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MySpace Makeover

May 19, 2009

MySpace was king a few years ago, now no one mentions it very much. Can it come back and become relevant again in the world of social networking?


Losing Popularity Contest, MySpace Tries a Makeover

New York Times


Published: May 3, 2009

As Owen Van Natta, the new chief executive of MySpace, starts his second week at the sprawling social network , he faces an acute demographic problem.

While Facebook is adding users, MySpace is losing them. Many user profile pages on MySpace are either cluttered or neglected, resembling a strip mall with pockets of empty storefronts. The users who remain tend to be younger and poorer, putting a drag on advertising revenue from blue-chip clients.

To put it more personally, Mr. Van Natta’s friends in Silicon Valley probably do not remember their MySpace passwords. Come to think of it, his own profile page could use some sprucing up. In mid-April, a week before he was hired, he had only six friends on the service.

In late April, the News Corporation, which is controlled by Rupert Murdoch and owns MySpace, moved to revive the social network by replacing its founder, Chris DeWolfe, with Mr. Van Natta, a former Facebook executive and a shrewd deal maker. The move signaled an increasing frustration on Mr. Murdoch’s part toward MySpace’s management.

Mr. Van Natta will be charged with deriving more revenue from MySpace, which sometimes calls itself a social portal and competes with Yahoo and AOL for ad dollars. To do so, the executives may choose to concentrate on a specific niche: the 13- to 34-year-olds who make up slightly more than half of the site’s audience.

MySpace draws 130 million users globally each month and is said to be profitable. But the network, which is News Corporation’s biggest Internet property, has been slow to innovate and has had trouble meeting ambitious revenue goals.

Fox Interactive Media, the unit that includes MySpace, came up about 10 percent short last year of a $1 billion revenue projection. In the most recent quarter, the unit generated $226 million in revenue, down 3 percent from the year-ago period. Operating income declined to $7 million, from $47 million.

“It’s been such a long and winding road on monetization,” said Anthony DiClemente, an analyst at Barclays Capital.

Shortly after News Corporation bought MySpace in 2005, it established a search advertising deal with Google, which contributes about $300 million to the company’s annual revenue. But that deal expires next year, and it is unclear whether it will be renewed.

Meanwhile, Facebook has surpassed MySpace as the biggest social network in the world and is on track to beat MySpace among United States users this year.

Furthermore, there are indications that MySpace is losing audience outright. While the site drew 70 million unique visitors in the United States in February and in March, that figure was down from 75 million in December and in January.

Compared with the overall online population in the United States, the site draws disproportionate numbers of teenagers, twentysomethings and people whose household income is less than $25,000 a year, according to the measurement firm comScore. The Facebook audience tends to be more affluent, making it a more appealing space for higher-end advertisers…

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