Rupert Murdoch's News Corp, long in denial about about its misguided purchase of MySpace, is finally coming around to accepting that it made a colossal mistake as losses pile up. But that's what happens when suits with no street cred whatsoever try to get down with the kids - it's pathetic, embarrassing and, in this case, very costly, as Martyn Warwick reports.
It's akin to watching your dad dancing at a wedding - mortifying. There's little worse than some old codger pretending he's a sixteen year-old and in intimate touch with what's going on in the world of technology and social networking. The world's full of them, from musicians, actors and "celebs" who should know better through to politicians and businessmen who seemingly don't know any better or persist in their foolishness when they have been advised to pack it in and act their age.
NewsCorp is run by the very hard-headed 79 year-old Rupert Murdoch yet somehow his minions managed to persuade the old man that it would be a good idea to spend US$580 million on a social networking site that was already in decline even as it was being bought.
OK, so it probably didn't look like a disaster when the sale went through in 2005. MySpace seemed to be growing quickly and for a short while it was valued on the News Corp books at an astonishing $12 billion! However, this optimistic valuation was bandied about at the time Murdoch was trying to merge MySpace with Yahoo - an exercise that led to nothing more than the expenditure of a great deal of hot air.
Where the suits missed the point was that teenagers and early 20-somethings are a fickle bunch. Enthusiasms wax and wane very quickly as people migrate to new, and briefly exciting pastimes, only to drop them as something that is perceived to be even trendier or cooler comes along - and cool sites and apps come along much more regularly than the Clapham omnibus.
As soon as the kids heard that Murdoch was buying "their" site they upped and left. MySpace was already old hat and its being bought by an international business with no relevance to or real interest in the young lifestyle apart from trying to make a quick buck out of them simply quickened the rate of defections.
Big, clumsy, heavily hierarchical, traditional and slow (by web standards) organisations cannot keep pace with social networking trends.
They can only react after the event and try to make money out of a phenomenon by clutching on to the coat-tails of youngsters who throw them off and dart round an unexpected corner leaving the old boys floundering on the pavement and looking foolish.
No-one has yet been able to forecast what trends the teen and early-20's market will latch on to next and its a racing certainty that no-one is going to at any time in the near future - if ever.
And now, and at last, someone at News Corp has stood up and accepted the reality that MySpace, once, but long, long ago in Internet terms, the world's biggest and most influential social networking site is now an albatross around the corporate neck.
On a quarterly results teleconference call last night, Chase Carey, the President and COO of News Corp, admitted "MySpace is a problem", that the losses it is piling-up are "neither acceptable nor sustainable", and that "traffic numbers are still not going in the right direction."
Well, they are unlikely ever to improve and Mr. Carey, tacilty admitted as much (and signaled the probable demise of MySpace) when he added, "In this company we judge in quarters, not in years. Our current management did not create these losses but they know we have to address them." That's plain enough. Barring a miracle the days of MySpace are numbered.
However, this sudden but overdue reality check hasn't stopped News Corp spending money on a MySpace site redesign in what is presumably a last ditch effort to improve matters.
Last week another News Corp spokesperson said the update "has been generally well received by the opinionmakers in the business but we recognize the critical issue is building interest with consumers. We also recognize the challenges we face in doing so."
Well, it might help if we knew who the "opinionmakers" who like the redesign actually are. What's the betting few of them are those that used to use MySpace when it was of relevance to the age-groups and demographics it was first aimed at.
Chase Carey claims that MySpace still has "tens of millions of users" but won't say exactly how many tens of millions there actually are. However, we do know that Facebook, with over half a BILLION users has utterly eclipsed the News Corp site and MySpce cannot and will not catch up with it.
Mr. Carey added that MySpace must "stabilise" its traffic numbers (not "grow" its traffic numbers you'll note) and that the company must "have a predictable path forward, the right cost structure and a clear path to be a profitable business."
Fat chance.
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