difficult to pin down, with trends in fashion, music, and other manifestations of popular culture emerging and fading from view in what seems like the blink of an eye.

So, is it good business practice for media corporations and web powerhouses to pay hundreds of millions of dollars — and perhaps more — to acquire social-networking sites with such ephemeral youth appeal? That’s the implicit question that runs through an article in today’s edition of the Washington Post.

The article, written by Yuki Noguchi, presents anecdotal evidence that MySpace is in the process of becoming passe with today’s teens. She quotes teens who have grown tired of spending time on MySpace, and who have been alienated by its lax security and privacy controls.

Writes Noguchi:

To a youth market composed of teens like Kim and Birnbaum, MySpace is just the latest online fad. Before MySpace, the place to be was Xanga, and before that, Friendster, MiGente and Black Planet.

"They’re not loyal," Ben Bajarin, a market analyst for Creative Strategies Inc., said of the youth demographic. Young audiences search for innovative and new features. They’re constantly looking for new ways to communicate and share content they find or create, and because of that group mentality, friends shift from service to service in blocs.

If Bajarin is correct about the inconstant loyalties of teens — and the fates of countless pop-music icons of years past suggest he’s right on the mark — how is it possible for News Corp. to keep its MySpace brand hot? More to the point, is it wise for Yahoo, or anybody else, to spend more than $1 billion to acquire Facebook, which, if the Post article is correct, is becoming the flavor of the month with teens?

News Corp. hopes that new technological features will keep MySpace in favor with the youth demographic, but will that work? A teen hangout, whether in the virtual or the physical world, is defined by the caprice and presence of other teens, not by a rational calculation of features and functionality.

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