5 Oct 2007

Facebook to Go Into Music Distribution???

The primary strategy for successful web companies should be to enhance their core product and integrate with complementary services of other successful web companies.

Allfacebook.com is reporting that Facebook is looking at leveraging its relationship with college students to go into the downloadable music industry. If the report is true, this would be the first crack in Facebook's previously flawless execution. With so many other services doing it really well (iTunes and Amie Street to name just a few), why would you build it yourself when you have so much more to do within your core business?

Big and small companies continuously fall into this trap. They figure that since their customer base probably buys this other product (which they have no expertise at producing or delivering) why not build it and sell it to them? Honestly, it's like a farmer saying "Hey I sell fresh vegetables to families, families like to rent movies, so why don't I do that as well?" This reasoning has been continually proven wrong. The web is a big minefield for this train of thought because it is so easy to build a rough prototype of any service.

Therefore, alot of companies use the "Let's try it out" strategy that screams lack of focus and discipline. The problem is that while web prototypes are easy to build, they take alot of effort to perfect (and we haven't even discussed the likely business needs that are different from the core business). The "Let's try it out" strategy is one of the worst ways for an established successful company to take advantage of the web. They fail to remember that the web offers unprecedented connection with others. If it is easy to build a prototype, think about how easy it would be to integrate another successful web service into your business.

The primary strategy for successful web companies should be to enhance their core product and integrate with complementary services of other successful web companies. Facebook should not pursue this music distribution strategy. It should focus its resources on enhancing its core product (I think adapting it to the needs of a business market would make google and microsoft very nervous). If it wants to offer music downloads on its site, partner with one or more successful companies already in the space. Set up a revenue sharing agreement, integrate the applications into the core Facebook offering, and continue to do what they do best which is keeping people connected.