Monday, November 24, 2008

MySpace Traffic and Consumer Confidence

According to one theory, a time of economic uncertainty should benefit web sites such as MySpace. The free entertainment that it provides could substitute for paid entertainment options as consumers cut back on spending. But another theory says that a site such as MySpace would decline along with consumer confidence. In times of uncertainty, who has time for anything so frivolous? I checked with Google Labs, and it showed U.S. MySpace traffic dropping off significantly in early September, at the same time that the financial crisis was becoming apparent to the general public. This decline appeared to coincide with the September decline in the University of Michigan consumer sentiment index. Both MySpace traffic and consumer confidence have continued to decline in the two months since.

This is not really enough data to draw a conclusion from, but I take it as a positive sign. I would like to think it shows that U.S. consumers are taking the economic turmoil seriously and doing what they can to put themselves in a better position, at the cost of some entertainment time. If people are taking extra time to take care of their own economic conditions, then despite what may happen to the corporate sector, the economy as a whole will not be overwhelmed by the recession.