Evil Times For MySpace
February 24th, 2011 | by Jen |In 2005, MySpace was an upstart social media Web site with more than 16 million users. Young and flashy, it soon eclipsed Friendster, its main rival in the United States, among users in the most highly coveted under-30 demographic. And MySpace kept devising new features and innovative goodies for its eager young users.
That was the year that Rupert Murdoch, the chairman of the News Corporation, agreed to pay $580 million for Intermix Media, the parent company of MySpace.com. The purchase reflected Mr. Murdoch’s edict that his top staff get serious about the Internet.
Users quickly numbered more than 33 million and advertisers flocked to the site, hawking everything from body sprays to music.
But MySpace fell on evil times, outmaneuvered by Facebook and its fresh innovations. On one level, the decline of MySpace showed the fragility of social media where fickle consumers and changing tastes can make sensations out of services like Tribe and Friendster that quickly fade from public imagination. According to comScore, MySpace reported 54.4 million users at the end of November 2010, a loss of more than nine million from the previous year.
Then in January 2011, as Facebook was negotiating a half-billion-dollar investment from Goldman Sachs, MySpace announced that it was preparing to fire nearly half its staff. The layoffs will cut nearly 500 employees from a payroll of close to 1,100. The downsizing is the most draconian yet for the beleaguered company, and could be a precursor to a sale of the site by the News Corporation.
More broadly, the decline of MySpace is a tale with echoes of the ill-fated pact AOL made with Time Warner: a highflying Internet venture caught in a culture clash precipitated by joining a big media conglomerate. Then a competitor arrives on the scene with better technology.
Now the News Corporation is considering selling the site entirely, putting the capstone on the legacy of a deal that never quite worked out.