MySpace Moving Away From Social Networking?

Sign of the times: One senior executive for comedy at MySpace has 1,403 friends on Facebook.

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. Many in the industry felt that DeWolfe, considered a favorite of CEO Rupert Murdoch, let rival Facebook take the lead on innovation and technology.

On Van Natta’s first day on the job, Monday, News Corp announced that he will be joined at the top of MySpace by two well-regarded tech executives who were behind start-ups later sold to media conglomerates.


The two are Michael Jones, most recently a senior VP at AOL, which bought his online tools company Userplane in 2006, as chief operating officer and Jason Hirschhorn, president of Sling Media’s Entertainment Group, as chief products officer.

A MySpace spokesperson would not discuss the new hires. 


Chief products officer is a new position at MySpace — a signal that the company is getting serious about the need to innovate and create new products that differentiate it from Facebook.

“With this new team, MySpace looks more like a media and entertainment portal,” said Caroline Dangson, social media analyst for market research firm IDC. If MySpave defined itself that way, the site would incorporate social networking, but where Facebook is designed for sharing information with your friends, MySpace would be for connecting with people while finding and consuming entertainment.


This seems to recognize the obvious: Facebook now controls the social networking space. Indeed, one of MySpace’s senior comedy content producers, Lance Patrick, has 1,403 friends on Facebook.

According to MySpace executives, MySpace knows which way the social media wind blows and is moving away from positioning itself as a networking site. What it does well is media consumption, and the plan is to focus and innovate there.

To redirect, MySpace needs more products like MySpace music, which last year extended its popular music features and music community and remains a hot spot for online music. It’s the one area in which MySpace gets some respect and has an image that has not been totally trashed.

Where else can MySpace expand? The new team will be overseen by Miller, the well-respected former chief executive of AOL. Miller knows online media consumption: His charges also include IGN Entertainment, Photobucket and the company’s interest in Hulu.

As far as image goes, MySpace’s rowdy reputation will not be easily changed — but that may not be fatal. One media executive pointed out that while Facebook wants you to connect only with people you know in the outside world, thereby protecting the site’s staid atmosphere, MySpace can be "more of a party" —  a place where users are welcome to take on fake identities and mingle freely with people they’ve never met.


But most important will be: Can MySpace come up with some new products that perform as well as MySpace Music — and build a bit more of the corporate respect the company needs, even if it keeps a party-place image?

Online gaming, as well as virtual goods, are areas where MySpace could develop, Dangson said. “They need to put more attention into gaming because it will keep people on their site, and it’s a way to do creative advertising too, with sponsored games, for example.”

Microtransactions and virtual goods would generate revenue — but there, they will be up against that old MySpace image problem. “They’ll have to work on the trust factor,” Dangson said, “if they’re going to be asking people to put in their credit cards.”