From MySpace to YourSpace

From MySpace to YourSpace

Published: January 21, 2008

Two years ago, Chris DeWolfe, the co-founder and chief executive of MySpace, was talking about international expansion with Rupert Murdoch, whose News Corporation
bought the social networking site in 2005. According to Mr. DeWolfe, an
entrepreneur used to moving at Internet velocity, he suggested that
MySpace could expand to “four or five” countries in the next year.


Tom Anderson, left, and Chris DeWolfe, co-founders of MySpace, recently signed new contracts.

 

“What about 13?” Mr. Murdoch said.

That
was one of Mr. DeWolfe’s first lessons in just how fast business is
done inside the News Corporation. MySpace ended up adding 15 local
versions in the year. It is now up to 24 — “we just launched in
Brazil,” Mr. DeWolfe said in one of his first interviews since signing
a new two-year contract with the News Corporation in October.

In
addition to expanding, MySpace is evolving. While it is introducing new
musicians and playing host to amateur filmmakers, it is also signing
artists to its own record label and developing online video series. It
introduced a content guide, MySpace Celebrity, last week.

The
world’s largest social networking site, MySpace has grown far past
being merely “a place for friends,” as its slogan states. With an
estimated 110 million monthly active users, MySpace is undeniably a
powerful tool for advertisers who seek reach and efficiency.

Richard
Greenfield, a media analyst for Pali Research, called MySpace a
fantastic acquisition from a return-on-investment standpoint. The site
was sold for $580 million; Mr. Greenfield said it was expected to have
around $800 million in revenue in fiscal 2008, mostly through
advertising.

“Rupert made an important bet,” said Eric E. Schmidt, the chief executive of Google,
which signed a $900 million advertising deal with MySpace’s parent, Fox
Interactive Media, in August 2006. “He may find that this is the single
best investment he has ever made.”

But MySpace has challenges, especially from Facebook,
which has leapt ahead of MySpace in technology and has been
accumulating users at a faster rate. Facebook, with its cleaner
interface and higher demographic profile, is also seen by some
advertisers as a better bet. By comparison, the reputation of MySpace —
with its cluttered and often sexually tinged personal pages and
lingering privacy concerns — has suffered.

“It’s definitely not
the sexy pick anymore,” said Adam Kasper, a senior vice president at
Media Contacts, the interactive division of Havas.

So MySpace has changed tack. What was seen as a competitor to traditional media platforms is starting to resemble one.

“Some
people still perceive MySpace like it was in early 2004, as a niche
place for scenesters in New York and Los Angeles. That’s how it
started, but it’s become very mainstream,” Mr. DeWolfe, 41, said. “It’s
about consuming content and discovering pop culture.”

As a result, the MySpace site resembles a portal like Yahoo or AOL
as much as a social networking site. Peter F. Chernin, the president
and chief operating officer of the News Corporation, called MySpace a
“contemporary media platform” and said the site existed to “create
content and connect people to one another.”

Fox Interactive
“clearly envisioned them as a portal,” said Alan Rambam, a senior vice
president at the ad agency Fleishman Hillard. “I thought they would be
much further along with that today.”

The original content may
draw advertisers who are wary of placing a marketing message next to a
messy profile page, but it is unclear whether the users who make
MySpace the most-viewed Web site in America will want to watch TV
episodes and chat with friends on the same site.

Making this
transformation work falls to Mr. DeWolfe, the business face of the
company, and co-founder Tom Anderson, 37, the product specialist. Both
recently signed new contracts at salaries reported to be $7.5 million a
year, which would make them two of the highest-paid employees at the
News Corporation.

frommyspacetoyourspace.jpg

Chris DeWolfe, left, chief at MySpace, says Rupert Murdoch is knowledgeable about the Web site but gives it autonomy

Mr. DeWolfe did not enter MySpace with a media
background. He led two companies, now defunct, specializing in data
storage and Internet marketing, but he had long envisioned a
community-based Web site. In 1997, while in graduate school at the University of Southern California, he developed a business plan for the idea, which he called SiteGeist (he received an A-).

Surprising
some observers, the News Corporation — one of the largest media
conglomerations — has remained relatively hands-off. Mr. DeWolfe said
Mr. Murdoch visited MySpace’s headquarters in Los Angeles about once a
month — “He’s definitely in tune with the different features on the
site, and he’s very aware of the product road map” — but the two
founders are still in control of the site.

“Some of the first
words out of Rupert’s mouth were about how important he felt it was to
protect what Tom and I had built and to preserve the user experience at
all costs,” Mr. DeWolfe said. “He said the single most important thing
the company could do is to empower MySpace with the autonomy and
resources it needed to continue giving the users what they want.” He
added, “It was incredibly reassuring.”

But as MySpace expands
beyond its origins, its executives struggle as they try to give users
and advertisers what they both want. There is a big contrast between
the chaos that is comfortable to many MySpace residents and the
neatness that appeals to consumer product companies.

“The
challenge for MySpace in the future is making it more of a well-lighted
environment for the big brand advertisers — the Procter & Gambles
and Unilevers,” said David Cohen, the United States director for
digital communication for the media buying agency Universal McCann.

Sitting
in his Boston office, Mr. Kasper of Havas counted 10 advertising units
on the main page of MySpace Music. He said that some appeared to have
been placed by third-party networks, creating a cluttered environment.

“I
think it’s too much,” Mr. Kasper said. “It’s just not as valuable to
the advertiser, and it’s certainly not as good from a consumer
experience standpoint.”

The site suffers, at least in some
circles, from an image problem. The prevalence of unwanted friend
requests, spam and sexually suggestive material has driven some users
away, even giving rise to the term “MySpace refugee.” It still has more
page views than any other Web site in the world — more than 1.3 billion
a day — although that figure dipped for the first time in December
2007, according to comScore. (MySpace executives said improvements to the site’s structure were at fault.)

Mr.
DeWolfe does not seem especially concerned about the perception. He
points to what he sees as MySpace’s growth potential and new security
and customization features. Users will soon be able to tailor their
profile for subsets of friends, “so my colleagues will see a much
different page than my college buddies,” Mr. DeWolfe said.

New
features for mobile devices are being added, as well as new social
applications. And in response to concerns about child predators,
MySpace unveiled an accord last week with 49 states to tighten privacy
restrictions.

To burnish MySpace’s media credentials, Mr. DeWolfe is leaning on his friends in Hollywood. At the Sundance Film Festival this week, he is playing host to industry parties with the band Maroon 5 and the rapper 50 Cent. MySpaceTV has been the launching pad for a number of Web video series, and it is second to YouTube among Internet video sites.

Mr.
DeWolfe is nurturing another project that promises to help MySpace
grow: an incubator that will form new companies and function like a
start-up. The company, tentatively named Slingshot Labs, will be
financed by the News Corporation but exist as a separate company. Mr.
DeWolfe anticipates that it will nurture four or five consumer Web
sites at a given time.

“We firmly believe that it’s very hard to create a disruptive technology within a larger organization,” he said.

Mr. Chernin said he was not surprised that Mr. DeWolfe and Mr. Anderson had decided to stay with the company they created.

“Think
about the size and the scale of MySpace and the opportunity to affect
people and the opportunity to play a role in the culture,” he said.
“There’s really nothing like it.”

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