Will MySpace, Facebook Dominate Mobile?

While MySpace and Facebook will have a strong presence in the mobile market, there's room for a variety of companies to thrive, executives from various mobile social networks said during a panel discussion at the EconSM conference.

The social networking giants have placed increased importance on access from cell phones and smartphones, and MySpace said it expects nearly half of its members to access the site via a mobile phone within five years. This would appear to be a very bad sign for startups like Brightkite, MocoSpace, and others that have mobile-focused social networks, but executives said they're optimistic about their chances.

"We haven't seen any change in our growth curve," said MocoSpace CEO Justin Siegel. "If anything, it's raised awareness and underscored the possibility of what mobile can mean to people."

There are about a billion personal computers in the world, but more than 3 billion cell phones, Siegel said. This leaves a lot of room to gain traction in regions where the bigger players haven't latched on, and Jupiter Research estimates there will be more than 600 million mobile social network users by 2012.

Siegel said the different networks can play different roles in consumers' lives. For example, Siegel said when you message someone on MySpace or Facebook, you don't expect an immediate response -- but you do when using a mobile social network. This different use case probably won't change as time goes on, he predicted.

A key differentiator is that companies that started on mobile can better apply the unique aspects the platform provides, said Brightkite CEO Jonathon Linner. This includes things such as the camera for picture sharing, as well as GPS for location information.

Linner said it's easier than ever to derive geographic information from users via GPS chips, cell towers, and Wi-Fi hotspots, and users increasingly want to share information with others despite possible privacy concerns. While the bigger players are likely to integrate location information in their mobile clients, Brightkite didn't appear very concerned.

"They could easily eat our lunch if they were focused on it, but they're primarily focused on the Web experience," Linner said of MySpace and Facebook.

Regardless of size, nearly every mobile social media site has yet to significantly monetize. This is a major issue that threatens to dampen future growth. Companies will likely try various models until it's clear which represents the best path for long-term sustainability, as none of the businesses represented on the panel were profitable.

"We haven't found the sweet spot yet … but the model we think has the most traction is where the carrier is absorbing the cost and factoring it into the cost of the handset as a value-add," said Amir Hosseinpour, CEO of Juice Wireless.

Companies like Brightkite are taking the advertising route, and Linner said this is generating a couple hundred thousand dollars a month. The monetization issue is further complicated because the mobile social networks rely on mobile operators.

"You can't talk about business models without considering the links in the value chain," said Shawn Conahan, CEO of Intercasting. "It's literally impossible to bring the exact same business model to every carrier that acts as a gatekeeper to the users you want to reach."

Conahan said mobile social networks are just another form of communication, and people historically have been willing to pay for that. The mobile e-mail and instant messaging companies have been able to thrive and be profitable, and Conahan said mobile social networks should be able to do the same.

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