MySpace will go down in history as a classic MBA case study. How did the darling of social networking, bought by media giant News Corp. for $580 million in 2005, sell to ad network Specific Media for $35 million? Today’s deal, first reported by AllThingsD, will involve cutting MySpace’s 400 person staff in half. In many ways, the MySpace book has closed.
So what went wrong? It’s unclear where to place the blame, but as I wrote in January, it comes down to Facebook’s surge while MySpace slowed new product development. After the acquisition, there was a key stretch in 2006 and early 2007 when MySpace appeared to be focused more on international expansion and less on improving the user experience. At the same time, MySpace was raking in the dough, fresh off signing a $900M ad deal with Google. The site looked messy and chaotic, while Facebook looked clean (and perhaps to some, too sterile.) But beyond design, MySpace went over a year without any new features of note while Facebook obsessed about improving the experience and growing its community, launching “Connect” to expand from a site to a social platform.
The rest is history.
In social networks, momentum matters. That year and half or so was a critical time to continue to lead the way with new user-focused products that captured buzz, kept its members engaged and grew the community outside the confines of the site itself. Instead, MySpace slipped from leading to competing. Then simply, reacting to everyone else.
There’s a lesson in here for all of us.
