MySpace, R.I.P
It is not good to talk ill of the dead. It is okay, however to speak the truth, however harsh it might seem, about the living dead. — Rupert Murdoch's $580 million MySpace purchase has outlived not only its utility, but has also finally hit its expiration date.
Context & Ripple Effects
The obituary lands on the day News Corp fired MySpace CEO Owen Van Natta, barely a year into his tenure — syndicated reporting from Silicon Alley Insider and BoomTown describes him being dismissed by News Corp digital chief Jon Miller in an afternoon meeting, which frames GigaOM's 'living dead' verdict less as commentary than as a management decision made official. The arc behind it is long: Washington Post flagged as far back as 2006 that teens were already drifting off MySpace, Silicon Alley Insider documented the growth curve flattening in 2008, and MediaMemo reported last year that the Google advertising guarantee expires this year — meaning the revenue floor under the business disappears in 2010.
Murdoch paid $580 million for the site at its peak; the intervening moves read like asset management rather than strategy — iLike was acquired in August and left running, while Imeem was bought in December and shut down within weeks. A rumored interest in Flixster (unconfirmed) suggests News Corp is still shopping for a social property even while writing this one down.
First-order effects
- News Corp must install a third MySpace leadership team in under a year and justify the unit inside Miller's digital division with no CEO, no growth story, and the Google ad contract lapsing mid-year.
- MySpace's remaining staff and partners face a holding pattern: the music strategy is now one service (iLike) after Imeem's shutdown, and any Flixster pursuit would be a bet placed on top of an unled company.
Second-order effects
- When the Google guarantee ends, MySpace competes for open-market ad dollars against Facebook at the exact moment its traffic trajectory is flat — pricing pressure falls on the display inventory News Corp once banked at guaranteed rates.
- Facebook's rise converts every other portal-era acquisition into a cautionary benchmark; rival media companies weighing their own social buys now price in MySpace's $580 million as the downside case.
Third-order effects
- If the pattern holds, first-generation social networks get managed for cash extraction rather than user growth, and 'social' stops being a product category acquirers buy and becomes a feature every media property builds itself.
- The MySpace ledger becomes the standard exhibit in the argument over whether big media conglomerates can operate consumer internet platforms at all — a governance question that will follow News Corp's digital ambitions well past this sale-or-shutdown decision.
The trend: Social networking's center of gravity has shifted decisively to Facebook, reducing earlier-generation networks to cash-managed assets whose value now depends on exit timing rather than audience.