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MySpace Plays Chicken with Users

The popular social network is showing third-party widget makers—and its users—who really decides what content gets added to pages

Late on Apr. 10, photo-sharing site Photobucket began receiving complaints from users that slide shows and videos they had created with Photobucket tools and posted on their MySpace accounts were not working. At first, Photobucket Chief Executive Alex Welch figured it was just a glitch. But when video remained missing through the following morning, Welch knew something was amiss.

Turns out MySpace had blocked the content, saying Photobucket violated its terms of use by encouraging users to embed ad-supported slide shows in their MySpace pages. "MySpace allows its users to embed video, slide shows, and other features from third parties so long as they comply with our terms of service," MySpace said in a statement. "We spoke to the company about their actions, but they refused to respect our community's terms, and we had no choice but to disable their service."

Photobucket's Welch maintains that neither he nor any senior manager on his staff was contacted by MySpace. "I don't know what their motivation is," Welch says. "In general it goes back to brands wanting to interact with users, but it's the user who has really chosen this route. And they don't think it's fair for that outlet to now be taken away from them, and neither do we."

Voting with Your Mouse

The contretemps drives at the heart of a bigger issue confronting MySpace and the growing community of companies that create cool applications, often referred to as widgets, for users to append to their pages. Third-party applications can live or die based on whether MySpace lets them operate on its pages. And while the Photobucket shutdown underscores how vulnerable these companies can be to MySpace's graces, it also shows the limits of MySpace's control.

Place too many limits on what users can include on their pages, and those users can vote with their computer mouse, taking their profiles and friends to a rival site—say Bebo or Facebook. "Users are going to make the personal decision of what's more important to them, their MySpace page or the other medium," says Michael Arrington, editor of "If they decide Photobucket is more important, they're going to go to another site like Bebo and set up shop there. They're playing chicken with their users, effectively."

MySpace users are increasingly being forced to choose. For instance, they're free to use SNOCAP, a MySpace-authorized widget that lets users set up music storefronts on their profile pages, but not Indie911's Hoooka. MySpace says Hoooka transgressed its terms by giving the profile owner a cut of its profits. By banning widgets like Hoooka, MySpace is sending out a clear message: Do things our way or don't do them at all.

Lehman is an editorial assistant for BusinessWeek in New York.

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