MySpace Moving Away From Social Networking?

It’s been a big week or two for News Corp's social networking site, MySpace.

Founding CEO Chris DeWolfe was bounced. A new CEO, Owen Van Natta, was brought in six months after he'd left rival Facebook and started Monday.

Now only one big question looms: With no buzz factor, low scores for “user trust” in online surveys and a reputation as a hangout for disaffected teenagers, is MySpace still viable as a broad-based, come-one-come-all social network?

On that rides News Corp's $580 million investment, whose current value now bobs on the unpredictable waves of social networking.

For the moment, News Corp and MySpace executives say, the company is financially well situated and is more profitable than its more popular rival, Facebook.

“We have focused relentlessly on profit,” one senior executive said, speaking on condition of anonymity. MySpace is projected to make about $900 million in revenue this year, and may break even by year's end, these executives say.

But a large part of those revenues are due to a $300 million deal with Google for search business. That deal, which delivers only about half that amount of value in advertising returns, ends in summer 2010.

Some see a panicky scenario ahead: What then? How will that revenue be replaced?

By contrast, Facebook has concentrated on growth, and now has over 200 million global users to MySpace's 130 million. In the month of March, according to ComScore, Facebook had an estimated 294.7 million unique visitors worldwide, while MySpace had 125.7 million. (See accompanying story: "MySpace & Facebook: A Brief History.")

"The more cynical among us are already comparing MySpace to soon-to-disappear GeoCities," said VentureBeat last week, after the news arrived that Yahoo is scrapping GeoCities, the "personal home page" site it bought for more than $2.9 billion in 1999.

Indeed, Van Natta's appointment was met by a hailstorm of doubt in the blogosphere about MySpace’s chances of competing with Facebook.

“Like an '80s rock band, MySpace's time has come and gone,” GigaOm wrote after Van Natta was appointed. “Folks, what we are seeing is an end of general purpose, broad social networking.”

MySpace “has the feel of a fun party that's almost over,” wrote VentureBeat.

The worries are not unfounded. At Facebook, Van Natta was chief revenue officer and helped negotiate a $240 million investment from Microsoft. After reportedly clashing with CEO Mark Zuckerberg -- whose job Van Natta is rumored to have wanted -- Van Natta left and in November took the top job at Playlist, a free music-streaming venture.

Traffic to that site fell after MySpace and Facebook, faced with lawsuits from major music companies, severed ties and access to their users. All of that fueled talk in the industry that Van Natta was better at furthering his own career than at running companies. It didn’t help that he reportedly took himself out of the running as head of MySpace Music because he was waiting for the top MySpace job.

That role came open suddenly last week when founder DeWolfe was given his walking papers by News Corp’s new chief digital officer Jon Miller.

 

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