Filling the blanks: MySpace discusses dramatic reinvention

27 October 2010

by Eamonn Forde

With their new designs due to be unveiled very, very soon, TMN speaks to Nick Love, MD of MySpace Australia, about the dire need for change and hints at what we can expect.

MySpace is dead. Long live MySpace. That’s what News Corp, the company that forked out an astonishing (at the time) $580m [A$592m] to buy the social network in 2005, is hoping as is gears up for MySpace’s biggest reboot to date. This really is a make or break moment for the site. What the new MySpace will look like is still under lock and key, but what is clear is that a mere redesign of the UI (user interface) will not suffice. The changes will have to go much deeper to sharpen and refocus what exactly MySpace is and, more importantly, what it does.

The Music Network spoke to Nick Love, MD of MySpace Australia, ahead of the global re-launch of the site and he was brutally honest about the need for change.

“The first thing about the redesign was to ask the question: why?,” he said. “We were very unfocused from the product perspective and this really led us to try to be everything to everyone. What that strategy ends up meaning is that you become nothing to anyone. Lots of companies have grown really quickly and have forgotten what it is that made them great in the first place. If we put our hand on our heart we can say that where MySpace lost its way a bit was in that lack of focus.”

The new-look service is due to be unveiled later today at 6pm (AEST) and TMN will have full analysis and screen grabs.

MySpace has, however, sent out a teaser in the form of its new logo, designed to focus attention on its future rather than its turbulent present in which it has cut staff, had its revenue slump and seen not one but two senior executives (CEO Owen Van Natta in February and co-president Jason Hirschhorn in June) leave the building this year alone. While that was bad, the financial state of the company was worse.

Back in May, News Corp’s Rupert Murdoch laid it out in harsh and clear terms that MySpace had to turn things around – and turn them around quick. In an earning call, he revealed that the division of News Corp of which MySpace was a major part reported a loss of $150m [A$153m] in the fiscal third quarter.

Murdoch muttered that “during the last two or three years, I think we made some big mistakes” and, while he stopped short of heaping all the blame on MySpace, it was clear where the finger was pointing. Murdoch did, however, say that a new management structure was working on a re-launch and a refocus of the site. He added that early signs suggested user traffic was growing and dwell time on the site was increasing. “When that gets more substantial,” he said elliptically, “we’ll get more advertising.”

In August, the issue of MySpace’s problems was raised again and Murdoch said it was undergoing “a major overhaul” that would make it “look very different in the next few months than it has in the last few years”. Perhaps tellingly, he added, “We’re going to see it out for some time yet.” The use, intentional or otherwise, of the world “some” here was read as a sign that Murdoch was becoming tired of the financial drain caused by MySpace and the growing suggestions that it was a bad investment as he bought the site as its peak when its worth was artificially inflated by the hype surrounding it in 2005.

MySpace did not quite come out of this all looking like the unwanted child, but it really could have done with more support from its parent company. Murdoch’s comments here were interpreted as him being prepared to keep investing in MySpace but not being prepared to treat it as a money pit. The clock was ticking. MySpace had been granted a stay of execution but it had to prove it was worth keeping alive.

It is all too easy to declare the death of MySpace, but this oversimplifies and obfuscates what is happening. All services have their golden period, their moment in the sun; but when they are eclipsed, it does not automatically follow they are redundant. But it does mean that it must reevaluate its position and role in a market that has changed considerably since its launch.

MySpace still has a solid user base of close to 100m users, but it lags way behind Facebook’s 500m users. On top of this, comScore recently reported that Twitter had overtaken MySpace to become the second biggest social networking channel in the world. Twitter had 96m unique visitors in August (up 76%) while MySpace had 95m uniques (down 17%). With falling user numbers comes a tougher challenge to sell ads, the very lifeblood of a site like MySpace, and the analysts’ forecasts suggests a long road ahead for MySpace; and one that will get bumpier before it gets smoother.

In August, eMarketer forecast that ad sales on Facebook will rise to $1.28bn [A$1.31bn] this year, up from $665m [A$679m] last year. For MySpace, it would see ad revenues drop from $400m [A$408m] to $347m [A$357m] over the same period. The subtext here is that not only has Facebook stolen MySpace’s cool and its users, it’s also stealing its revenue.

The bigger Facebook becomes, runs the logic, the weaker MySpace is in comparison and the less advertisers are willing to deal with it.

“Sometimes it’s been a hard slog with media agencies because MySpace isn’t the shiny new thing it was a few years ago in the market,” accepts Love. “It’s not as easy a sell as it once was.”

The other big challenge facing MySpace is that other sites are proving more effective for music promotion. In May, BigChampagne looked at how MySpace compared to other sites that came in its wake and found it to be seriously lagging behind. In a one-week period, BigChampagne found that Rihanna’s Rude Boy single had been streamed 732,014 times on MySpace Music but it had been watched 4,282,376 times on YouTube. BigChampagne added that in the same week, the top 10 tracks on MySpace Music were streamed 7.5m times but the top 10 music videos on YouTube were watched 57.3m times.

This all conveys a message back to the music industry, always a key partner for MySpace, that the site is less effective than its competition.

While labels are not washing their hands of MySpace, it is slipping down the page during digital and marketing meetings as other sites and services take priority. “If you don’t have focus,” says Love, “you leave yourself open to competitors who do have focus on a particular function to drive a train right through your business. The US is really ramming home that we have to focus on who we are, what we stand for and, most importantly, what we’re not.”

This issue of defining what MySpace is not is a critical one and goes deep into the heart of the need for this reboot. We were told of a former MySpace executive who once said, “MySpace does a lot of things but is not best at any of them. We were second or third best.” Here, laid bare, is the fundamental problem at the heart of MySpace.

Opening up the site is something that MySpace has been steadily working on all year and this all gives a flavour of where the redesign is going. It has created a series of developer APIs (application programming interfaces) for third-party sites to build products and services that link into or link back to MySpace. That is where MySpace is putting its chips on the social media roulette table.

“The web is becoming more open and we absolutely believe in that,” says Love. “Part of our goal is to be as open as possible.”

MySpace is certainly doing everything in its power to open up as widely as it can. What the re-launch will reveal is less about how widely it has opened but more about if can have a second bite of the cherry or if all that’s left is to bite the dust.

What do you think MySpace needs to do to get its mojo back? We asked four industry experts how they'd fix its problems in this week's Hook feature.