As Facebook was negotiating a half-billion-dollar
investment from Goldman Sachs recently,
MySpace, once the dominant Web site for social
networking, was preparing to fire nearly half its
staff.
The layoffs, which cut nearly 500 employees
from a payroll of close to 1,100, were announced
Tuesday. 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, which bought MySpace in 2005 for
$580 million after a bidding war with Viacom.
On one level, the decline of MySpace again shows
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, a loss of more than nine million from
the previous year.
“MySpace was like a big party, and then the party
moved on,” said Michael J. Wolf, the former
president of Viacom’s MTV Networks and
managing partner at media consulting firm
Activate. “Facebook has become much more of a
utility and communications vehicle.”
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.
Even Tila Tequila, the model and rapper who
achieved fame by building an audience on
MySpace, has switched allegiances. In 2006, Time
magazine called her the queen of MySpace, but
these days she prefers Facebook.
“I just lost my passion for MySpace,” she said in
an interview, adding that she does not even
remember her MySpace password, even though
her page still lists 3.7 million fans. “I haven’t
logged on because it’s not simple anymore.”
MySpace began life as part of the News
Corporation with the same sort of hoopla that
now surrounds Facebook. Rupert Murdoch, the
News Corporation’s chairman, was immediately
hailed as an Internet visionary. When Sumner M.
Redstone, the controlling shareholder of Viacom,
lost out to Mr. Murdoch, he called it a “humiliating
experience” in an interview with Charlie Rose, and
fired Tom Freston, the chief executive of Viacom,
for failing to acquire the site.
Mr. Murdoch was an early champion of the site
and its founders, Chris DeWolfe and Tom
Anderson. He would have them to his ranch in
Carmel, Calif., for long chats about the future of
media, and often intervened personally to help
them navigate the News Corporation ’s hierarchy
so decisions could be made quicker, according to
a former executive who demanded anonymity so
he could maintain his business relationships.
In 2007, when Mr. Murdoch set his sights on
Dow Jones and its prize, The Wall Street Journal,
his attention was diverted from what had been
his obsession, nurturing MySpace.
The calls to Mr. DeWolfe and Mr. Anderson for
impromptu beers at a bar near the News
Corporation ’s Midtown Manhattan headquarters
became less frequent, as did Mr. Murdoch’s help
in cutting through the bureaucracy.
Another early sign of the culture clash was the
News Corporation ’s decision — which executives
publicly complained about at the time — to move
MySpace’s offices from Santa Monica, where
employees worked in a loft space and had access
to countless restaurants and coffee shops, to a
building in Beverly Hills that was originally
intended to be a medical facility. There were
many fewer restaurants nearby, and employees
began leaving work early to eat, and not
returning until the next day.
Users, meanwhile, have been fleeing by the
millions. MySpace ’s aesthetic came to be seen as
cluttered and unwieldy, like a locker door, while
Facebook came along with a simple, Google-like
interface.
Like many Americans, Erin Polley, a 29-year-old
who works for a nonprofit organization in
Indianapolis, received her social networking
baptism years ago on MySpace.
And like many Americans, she has moved on.
“To me, it was kind of a precursor to how
Facebook is now, where everyone is on it, and
it ’s almost a necessity,” said Ms. Polley, who
added that she had not logged on to MySpace in
years because it became “amateurish” and
“boorish” and too focused on celebrities and
music.
“Every time I logged on it was just messages
from bands I barely heard of,” she said.
“Facebook allows you to actually connect with
real people, rather than bands or celebrities.”
The imperatives of making money, rather than
focusing on technology and expanding new
users, is what perhaps sealed MySpace ’s fate.
“The paradox in business, especially at a public
company, is, ‘When do you focus on growth,
and when do you focus on money?’ ” said Mr.
DeWolfe. “We focused on money and Facebook
focused on growing the user base and user
experience. ”
Early on, the News Corporation announced an
ambitious goal of generating $1 billion in revenue,
which it failed to meet. A $900 million advertising
deal with Google ensured that the News
Corporation made its money back from the
acquisition, but more recently MySpace ’s
performance has been a drag on the earnings of
the News Corporation.
In the most recent quarter, the division that
houses MySpace reported a $156 million
operating loss.
“The current losses are not acceptable or
sustainable,” said Chase Carey, the News
Corporation’s president, in a conference call with
investors in November.
Source: Http://www.nytimes.com/2011/01/12/technology/internet/12myspace.html?src=busln
0 comments:
Post a Comment