Over the past two years, Myspace has lost, on average, more than a million U.S. users a month. Because Myspace makes nearly all its money from advertising, the exodus has a direct correlation to its revenue. In 2009 the site brought in $470 million in advertising dollars, according to EMarketer. In 2011, it’s projected to generate $184 million.
In February, News Corp., which bought Myspace and its parent company, Intermix, in 2005 for $580 million, started officially looking for a potential buyer at an asking price of $100 million, according to a person familiar with the sale process. Yet even in the midst of a frenzy for social media that has seen LinkedIn valued at $6.4 billion and Groupon rebuff a $6 billion takeover offer from Google, barely anyone wants to buy Myspace.
On June 9 the News Corp.-owned tech blog AllThingsD.com reported that a group of investors led by Activision Blizzard, chief Robert Kotick was closing in on a deal. “Getting people to come back to something that in their minds has become less useful is an incredible challenge on the Web—just ask AOL,” says Richard Greenfield, an analyst with BTIG. “Myspace has become an eyesore for News Corp.”
It’s an eyesore for users, too. Many Myspace pages appear to be host bodies for the worst kinds of advertising parasites. On the upper right-hand corner of the page for Zaiko Langa Langa, an African band Googled at random, a photo of a blonde in a tight T-shirt appears, asking, “Want a Girlfriend? View Hundreds of Pics HERE!” (It’s an ad for a dating site called True.) Farther down, someone has posted footage of nearly naked jiggling buttocks. There hasn’t been an update from the musicians in weeks.
Mismanagement, a flawed merger, and countless strategic blunders have accelerated Myspace’s fall from being one of the most popular websites on earth—one that promised to redefine music, politics, dating, and pop culture—to an afterthought.
Myspace’s fate may not be an anomaly. It turns out that fast-moving technology, fickle user behavior, and swirling public perception are an extremely volatile mix. Add in the sense of arrogance that comes when hundreds of millions of people around the world are living on your platform, and social networks appear to be a very peculiar business—one in which companies might serially rise, fall, and disappear.
Will Facebook live forever?