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When News Corp. (NASDAQ: NWS) bought MySpace.com for over $500 million back in 2005, some said it was the way Rupert Murdoch would charge into the digital media audience business in a big way. While that was true at the time, the digital world and its audience can become fickle and change rapidly as new web-based properties develop. It's pretty obvious by now that Facebook has leaped past MySpace and is "the place" to be when it comes to social networking interaction (although Twitter is garnering all the buzz presently).
Why Did MySpace lose its way? MySpace evolved to become a portal, offering music downloads and other goodies, while Facebook kept its social networking status as a place where friends and associates could virtually connect. And there you have it -- MySpace didn't evolve as trends were created and rapidly changed.
Now, the company is in the throes of layoffs -- up to 30% of its U.S. workers. Former Facebook COO Owen Van Natta -- who now leads MySpace -- said that "Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company ... I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace."
Change is the only constant, and MySpace apparently didn't pay attention to that paradigm. EMarketer Debra Aho Williamson said it well: "MySpace ended up not being the leader that it wanted to be in the social-networking realm, on the tech front, on the ad front -- and now on the usage front." If she's right, then what does the future hold for MySpace? A middling audience that isn't growing and that becomes the goofy teen gossip website -- and that's it?
The good news is that MySpace still has a very sizable (and hugely envious) audience. It just isn't taking advantage of it like it tried to in the past -- and is still failing at.
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