Michael Arrington Mar 23, 2011
Between January and February 2011, says Comscore, worldwide unique visitors to MySpace declined by a staggering 14.4% from 73 million visitors to 63 million visitors. It’s about half of the audience they had a year ago.
Everyone knows MySpace traffic is going the wrong way, but the accelerating decline (and big financial losses) is a serious problem. Parent company News Corp. is in the middle of a sale process, and everyone from venture firms to private equity firms to operating companies are taking a look. “It’s like slowing down at the scene of an accident,” says one person with knowledge of the discussions, “everyone wants to take a look at how bad things have become.”
The problem with negative growth is that predictive modeling has to be thrown out the window. And an accelerating decline in audience suggests that MySpace won’t be stabilizing soon. Right now, people are fleeing as fast as they can from the site.
News Corp. seems sensitive to getting a lot less than they paid for MySpace – $580 million in 2005. That price isn’t going to happen, which means a spinoff may be the best PR solution for MySpace. It’s not clear, though, that MySpace head Mike Jones has a go forward plan that anyone really cares for, say sources. MySpace had around 95 million unique visitors when the site was redesigned from the ground up and relaunched late last year. By any measure that relaunch has amounted to nothing more than a medieval-era bloodletting, weakening the patient further.
MySpace, once the king of the Internet, is in very real danger of becoming just a footnote in Internet history.
This is a dramatic situation, and more drama is likely as the scene continues to unfold.
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MySpace
MySpace is one of the world’s largest social networks, with about 125 million users. Originally inspired by Friendster, MySpace quickly grew to become the world’s largest social network, before being overtaken by Facebook. User pages are highly customizable and support integration with widgets such as Slide or YouTube. MySpace provides users with a way to connect around content and culture.MySpace was started as a side project of the internet marketing company eUniverse (now called Intermix Media) in August 2003. Brad Greenspan, then founder and CEO of eUniverse oversaw the project, which was also led by Chris DeWolfe (later CEO), Josh Berman, and Tom Anderson (soon to be President). It officially launched in January 2004.
By February 2004, MySpace reached 1 million registered users. By November 2004, that number had reached 5 million. In July, 2005 News Corporation bought eUniverse (renaming it Intermix Media) for $580 M, of which approximately $327 M was the valuation of MySpace. At this time, the site had 20 million registered users. In mid 2007, News Corporation contemplated selling 25% of MySpace stock to Yahoo! in a deal that would have valued the site at $12 B, though this never went through.
After being acquired, MySpace’s revenues grew rapidly, as News Corporation pursued lucrative advertising deals. In August 2006, Google made a $900 M agreement to provide search and advertising directly on the MySpace site, which is set to expire in June 2010.
In mid 2008, MySpace participated in a major site redesign. Throughout its history, critics have often cited the chaotic and disorganized interface as a severe drawback to usability of the site. This redesign made the main page more streamlined and clean.
In late 2006, Universal Music Group sued MySpace for millions in damages from copyright infringement. This suit was settled in mid 2008 by the launch of MySpace Music, a site where users can listen to streaming songs from all sorts of artists. To supplement this venture, MySpace acquired iLike in mid 2009. MySpace had previously also launched a record label in 2005 and musicians such as Lily Allen and Sean Kingston were first discovered through MySpace.
In mid 2007, MySpace acquired PhotoBucket for $250 M in cash, plus an additional $50 M earn-out. By late 2009, News Corporation sold a 2/3 stake in Photobucket to a group of investors valuing the company at $60 M, over 80% less than the acquisition price.
Since 2008, user growth has stagnated and page views and other metrics have fallen. In April 2009, longtime CEO and co-founder Chris DeWolfe was replaced by Owen Van Natta, in a publicized firing. President and head of product, Tom Anderson, was kept on, but in a different position. Two months following this, MySpace announced it was laying off 30% of its workforce amounting to 420 people.
Milestones
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- MySpace added Laurie Spindler as Director, Corporate Communications. (1/1/00)
- MySpace added John Schultz as Sr. Principal Software Architect. (9/15/06)
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- MySpace added Arvind Puri as VP, Data Platform. (3/15/10)
- MySpace added Bjorn Laurin as Vice President and General Manager, Mobile. (5/1/08)
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- MySpace added Mike Jones as CEO. (10/1/10)
- MySpace added William Kapke as Technical Evangelist. (3/15/10)
- MySpace added Ashley Ford as Creative Developer. (7/1/09)
- MySpace added Ashley Ford as Designer. (9/1/07)
- MySpace added Jason Ling as Head of Mobile Products and Technology. (1/1/00)
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- MySpace added Frank Orozco as Director of Engineering. (9/1/05)
- MySpace added Tracy Akselrud as Vice President Communications. (11/1/06)
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