David vs. Murdoch er …. Goliath.

By Robert Young

If history of online communities is any indication, then myYearbook seems to be a worthy contender against the reigning champ of social networks, Rupert Murdoch’s MySpace.

From 1992 (when the commercial Internet was officially born) to 2002, online communities were kind of a weird, off-beat space. By “weird” I don’t mean anything negative… what I mean by it is that it wasn’t mainstream. Rather, online communities attracted the edge cases of the population: the intellectuals, the very shy, the anti-socials, the dysfunctionals, the medically/health afflicted, etc. Generally speaking, it became a haven for people who had difficulty dealing face to face with carbon-based life forms. In that sense, the advent, and the democratizing nature, of the Internet and online communities proved to be of huge benefit to society. Probably the only exception were the teens that chatted on AOL. This last exception serves as the perfect segue to the rest of my post.

When social networking was jump started by Friendster in 2002, something subtle, something radical and different, started to happen. The twenty-somethings (grown up AOL teen chatters) that initially flocked to Friendster were *not* the nerds of that generation. They included the cool kids, along with the nerds of course… in other words, a nice cross-section of people representative of the mainstream. In short, Friendster disrupted the online communities by bringing in the average folks into the fold.

As we all know, Friendster couldn’t pull it off at the end, and MySpace took the crown. The biggest advantage that MySpace has today is that it’s so very “cool”. Given that, do you know what its biggest liability is? It’s actually the same thing… it’s too cool. If the article on MySpace in the current March issue of Vanity Fair magazine is any indication (sorry, no link available), they are the Paris Hilton of social networks. And just as Paris cannot stay hot forever, MySpace’s cool will fade.

But myYearbook is different. It’s beyond cool… it’s orthogonal to cool. For the teenagers in high school, it’s rapidly becoming a necessity… on par with other daily essentials like IM, email, and a cell phone, it’s not just a nice thing to have, it’s becoming a must-have. The way myYearbook does this is by providing teenagers with the tools to digitally and seamlessly extend nearly every aspect of their lives. It would take too long for me to go into many of their unique features here… the best thing to do is to sit with some teenagers and go through the site piece by piece (you’ll hear a lot of “sweet!”).

As you’ll quickly realize, the features and functionalities offered within myYearbook enable teenagers to facilitate and optimize their real-world social lives and their careers as high school students. Conversely, if you’re not on myYearbook, you will be at a disadvantage, one that becomes more severe with time. For instance, in schools where the teens have adopted myYearbook, parties are planned with the service, they collaborate on classes and extracurricular activities, you can see who’s popular or who lives near you with similar interests… even their search engine is optimized for socialization. Of course, this is all on top of pretty much everything you can do with MySpace. In a complete reversal of the first ten years of online communities, where the inhabitants were the edge cases of society as I described above, for a teen in a high school today where myYearbook has presence, the edge case is the one that *doesn’t* belong to the service. Consequently, this is something that is not well understood by many “older” execs and investors today.

Observing the way these kids rely on myYearbook has enormous long-term strategic implications for how C3s (the “consoles for consumer control” I mentioned in my previous post) will eventually develop to impact the mainstream market at large. For instance, my mouth waters at the thought of envisioning the possibilities that will result when the functionality of myYearbook inevitably collides with all the benefits inherent with feed syndication (e.g. RSS). In fact, many Web 2.0 tools/services will enable myYearbook to dynamically grow with the individual, morphing features & functionality over time with evolving tastes and needs. These pages harness and digitally represent all that is important to them and what they pay attention to. That’s the fundamental foundation and power of C3s in an attention economy.

At this point, many of you are probably wondering… what about Facebook.com? How will myYearbook fare against Facebook? Well, my immediate response is an obvious one… they should be talking to each other about a merger, as Facebook is to college what myYearbook is to high school. However, if there’s no deal, my bet is that myYearbook will gradually edge out Facebook, and for a very simple reason.

There are about 20 million high school teens in the U.S. At its current rate of growth, it’s not difficult to imagine that a huge share of them will soon be on myYearbook. Now, further imagine them all graduating, at some point, and going off to college. Remember, these kids will have invested a lot of their lives into myYearbook. With myYearbook offering them the ability to “upgrade” to the college level, what would you do at that juncture? Would you decide to pick another service and trash everything that you’ve built? Or would you keep your investment and simply modify it sufficiently to reflect your growth and maturity? My bet is the latter. Talk about high switching costs! Bottom line is that I can envision successive waves of myYearbook “graduates” decimating the ranks of Facebook with every year that passes. As I mentioned in the first part of this post, there is significant benefit to focusing on the teenaged demo (which, consequently, is the youngest group that any web service can address, legally).

Now, having said all that, myYearbook’s success is by no means a slam dunk. Even if they execute perfectly, wrestling away meaningful market share from MySpace is going to require a lot of luck and excellent timing, not to mention the daunting challenge of having to go up against the vast resources of Rupert Murdoch’s media empire. But of all the potential contenders out there, I think myYearbook is the one to watch (particularly if they align with a major strategic whose resources are comparable to those of Murdoch’s).

For powerful insight into the general impact of social networking in today’s society, I would highly recommend you read the transcript of the speech danah boyd recently gave to the AAAS. Although Danah uses MySpace to illustrate the sociological significance of social networks to teens, in my view, everything she observes goes double for myYearbook.

(n.b. I know many of you are disappointed that I didn’t go into myYearbook’s business model. Unfortunately, I am not at liberty to disclose their plans as they remain confidential. Suffice it to say, their success in capturing such a tight demo in teens will yield them not only premium monetization opportunities, but also much flexibility in terms of monetization schemes. In other words, it won’t be just the regular run-of-the-mill ads; instead, I expect to see exciting and unconventional initiatives that reflect the fact that teens don’t like to be advertised at, but instead prefer high levels of engagement where brands become intertwined with their social personalities and status).