MySpace: We don’t need Web 2.0

News Corp. chief operating officer Peter Chernin told company investors today that, “If you look at virtually any Web 2.0 application, whether its YouTube, whether it’s Flickr, whether it’s Photobucket or any of the next-generation Web applications, almost all of them are really driven off the back of MySpace.” MultiChannel News is reporting that Chernin said there is no reason why News Corp. couldn’t build parallel businesses, targeting YouTube in particular. “Given that most of their traffic comes from us,” he said, “if we build adequate if not superior competitors, I think we ought to be able to match them if not exceed them.”

What didn’t get discussed in the coverage of Chernin’s talk to the Merrill Lynch Media & Entertainment Conference today are the steps the company has taken that have made it more difficult for outside companies to spread their presence inside MySpace, like blocking external links in Flash widgets. Could more hindrances like that be forthcoming? [To clarify, this is the context in which Chernin’s comments were made, he did not discuss blocking other company’s widgets.]

While competitor Facebook won accolades for opening an API to outside developers, it’s understood that there is probably zero chance of such openness from MySpace.

It’s unclear what more MySpace could do by way of features alone to compete with YouTube. The MySpace video player has embedding, related videos, top videos and viewer comments. Chernin said that MySpace’s video efforts have been small so far and estimated that between 60 and 70% of YouTube’s traffic comes from MySpace. That may become less the case as the YouTube community develops its own stars who use MySpace pages as static points of reference, at most.

Chernin also said that the company was looking to put more of its own commercial video on MySpace. “You’re going to see us starting to play more aggressively on the entertainment side of that site,” he said. Commercial video on YouTube has been a big gamble, with some of it well received and some of it eliciting a very hostile response from users.

To summarize: the COO of News Corp. says that Web 2.0 is leaching traffic off of MySpace, that they can build their own services to compete with any of it and that there’s going to be an increasingly aggresive commercial push on the site. That sounds both dangerously arrogant and like a real validation of fears that MySpace dependency is too risky for outside developers.

Om Malik had a piece in Business 2.0 yesterday titled Suddenly Everything’s Coming Up Widgets, where he said “Everyone’s a winner here: MySpace, because it becomes stickier; YouTube and Slide, because they get the traffic; and the user, because he or she gets it all on one page.” It sounds like MySpace’s owners may not want to play a game where everyone wins.

I hope we hear from others at Newscorp who have something different to say, or that Chernin’s statements are qualified. The innovation that comes from many different organizations swapping data and allowing users to port information from one platform to another is key characteristic of what’s called Web 2.0. Chernin’s statements may make business sense, but they don’t bode well for innovation. If you want to get a hint of how cool cross site widgets can be, check out Typepad’s approach or the new widget marketplace Widgetbox.

I guess no one should be surprised. Perhaps all the outside developers who hate MySpace’s dreadful code will feel a new sense of freedom.