In Teens' Web World, MySpace Is So Last Year
Teen Web sensation MySpace became so big so fast, News Corp. spent $580 million last year to buy it. Then Google Inc. struck a $900 million deal, primarily to advertise with it. But now Jackie Birnbaum and her fellow English classmates …
Context & Ripple Effects
In 2005 News Corp paid $580 million for MySpace, and this year Google committed $900 million primarily to advertise on it — two of the largest bets of the Web 2.0 boom, both priced off MySpace's grip on teens. The Washington Post's report that students like Jackie Birnbaum now consider the site 'so last year' strikes directly at the user base those deals were underwriting.
First-order effects
- News Corp's flagship acquisition faces its core risk earlier than expected: if teen users drift before the Google ad deal matures, the traffic behind the $900 million commitment erodes.
- Google is exposed to paying against an audience that may be smaller and less engaged than the one its contract assumed.
Second-order effects
- MySpace must spend to hold young users — adding features and refreshes to counter the perception it is dated — while monetizing harder through ads to justify both purchase prices.
- Advertisers following the teen audience gain leverage over MySpace on pricing, since the site's scarcity value depends on being where youth attention actually sits.
Third-order effects
- If the pattern holds, social networking behaves like hit TV shows or fashion cycles rather than durable utilities — meaning nine-figure acquisitions priced at peak popularity carry structural depreciation risk, and ad-funded platforms become only as durable as their coolest demographic's loyalty.
The trend: Social networks are entering a churn cycle in which teen taste-making decides platform lifespans, testing whether massive ad-backed acquisitions can outlive the fashion that created them.