Remembering the Arrogance of MySpace

MySpace’s fall from glory is now complete; Kara Swisher reports that it has been sold off to an advertising network for $35 million, an incredible decline in value from the $580 million that Newscorp paid for the social network in 2005.

Why did MySpace fail? Why have Facebook and Twitter stolen its thunder? That will be a question for the ages, but one contributing factor may be the incredible hostility that MySpace had for outside application developers. MySpace thought, and said publicly, that all the rest of Web 2.0 was a leach, a monkey on MySpace’s back. Below, an excerpt from a TechCrunch post I wrote about this five years ago. It looks pretty amazing now in retrospect and is a good reminder that today’s leading companies should remember their humility.

The post was titled, “MySpace: We don’t need Web 2.0,” by yours truly and ran on TechCrunch, September 12th, 2006. I should add that Newscorp/Fox was not very happy with us for writing this post. Eight months later, Heather Harde, who ran the mergers and acquisitions team at Fox Interactive Media became the CEO of TechCrunch.

Almost five years later, can you imagine Mark Zuckerberg saying things like this about, for example, Zynga?

News Corp. chief operating officer Peter Chernin told company investors today that, “If you look at virtually any Web 2.0 application, whether it’s YouTube, whether it’s Flickr, whether it’s Photobucket or any of the next-generation Web applications, almost all of them are really driven off the back of MySpace.” MultiChannel News is reporting that Chernin said there is no reason why News Corp. couldn’t build parallel businesses, targeting YouTube in particular. “Given that most of their traffic comes from us,” he said, “if we build adequate if not superior competitors, I think we ought to be able to match them if not exceed them.”

What didn’t get discussed in the coverage of Chernin’s talk to the Merrill Lynch Media & Entertainment Conference today are the steps the company has taken that have made it more difficult for outside companies to spread their presence inside MySpace, like blocking external links in Flash widgets. Could more hindrances like that be forthcoming? [To clarify, this is the context in which Chernin’s comments were made, he did not discuss blocking other company’s widgets.]

While competitor Facebook won accolades for opening an API to outside developers, it’s understood that there is probably zero chance of such openness from MySpace.

It’s unclear what more MySpace could do by way of features alone to compete with YouTube. The MySpace video player has embedding, related videos, top videos and viewer comments. Chernin said that MySpace’s video efforts have been small so far and estimated that between 60 and 70% of YouTube’s traffic comes from MySpace. That may become less the case as the YouTube community develops its own stars who use MySpace pages as static points of reference, at most.

Chernin also said that the company was looking to put more of its own commercial video on MySpace. “You’re going to see us starting to play more aggressively on the entertainment side of that site,” he said. Commercial video on YouTube has been a big gamble, with some of it well received and some of it eliciting a very hostile response from users.

To summarize: the COO of News Corp. says that Web 2.0 is leaching traffic off of MySpace, that they can build their own services to compete with any of it and that there’s going to be an increasingly aggresive commercial push on the site. That sounds both dangerously arrogant and like a real validation of fears that MySpace dependency is too risky for outside developers.

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