Once-fading MySpace undergoes youthful reincarnation

Facebook thumped it, and Twitter threatens it as a source for entertainment news and real-time searches.

But MySpace, nestled in the entertainment capital of the world, thinks it can survive — even thrive — as a repository for all things music, Avatar and Twilight for the under-35 crowd.

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“It would be silly to count us out,” says Jason Hirschhorn, who, with Mike Jones, runs the company as co-president. They replaced Owen Van Natta, who was jettisoned as CEO last month after less than 10 months on the job.

“There is a pulse of pop culture on MySpace,” says Hirschhorn, a former MTV executive. “It is the place where 100 million people congregate, and hundreds of thousands sign up every day,”

They have their work cut out. MySpace, a unit of News Corp. Digital, has stumbled through two CEO resignations in the past year, while Facebook and Twitter surged. (Van Natta’s predecessor, Chris DeWolfe, left in April 2009.) Nonetheless, MySpace remains one of the Internet’s most enduring brands. It is profitable, and it is expected to haul in more than $350 million in revenue this year — mostly from ads.

Hirschhorn acknowledges that every major brand goes through plateaus, but says the strong ones overcome them. He and Jones concede that MySpace’s online traffic had flattened last spring, user engagement was down, and its products lacked focus and vision. But with an ambitious rebranding now underway, they foresee a renewal in its fortunes. The company is hiring engineers designers and marketers in Los Angeles, San Francisco and Seattle.

MySpace is moving back to its original DNA: appealing to self-expressive, creative under-35-year-olds who are into games, music and movies. More than half of MySpace’s estimated 100 million users are 25 and younger, according to market researcher ComScore. The 13-to-34-year-old demographic spends 84% of all user time on the service.

MySpace intends to appeal to that demographic with a mantra of “Discover and be discovered,” a fancy way of saying it wants to be the online venue to find new friends, movie trailers, little-known bands and social games.

The rebranding is illustrated in design mockups splashed across the walls of a user-experience lab here: simple, clean pages with vibrant looks designed to draw artists, hard-core social-media users, brand managers and others. There is even talk of a new company logo.

In its pursuit of customers, MySpace has reinvented itself in several ways:

New user home pages, released last month, are heavy on live personal content, but without the clutter once associated with the original MySpace design. “The product got too big and congested,” Jones says, looking at a simplified new interface mockup. “It became unfocused.”

•Forthcoming profiles for celebrities such as Lady Gaga and Angelina Jolie are easier to navigate and offer encyclopedic data on their subjects.

•Social-gaming firm Playdom is helping MySpace reinvigorate its gaming channel. This month, it launches Wild Ones, a shoot-’em-up already available on Facebook, on MySpace. More games, including ones exclusive to MySpace, are on the way. “Thirty percent of our users play games; we think it should be at least 50%,” says Jones, a former AOL executive.

•Through its constant tweets on Twitter, MySpace has developed into a heavy-duty entertainment news service for music, celebrities and youth-oriented movies such as New Moon and Alice in Wonderland. Twitter and MySpace have also synced services, so tweets or status updates on one service are automatically duplicated on the other.

MySpace is not only reinventing itself, but recasting the competitive climate. “When we think about Twitter and Facebook, we don’t think about competition as much as we think about partnership, distribution and synchronization,” Hirschhorn says.

Yet can MySpace — once the undisputed king of social networking — remain relevant as a scaled-down Web portal for music and entertainment news? Industry analysts, including Debra Aho Williamson, aren’t so sure. They say MySpace faces an obstacle course of competitors, starting with the omnipresent Facebook and now including Google Buzz.

“For months we’ve heard about the company’s plan to refocus on its historic roots in music and entertainment,” says Williamson, of market researcher eMarketer. “But the turnaround has been painfully slow, and this shakeup will only reinforce the perception that MySpace can’t be fixed.”

Though millions of people use MySpace Music, the company “clearly needs to find its next big” thing, says Richard Greenfield, an analyst at investment brokerage BTIG. “This is no easy task and may require a meaningful acquisition, maybe of a social-gaming company like Zynga or a start-up.”

Since Facebook’s audience overtook MySpace last May — 70.3 million unique users vs. 70.2 million — it has widened its lead dramatically. Today, Facebook boasts 400 million members, about four times as many as MySpace.

As audiences melt from MySpace, so are marketers, says researcher eMarketer. Facebook will surpass MySpace in advertising revenue this year for the first time — a year earlier than expected, it says.

EMarketer estimates ad spending on MySpace will fall 21% this year, to $385 million, worldwide. It expects Facebook to rake in $605 million in ads worldwide this year, up 39% from 2009. If not for a three-year, $900 million search deal with Google that is set to expire by midyear, MySpace’s revenue would be lower, Williamson says.

MySpace’s Jones says his company is still in discussions with Google to possibly extend the deal, or it could partner with others in the future.

“MySpace has been good at monetization, and others notice that,” he says.

Privately held Facebook, by comparison, could vacuum up $700 million to $1.1 billion in revenue this year, based on estimates from analysts including Forrester Research‘s Augie Ray. However, Trip Chowdhry, of Global Equities Research, says $350 million to $500 million is more accurate.

“MySpace rested on their laurels, got complacent and failed to innovate,” says Jeremiah Owyang, a partner at market researcher Altimeter Group.

Return to its roots

Facebook’s dominance notwithstanding, MySpace and others can thrive in fragmented spaces, such as music and entertainment news, says Eric Mandl, head of large-cap tech banking at UBS.

MySpace remains a force in music. More than 13 million bands, from Pearl Jam to garage bands, find it a vibrant tool to communicate with fans.

“Their brand was born in the music community, as a hub for attracting bands and fans,” says Tim Westergren, founder of Pandora, an online music service.”There still is a tremendous loyalty toward MySpace, and it is a monster audience. They were the first mass destination and home for DIY artists. Bands remember that.”

And, yes, MySpace’s appeal lingers for celebrities and creative types.

Cindy Margolis, a former Playboy Playmate with 16,000 people on her MySpace fan page, still finds it a useful marketing tool. It is part of her PR strategy to promote her Fox Reality Channel show, Seducing Cindy. She also uses Facebook and a personal website.

“To keep my loyal cyberbuddies, I need MySpace,” she says. “It is a huge vehicle to gain, and maintain, thousands of followers. Facebook is more intimate. They are two different spaces.”

“It’s great to get feedback on the shows that I do, which can be complicated,” says Bobby Roth, who has directed episodes of Prison Break, Lost and FlashForward. He has 10,000 friends on MySpace.

MySpace’s enduring appeal to millions, with the backing of Fox, has not been lost on software developers like Jon Siegal, CEO of Fan Appz, a Facebook application that helps celebrities and athletes market themselves to fans. Siegal and others are interested in working with MySpace.

“The game isn’t over for (MySpace),” Owyang says. “They still have a strong foothold, the opportunity to try new tactics, if their management team — and internal culture — can quickly come into alignment.”


Says Hirschhorn, “We will always be culturally relevant. And we’ll be here in five, 10 years.”

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