Link: FT.com / Reportage - The rise and fall of MySpace.
I've been around the social media block long enough (Geocities, Friendster, Tribe.net, anyone?), and this seems to apply to the seemingly "invincible" search engines as well (WebCrawler, AltaVista?): the one thing that seems as constant as death and taxes online is that the social sphere (the wisdom of crowds or mob rule) is fickle.
You may be up one day, but most surely, a day will come when you will be down (think about it, Blackboard!).
So while I never really got into MySpace, the larger story of the MySpace failure is a cautionary tale for any 800 pound gorilla entertaining dreams of invincible bigness.This Financial Times article dissects the failures of the early leader dancing on the tensions between interactive communication models and mass media communication models, as News Corp tycoons demanded MySpace scale up to mass media audiences and oblivious mass media behaviors, effectively killing their own golden goose.
But is that what killed the MySpace social ecosystem?
(Note, it is not really dead, but it is acknowledged in this article that its 100M users are no longer contesting Facebook for leadership at 300M users.)
One could argue that as surely as MySpace rose, it would also fall, as surely as a small town church will split into two churches, as surely as Friendster begat Tribe begat MySpace begat Facebook (which will begat ???).
But back when this question of ascendancy between MySpace and Facebook was still in more open contention, I never once doubted Facebook would come out on top (and this wasn't just because MySpace often resembled the old Geocities pages either!).
But people argued with me. And I knew they were wrong, despite their very earnest and rational arguments, proofs, numbers.
It bugs me: How did I know they were wrong? I am wont to reflect on these things. I wouldn't just cite my online research background in social ecosystems, user experience design work, or some other thing from my resume' (an argument based on authority or expertise, which seems to be a cheat in this instance, since I have never designed a site as successful as MySpace or Facebook).
So truisms and arguments from authority or expertise don't count, at least for this exercise.
So how did I just KNOW? How did all those other 300M users just know? What did we know?
I might hearken back to the rise and fall of search engines. One advantage of being so long in tooth in Internet-land is that I actually remember the Internet before "spiders" and crawlers, the Internet before search. I remember being dazzled by WebCrawler and Lycos, and then, some time later, abandoning my old favorites for AltaVista. (I always was drawn to machine indexing over human, sorry Yahoo!)
And yet, I had no hesitation when I first met Google, as surely as I once fell in love with Photoshop as a former professional photographer. People argued with me at the time, students, colleagues.
"What's so great about Google?" they'd say.
Or they'd just refuse to shift over, like my dad, still using his Excite home page.
I'd try to tell them, but on some level, I just knew... something. And when the next thing comes along and topples Google the Invincible, I will shift again. I'll probably do the same thing to Facebook at some unforeseen moment in the future. I'm not happy with this feeling so irrational. I'd like to parse it out better.
Until then, here are some telling bits of business-focused analysis in the Financial Times that tries to assess what made MySpace fall as Facebook rose. I suppose if I could figure out this mystery and bottle the solution, I'd be very rich. But I seriously doubt anybody has hit on the true "secret sauce" of this knowing just yet, regardless of what they may tell you.
The cautionary tale part of this is for Facebook, before the next small-town-church-split thing rises up to supplant it. I just want to highlight below the things that seem to factor into that unknowable something that makes some social media interfaces gel into truly alive social ecosystems that are far bigger than any design team could take credit for.
All bold emphasis below is mine, as is the snarky commentary.
The rise and fall of MySpace
By Matthew Garrahan
Published: December 4 2009 15:26 | Last updated: December 4 2009 15:26
In summer 2005, having spent the best part of four decades building a newspaper, film and television empire, Rupert Murdoch decided that the time had come to get serious about the internet. As founder and chairman of News Corporation, one of the world’s biggest and most powerful media conglomerates, Murdoch controls an eclectic portfolio of businesses ranging from The Sun newspaper to the movie studio 20th Century Fox. Yet with young people “watching less television and reading fewer newspapers”, as he observed that summer, News Corp desperately needed a bigger presence online.
[...]
The way in, it was decided after much deliberation among the News Corp top brass, was to buy Intermix, a Los Angeles-based company whose main asset was MySpace, a website that had been adding an astonishing 70,000 new users every day.
[...]
To say MySpace was a hot property back in 2005 is something of an understatement. Its rapidly expanding tribe of users had attracted the attention of other potential buyers. Viacom, for one, a rival media conglomerate that owns companies such as Paramount Pictures and Comedy Central, was eyeing it as a vehicle to revive its flagging MTV channel, a similarly youth-oriented brand.
But Murdoch got there first and the resulting $580m deal transformed his image at a stroke. The curmudgeonly media baron, whose achievements included breaking the Fleet Street printing unions and launching the conservative Fox News cable channel, had re-invented himself as a 21st-century internet hipster. It took Wall Street a few months to appreciate the magnitude of the deal but the purchase slowly began to imbue News Corp with an almost priceless commodity it had lacked: cool.
[...]
Months after the acquisition, Murdoch had another reason to feel pleased: MySpace signed a three-year advertising contract with Google worth $900m – effectively paying for News Corp’s purchase. Google bought the right to become a fixture within the MySpace site, enabling it to display its text adverts to the network’s millions of users. This prize was highly contested, with Yahoo and Microsoft falling over themselves to win the business before Google triumphed.
[...]
It was also becoming clear that, unlike many other internet sensations, MySpace could earn its keep. Within 15 months of the acquisition, revenues had leapt from about $1m a month to $50m a month: half came from advertising sold by the new sales team that News Corp had installed, the rest from the Google deal. As advertisers rushed to target the site’s rapidly expanding audience, offices were opened in Japan, South Korea, China, while a free music service was launched at considerable expense.
But by the beginning of 2008, things began to sour. Facebook, a rival social network that was simpler and easier to use, was gaining momentum and starting to grow more quickly than MySpace. Murdoch confidently told the world that MySpace would make $1bn in advertising revenues in 2008 – but the company missed its target. Users began to desert the site, which had become cluttered with unappealing ads for teeth straightening and weight-loss products. News Corp executives could hardly hide their displeasure, and in April this year, DeWolfe left, closely followed by most of his senior management team.
Since then, MySpace has shed 40 per cent of its staff, closed many of its international offices and publicly given up trying to match Facebook in the race to become the world’s biggest social network. (MySpace has more than 100 million regular users, Facebook more than 300 million.)
[...]
The number of people using the site has also dropped precipitously this year: MySpace’s share of the social networking market has tumbled from 66 per cent a year ago to 30 per cent, according to the online research company Hitwise. The situation is so dire that MySpace recently revealed that it had failed to attract enough online traffic to meet targets set in its advertising deal with Google and as a result would lose $100m this year. An acquisition that had initially covered Murdoch in glory and offered so much promise was becoming an embarrassment to the News Corp chairman and a liability for his company.
[...]
As long as MySpace was growing exponentially, Murdoch and Chernin seemed happy to let Anderson and DeWolfe run it how they pleased. The MySpace team and Levinsohn continued to clash, and Levinsohn left News Corp to be replaced by his cousin, Peter, a veteran of Fox’s TV business. MySpace continued to add users at a terrific rate and was also attracting huge volumes of advertising from movie studios and consumer brands. That meant two things: one, the young team would have to learn to balance users’ and advertisers’ needs, and two, the top brass would have trouble resisting the temptation to get involved.
Murdoch himself was responsible for dealing the company the first in a series of blows. On a 2007 News Corp earnings call, a punchy Murdoch told analysts that Fox Interactive Media would generate $1bn in revenues for the 2008 fiscal year (up from about $550m in 2007). With MySpace representing almost all of Fox Interactive’s revenues, the implication was clear: Murdoch thought MySpace’s meteoric rise would continue. There was only one problem: the MySpace management team had no idea Murdoch had set them a new target until he opened his mouth. “It came out of thin air,” says a former MySpace executive. At a stroke, the site’s free-wheeling, entrepreneurial days were over: it had to perform exactly as expected – or else.
[...]
As the rivalry with Facebook intensified, MySpace staff took pride in the fact that theirs was an edgier site, with a younger demographic. One employee even had jokey stickers printed saying:
“Your Mom is on Facebook”
The company also prided itself on being able to respond quickly to the needs and demands of its community, but once Murdoch had set the $1bn revenue target, putting the MySpace community first became more difficult. According to former MySpace executives, the advertising on the site was making it less compelling for users. Meanwhile, any innovations or changes that might have cut the number of page views – and therefore advertising revenues – were likely to fall foul of News Corp.
[...]
Jim Heckman, the former chief strategy officer of Fox Interactive Media – and the architect of the MySpace-Google deal – says blaming News Corp for the site’s demise is “an anecdotal smokescreen. By that time, the jig was up … people had already started moving over to Facebook en masse.”
[...]
The two sides differ profoundly over where responsibility lies for the site’s decline. Former MySpace executives say News Corp dragged its feet over implementing Ajax, a program that allows users to send a message, an e-mail or to post a comment on their friends’ pages without having to open a new browser window. Facebook was quick to embrace Ajax but MySpace did not follow suit, partly because to do so would have reduced the number of page views the site generated and therefore its advertising revenue. “It would take five steps to post a comment or send a message, so five different pages would open,” explains another former executive. “There would be ads on each of those pages, so we were making money. We went to News Corp and said: ‘We want to change this but in the short term our revenues will drop.’ It became a long back and forth. [They] were pushing back – they wanted to make sure we weren’t going to drop our revenue numbers.”
News Corp, meanwhile, contends that the request to adopt Ajax came at the beginning of 2009 – when Facebook had already established its supremacy. In other words, it was too little, too late.
[...]
One of the other tools that made Facebook so effective was an e-mail address importer that immediately sent invitations to the user’s friends to sign up to the site. Another ex-MySpace executive says Anderson waited too long to introduce a similar function on MySpace.
Facebook, which had initially been restricted to university students, launched the importer shortly after opening the site to the public. “It caused a real spike in growth,” says the executive. “But six months before they launched the importer, Bebo [a UK social network] had done the same thing. We were neck and neck with Bebo in the UK but the number of their users suddenly started spiking. We knew we had to launch something similar straight away but Tom didn’t think it would make much of a difference. He wasn’t convinced it was that important.
“We discussed it for six months but he wouldn’t focus the team on building it.
It wasn’t until Facebook launched with that feature and had several months of 40 percent growth that we started working on it.
That was a judgment call and it was a mistake … it ended up costing us a lot of users that went to Facebook instead of MySpace.”
[OK, that wasn't a mystery of the social ecosystem, that's just plain stupidity, pure and simple. Business requirement stupidity, and it appears that there was enough of that to go around. The story gets worse.]
[...]
“When the recession hit we still needed to invest in product enhancements,” complains the ex-MySpace executive. “But the word came down from News Corp that if our revenues dropped we had to offset them dollar for dollar in cost reductions. The team became focused [on] cutting costs rather than thinking about driving the business.”
[...]
None of this was a problem while Murdoch remained deeply interested in progress at MySpace. But in 2007, two years after buying it, the man who was DeWolfe’s biggest ally became distracted by a new deal that required much of his time and attention: News Corp’s pursuit and eventual $5bn purchase of Dow Jones, the company that owns The Wall Street Journal.
“The bureaucracy crept back in when he bought the Journal [and] Murdoch became less interested in MySpace,” says a former MySpace executive. “Then the recession hit and every finance guy at News Corp became involved in what we did so we had to spend all our time doing PowerPoint demonstrations.”
Another former executive puts it more bluntly. “Rupert took his eye off the ball on the internet. He got obsessed with Dow Jones and stopped paying attention to MySpace. That’s when all the trouble really started.”
[Started? I'd say it was well on its way by that point, maybe even still from the point that Murdoch even bought it. There was just too much cultural cognitive dissonance, as unusual as Rupert Murdoch's business empire world is, between his existing media properties and MySpace.]
Van Natta and Miller, who decline to comment, are convinced MySpace must be a leaner, more appealing site that draws in users and encourages them to linger. Van Natta says the company is no longer interested in competing with Facebook – “we’re very focused on a different space” – and claims MySpace will be “the place where content gets socialised”. “If you and I had never met before but had similar tastes in music I can connect with you on MySpace and discover that you like movies and TV shows that I hadn’t discovered yet,” he says. “MySpace can foster discovery [of music, films and TV] in a way that others can’t.”
[...]
[My jury is just out on that one. It sort of feels like trying to resurrect Geocities, you know?
It is an interface that is also deeply rooted in a social time and space, and times, spaces and social ecosystems change.
In the land of the social, of human societies, this is seen as normal and inevitable, but the online world of interface and platform builders and media property owners on the edge of moving into the tense spaces between interactive media models of communication (many to many) and mass media models of communication (one-to-many), the business desire for scalability to mass levels, and the profits that can come with them, often leads these Old Media Owners to kill the very goose that laid their golden eggs.]
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