Monday, July 04, 2011


Stephen Bartholomeusz writes today on Murdoch and MySpace that;

Myspace could have been Facebook. News bought it before Facebook, which was until then operating as a closed network for university students, and opened its site to all-comers. In social networking, there is a big advantage for first movers because of the self-fuelling nature of the network benefits.

There are numerous reasons put forward as to why Myspace failed so spectacularly – apart from the $US545 million loss on its purchase price it generated hundreds of millions of dollars of operating losses.

Poor execution, an overly complex product – Facebook and Twitter are deliberately and deceptively simple and stripped back sites – an unwillingness to allow third parties to develop apps, tardiness in responding to changes in its market, issues with security and controversies about the nature of some of the content it was hosting were presumably factors.

The larger one, however, may have been its acquisition by News and the change in emphasis that accompanied the change of ownership.

The really successful internet businesses that are built by leveraging network benefits – like Google, Facebook and Twitter – are far more focused on generating user volumes than they are on today’s revenues. They build their audience first and then think of ways to monetise it.

So we have a litany of reasons offered. My answer the other day was;

As another example of non-innovation by big firms I take the case of News Corp. Back in the 90s News was highly focussed on the issues of "convergence", as a simple read of the Shawcross biography will show. But News failed with investments in online services through Delphi and now the retreat from Myspace.

News Corp is a growing, productive, profitable firm - but it can't innovate.

In particular Myspace - a place for personal site building - got surpassed by Facebook - a place for connecting.

I really think it is that simple.

Novae Meridianae Demetae Dexter delenda est

No comments: