Just Ask Mixi: Why Facebook's Attempt Was Doomed

(MoneyWatch)  Much like my Bnet Media colleague, Cathy Taylor, I watched this week's controversy over at Facebook with interest but didn't choose to write about it until it was over. This morning, Cathy is postulating that Facebook's failed attempt to assert ownership over its members' content may lead to an even more radical change -- demands by members to share in the revenue their content helps the company realize.
This entire issue over who controls social media content provokes in me a deep sense of deja vu. Almost a year -- and some 300 posts -- ago, I covered a similar controiversy as it unfolded at Mixi, the giant social networking site that is the Facebook of Japan.

Just as happened here, Mixi had tried to very quietly rewrite its Terms of Service to effectively give it control over its users' content. Then, an angry rebellion by users forced Mixi to reverse course before the new terms could even be implemented.

A close look at why Mixi got into trouble revealed that the company, in trying to figure out a way to monetize all of that user-generated content, was exploring publishing some of it with traditional media partners to generate revenue.

Mixi acted right after Morgan Stanley (remember them?) downgraded its stock, saying that traffic had peaked and the company had no "favorable" growth strategy. It wasn't difficult to imagine the discussion among Mixi executives as they devised their plan to assert ownership rights over their users' content.

Someone would have mentioned the legendary case of Densha Otoko (Train_ Man), an obscure love story that originated at 2channel but later swept the nation with a series of lucrative projects, including a blockbuster book, movie, a television series, manga, and other profitable media products.

Mixi's execs realized that they had access to similar personal stories posted by their users, but unless they unambiguously owned the rights to those stories, they couldn't safely repackage them into profitable ventures.

In the end, of course, just like Facebook, Mixi was forced to back down. Meanwhile, as I wrote about last month, a new challenge arose on the horizon, or rather along the traintracks. It was the "cell-phone novel" -- keitai shosetsu -- that are typically written by very young women, interactively with readers, on their mobile phones while riding the trains.

These novels, which are written not in formal Japanese but in texting language, are already so popular that eight of the top ten selling novels in book form last year were republished keitai shosetsu. So the guys at Mixi may have been on to the right idea, but that particular train had already left the station.

As they ponder their next moves, the execs at Facebook may want to become more familiar with the trials and tribulations of their counterparts at Mixi. There's no sense trying to reinvent wheels that are never going to turn.