Blog Post

Can Internet Free Agents Rescue MySpace?

myspacesaviorsWhen the New York Yankees spent more than $400 million signing up free agent pitchers C.C. Sabathia and A.J. Burnett, along with first baseman Mark Texiara, the team was betting that it would not only make it to the World Series, but win. After this weekend’s clean sweep by the Boston Red Sox, however, that looks like a mission impossible.

News Corp (s nws) is counting on the equivalent of three Internet free agents to replace Chris DeWolfe and Tom Anderson and revive MySpace, the big but not so bountiful social network. The three free agents are CEO Owen Van Natta (former COO of Facebook), COO Mike Jones (founder and CEO of Userplane) and Chief Product Officer Jason Hirschhorn (former president of SlingMedia.) These three men are certainly capable, but they are on a mission impossible. As I’ve said in the past — the era of general purpose social networking is over and it impacts no one more than MySpace. There are many challenges facing MySpace, among them: 

  • Though it leads in the U.S. in terms of traffic, Facebook has almost caught up, and there seems to be very little room left to grow.
  • Its strategy to capture portal advertising dollars may have helped revenues in the short term, but Pali Capital analyst Richard Greenfield argues that’s it’s also served to increase the company’s costs.
  • MySpace’s advertising-related deal with Google ends on June 30, 2010. With that a steady supply of revenues — about $300 million in 2009, estimates Pali Capital — is going to dry up. If MySpace indeed gets a new search deal in fiscal 2011 at a 50 percent discount from the current rate, according to Pali, it will have to grow sales by 27 percent organically. Tough targets, don’t you think?
  • Facebook is using its 200 million-plus user base to become a dominant web ID player, further marginalizing MySpace as a platform, which hasn’t managed to successfully capture the imagination of developers.

That said, I think MySpace Music is a nice niche opportunity — how big of one remains to be seen. For the three free agents — good luck guys! You are really going to need it.

23 Responses to “Can Internet Free Agents Rescue MySpace?”

  1. Myspace is too social. Once people started to use it as a dating site, its popularity began to wane. There is much more control over facebook and your interaction with people. Its simpler and much more to the point. The music is a good idea for Myspace, but not just music, multimedia as a whole.

  2. partywedo

    I attended an eMarketing summit in Portland last week. I was amazed at how many of the presenters made remarks like: “who even uses MySpace anymore?”. This and other disparaging remarks lead me to believe that these guys will have to reverse a huge image problem.

    As a baby boomer, I get the impression that MySpace is only for the young and the reckless. That may not be true, but I think that there are millions of others who may be getting the same impression.

    They should stake out a niche and keep hitting the ball to one or two fields. The trouble is that it will be hard for a big company to turn their thinking to landing on a niche.

    A lot of batting practice is probably on the agenda if they want any home runs.

    • Well you might be right about the fact that no small company person wants to deal with this mess. I bet they are promising him the moon in order to take this job. I know Mike pretty well and have a lot of respect for him. I mean, he is one of the few people I qualify as A-type free agent… in baseball parlance.

      • People promise the moon to secure talent all the time. Culture, expectations, and management (Murdoch) are barriers to execution though. Can a FIM company execute like an agile start-up? That’s what Myspace needs, but it is unfortunately under pressure to replace Google’s soon-departing ad revenue.

  3. Since none of these guys need the money they’re in it for the glory. But they’re not hungry enough to get it done. Its impossible at this point to do much with MySpace. Its going to fail. That is the way the web works. Its a trendy place. What is next? It’s anyone’s guess but one thing is for sure kids are getting bored of MySpace…