Think BR: MySpace, it's the product, stupid
Branding and marketing excellence, unrivaled commercial expertise and corporate behemoth backing can never compensate for an inferior product.
Rich Sutcliffe is editor of Brand Republic
The announcement of further sweeping cuts at the social network, with another 500 jobs, 47% of the global workforce axed, is just the latest in a string of stringent measures owner News Corp has taken in its attempts to get MySpace back on track.
Rupert Murdoch, who bought MySpace to huge fanfare for $580m in July 2005 but is now chilled by the losses being incurred by his once prized acquisition – running to tens of millions of dollars every month, and increasing, according to the latest figures available – has been systematically restructuring the organisation behind MySpace over the past two years.
A slew of changes at the top, the closure of the bulk of its outlying offices and the refocusing of the site as an entertainment portal to deflect from its inability to compete with Facebook in the social stakes have been implemented, but to little recognisable effect.
The statement from current chief executive Mike Jones was bullish, in part, but in truth read more like the dreaded vote of confidence than a clear, unquestionable backing of a future for MySpace within News Corp’s ranks.
In June 2009, the company slashed a third of its US workforce, taking headcount down to around the 1,000 mark, and two thirds of its international staff, a further 300 people, closing all but its London, Berlin and Sydney offices outisde the US.
Those changes took place under Owen van Natta, drafted in from Facebook in early 2009 to sort out the ailing website. At the time, the cuts were seen as nothing short of what it needed. MySpace had become bloated and costly, and had lost the number one spot to its more agile competitor Facebook.
Van Natta lasted less than a year, however, replaced by co-presidents Mike Jones and Jason Hirschhorn, themselves brought in alongside van Natta in Murdoch’s first cull. Hirschhorn lasted just a further five months before he moved on.
Jones has since been promoted to chief executive and today cut even deeper into MySpace, taking the company’s international arm almost full circle from when it launched its UK office in February 2006.
It's international adventure started with just four employees - Jay Stevens, now Rubicon Project's vice-president and general manager for international, being the first European hire – charged with taking MySpace to the world. Having peaked at about 150 staff, London will continue its charge with little more than 10 heads, albeit with sales outsourced.
With a skeleton international staff, a redesign that has done little to stem the losses, and a parent company that appears to have run out of patience – despite today’s more confident tone, News Corp described its losses as "neither acceptable or sustainable" at the time of its last earnings release – MySpace is seemingly stuck in a holding pattern, marking time until it's sold, closed or, by some miracle, swims against the digital tide and rediscovers its raison d’etre.
The audience figures speak for themselves. From a UK peak of 6.8 million unique users in April 2007, according Ukom/Nielsen figures, it has lost more than half its UK audience, reaching just 2.6 million in November last year.
Compare those figures to Facebook and MySpace’s problems are evident. In April 07, Facebook recorded a figure of just 2.7 million unique UK users. Fast forward to November 2010 and the Ukom figures have it at 25.6 million, dwarfing Myspace, and all those around it.
While MySpace’s numbers still represent a substantial presence for any website - despite the doom and gloom we shouldn’t forget it still has the kind of global reach many publishers would kill for - the comparative fortunes of the two sites still has one asking, ‘where did it all go wrong?’
The answer lies in Norway. In this small, seemingly inconsequential territory, of no great revenue or traffic importance, (sorry Norway), the battle between Facebook and MySpace was won and lost.
No amount of marketing excellence, of which there has been a great deal at MySpace, or monetisation expertise, for which it probably doesn’t get the credit it deserves – at its peak, MySpace generated far more revenue per user than Facebook has managed - can ultimately prop up an inferior product.
Around 2007, this was played out to startling effect in the small Nordic petri dish.
It was a country with no indigenous social network, where much of the population spoke English, with the majority of social networks yet to be localised.
And it was in this environment that MySpace’s shortcomings were highlighted to full effect. It was product against product, with no great marketing push or local affiliations to muddy the waters. Facebook, you will no doubt realise, quickly supplanted its elder rival.
The ability to import your address book and easily build a personal network of critical mass played a crucial role in Facebook’s swift rise.
Its feature-led, user-focussed development, free of the commercial pressures MySpace by this time was facing, fuelled what became an insurmountable lead against not only its original rival, but the majority of the web.
Facebook focussed on the product. Marketing could wait. It has outstripped MySpace because, in the end, it has been consistently better than MySpace at the crucial communications foundation upon which social networks are built.
You can accuse News Corp of many things, and people often do, but failing to focus on producing a quality product or losing sight of competitors are not traits you would lay at the door of Rupert Murdoch. Far from it.
So why did MySpace succumb to exactly those failings?
You don’t have to be an insider to see the site was slow to react. And if you were an insider, you would have seen a team that took for granted its market-leading position, and subsequently, stubbornness on the founders’ part to shift from their original path.
That could only have happened if News Corp had taken its eye off the ball with MySpace’s management team. It’s possible it was guilty of doing so in the early days, though I've heard nothing to suggest this was the case. That said, News Corp's more recent swift and decisive actions to chop and change at the top smack of company still trying to get to grips with a subordinate.
Did a lack of knowledge on News Corp’s part give MySpace too much autonomy? It has been said, and continues to be said, that Murdoch ‘doesn’t get’ the internet, but there was evidence following the acquisition that, operationally and commercially at least, there was a push to integrate where possible and bring the power of the News Corp machine to bear on the fledgling corporation.
Ultimately, the product has simply not been sufficiently robust to stand the test of time, or the challenge from strong competition.
When MySpace does ultimately close, and it will happen, or any contractual periods of enforced silence come to an end, which will probably be sooner, the insider books detailing its rise and fall will make for interesting reading.
Until then, the slow-motion car crash will no doubt keep you occupied.
Rich Sutcliffe is editor of Brand Republic
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