MySpace on the slide - what can fix it?

[Al-khiyal]

MySpace on the slide - what can fix it?

June 17, 2009 -- "MySpace was a good acquisition at one point... but the truth of the matter is they were not able to sustain or be competitive with other companies, notably Facebook. They weren't able to be competitive because News Corporation knows nothing about technology." That came from Michael Wolff, author of the Rupert Murdoch biography The man who owns the news, speaking to Beet.TV. "When mainstream, traditional media companies buy technology companies they don't do very well - often they do terribly, and often they collapse," he continues. "It's no longer competitive. It continues to have a very large audience, but that growth has become less and less and it will ultimately reverse. Unfortunately, to compound the situation, it has never really had a cogent or powerful business model so even managing its decline - or just for cash - is not a reality."

Is that too harsh an appraisal? Even accounting for the gloomy economic climate, there's a chequered history of old meets new media acquisitions from AOL and Bebo to CBS and Last.fm. As the social networking deal of its era, News Corp and MySpace can expect extra scrutiny, not least because if the genius of Rupert Murdoch can't find the money in them there hills, who can? But there are certainly big changes afoot at MySpace. It's the perfect storm of the economic downturn, which has made businesses consolidate and cut costs, combined with the generational collapse of the old media business model. We know about the stagnating MySpace audience - and new data from comScore this week confirmed it has been usurped by Facebook as the most popular social network on its US hometurf. We also know about the drastic job cuts at MySpace, which were confirmed last night. There's no confirmation yet of the UK and European implications of those cuts, though we've had reports that 20 staff have already been made redundant at MySpace UK.

It could be a classic symptom of tarting the site up to sell it... but who would buy it? It would be a terrible time for News Corp to sell with MySpace traffic visibly on the decline and the downturn pushing prices down. News Corp wouldn't get anything like the $580m it paid for the site back in 2005. More likely, this is just the MySpace part of News Corp-wide cost cuttings - and a timely, appropriate restructure of a company that needs to turn a very sharp corner very quickly. Maybe News Corporation should team up with ITV for a BOGOF - Buy One Get One Free - offering Friends Reunited in a bargain basement bundle with MySpace? Friends Reunited (suggested strapline: 'Social networking's biggest missed opportunity') and MySpace (suggested strapline: 'Remember when MySpace was cool?').

We've all been there - pasting those MySpace skins into the 'about me' field all those years back. But the pace of change in technology, let alone among that 'youth' demographic, is relentless, and perhaps big media companies are just looking for something too long term. Were they ever clear enough about why they were buying a social networking site in the first place? If the shelf life of a social network is less than five years, they will need to think far more carefully about whether a long-term revenue goal is realistic, and whether they can support the kind of rapid development that a site like Myspace would need to flourish. As Wolff says - perhaps it just takes a technology company to really bring a site to its full potential.

[Al-khiyal]

MySpace is forced to slash workforce as social network users flock to Facebook

June 23, 2009 -- MySpace, the networking site that helped launch the careers of Lily Allen and Arctic Monkeys, said today it would cut two-thirds of its workforce outside the U.S., in a stark reminder of how quickly internet phenomenons can burn out. The company is cutting 300 jobs from a workforce of 450 and closing at least four offices. The retrenchment also illustrates how media bosses, apart from a fortunate few, are still struggling with the conundrum of how to make money from the internet, even when a site has millions of users. The job losses follow an announcement from MySpace last week that it would cut about 420 jobs inside the U.S., about 30% of the workforce in its domestic and most successful market. Analysts blamed the decline of MySpace on the inexorable rise of the rival social networking site Facebook, as well as the broader difficulty in attracting advertising online, a situation made worse by the global recession. While MySpace had been successful among younger users, Facebook has proven adept at attracting a wider audience spanning demographic groups.

The rise and fall of MySpace delivers a blow to Rupert Murdoch, the News Corporation chief, who bought the business for $580m in 2005 in an apparent Damascene conversion to the internet, buying a clutch of other sites around the time. MySpace has 127 million users around the world and built a reputation for being a showcase for new music and a springboard for careers. But recent data has shown that it has gone into decline. The metrics firm comScore shows that Facebook overtook MySpace in Britain by number of users early last year and has continued to move ahead. According to comScore, MySpace's unique users in this country fell by 18%, from 8.5 million in April 2008 to 7 million just a year later. Facebook during the same period has seen growth of 63% and as of April had 23.5 million unique users in Britain and 200 million worldwide, according to the company. The influential Silicon Valley blog Techcrunch recently said it was "game over" for MySpace.

Murdoch's online nemesis, Mark Zuckerberg, is still only 25, and founded Facebook from his Harvard dorm room in 2004. Twitter, the latest online craze, has expanded rapidly from a low base and has around 2.5 million unique users a month in Britain. In April, in a sign that all was not well at MySpace, News Corp replaced the chief executive, Chris DeWolfe, who had been with the site since the beginning. A month later, Facebook overtook MySpace as the leading site in the U.S. In a statement today News Corp said it was "refining" its international MySpace business, focusing on offices in London, Berlin and Sydney. "It was clear that internationally, just as in the U.S., MySpace's staffing had become too big and cumbersome to be sustainable in current market conditions," said the chief executive, Owen Van Natta, who replaced DeWolfe.

MySpace is facing the possibility of a plunge in revenue. Shortly after buying MySpace, Murdoch did a deal with Google to sell advertising on the site that would guarantee $900m in advertising revenue over three and a half years, provided certain targets were met. But that deal comes to an end in June next year and is unlikely to be replaced by anything remotely as generous. MySpace is not the only social networking site to have suffered a decline. Bebo, bought by AOL in March 2008 for $850m, is also suffering. The site, which is more commonly used by school-age children, lost 24% of its unique users in the year to April, falling to 9 million. Friends Re*united, bought by ITV for £120m less than four years ago, was recently valued at just £20m and has 1.8 million users, a decline year-on-year of 24%.

[Al-khiyal]

How Facebook beats MySpace

June 23, 2009 -- With news that Facebook has for the first time overtaken MySpace in users and that MySpace has responded by sacking nearly a third of its workforce, people are asking the obvious question: Since these sites serve approximately the same purpose – facilitating social networking among online-friend networks – what is MySpace doing wrong? Or, more accurately, what is Facebook doing right? The answer is simple: Contrary to popular opinion, people aren't attracted to dazzling new technologies. They're attracted to dazzling new technologies that support the practices they're already engaged in. Facebook knows how to offer an unobtrusive tool and then get out of the way. MySpace, by emphasising the features of the site itself, misses this point entirely.

Though online social networking tools are new, the practice of social networking is as old as neighbourhoods. The Gutenberg press, the locomotive, the telephone, the fax machine, the internet – a rich variety of revolutionary innovations are linked to the innate human tendency toward social behaviour. While both Facebook and MySpace, the world's most popular social networking sites, support the human social tendency, they have done so by paths that have attracted very different audiences. Their slogans make the difference in approach clear. Facebook's promise is that it "helps you connect and share with the people in your life". The point here is that you already have a social network. Facebook exists only to support communication with the people in it.

Compare this to the MySpace slogan: "A place for friends". The difference is subtle but significant. While Facebook is a tool intended to support communication and networking, MySpace is a thing, a place, a new hangout site – a kind of virtual alternative to the mall beloved by teenagers. If a virtual mall is what you want, then MySpace offers exactly that. Users can customise pages with music, images, colours and fonts. A MySpace page thus becomes a space for public performance and an extension of the user's identity. But here's the thing: We don't need another hangout place. We have that already. It's called the internet. What we need is a site that allows us to showcase the results of all that hanging out, a place to collect and display what we've gathered in all our time spent browsing the online shelves. That's what Facebook offers.

In contrast to MySpace, Facebook offers little by way of variation: blue border, white background, a list of friends' status messages down the middle. With a few minor exceptions, a Facebook page is a Facebook page is a Facebook page. And users like it that way. For proof, think back to the outrage users expressed when Facebook touched itself up to look a tiny bit more like Twitter. Indeed, Facebook offers this bargain: Users get a space to manage a wide network of friends, family and acquaintances. They get to keep up with the details of the personal and professional lives of their Facebook friends. They can join groups, play games, take public or semi-public stands on issues that matter to them, and access photos, links and other online information that is of deep personal interest to them. In return, Facebook gets to ply users with ads and, to a largely unknown extent (at least by most users), gain access to private and often quite personal information.

This does feel like a bargain, especially for younger users whose entire lives have been lived deep in the morass of corporate-sponsored environments. What's the difference, after all, between attending a sporting event at Coors Field or Banknorth Gardens and playing Mafia Wars surrounded by ads for whiter teeth and online graduate programmes? Add to this the fact that Facebook administrators have proved remarkably responsive to user perceptions that designers have violated the bargain, as they demonstrated in the fracas surrounding a revision to Facebook's terms of service agreement. Last year, a similar revolt erupted against a new advertising system that announced users' purchasing decisions to entire friend networks.

In both cases, Facebook caved to public pressure, despite the reality that by now, most Facebook users will not leave, no matter how angry they get or how loudly they threaten their mutinies. And not only did Facebook cave, but it did so publicly, with accompanying posts to the Facebook blog by high-level administrators, including Facebook founder Mark Zuckerberg himself. The perception was this: Facebook serves at the pleasure of its users.

MySpace administrators have approached similar conflicts in a similar way, as when they bowed to user protests against a ban on embedding YouTube videos in 2005 and followed Facebook's lead in offering third-party apps, in an effort to ditch its stigma as a high-spam site. But adhering to the bargain only matters if you have the users to hold you to it, which means designing a tool that promises something that users want. MySpace forefronts the tool, promising a hip, customisable social networking technology. Facebook offers a technology for connecting with friends in hip, customisable ways. Teens, historically the age group most attracted to new outlets for personal expression, remain drawn to MySpace in droves. But early indications suggest that they move toward Facebook and similar social tools once they hit their mid-20s.

Facebook, in its design and administrator responses to user demands, is proving that it gets a key tenet of the new media age: Users don't need new stuff to do, they need new technologies to support doing the stuff that already matters to them. Content is not king after all, writes Cory Doctorow: "Conversation is king. Content is just something to talk about." We might add that if conversation is king, then social tools, at their most effective, are just something to hang conversation on.