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A look inside News Corps’ overly optimistic MySpace sales pitch

Molly McHugh
By

myspace for saleLast week, it was reported that MySpace’s days were numbered and the sale process was going to hit full swing soon. Apparently it has, and as could have been assumed, it’s not going to be pretty. TechCrunch claims to have obtained a copy of MySpace’s very confidential pitch plans as penned by News Corp.

As could be expected by any company trying to peddle its struggling Web property, News Corp is being overly optimistic about MySpace’s future. Of course this optimism can only go so far: The most positive things News Corp could say about MySpace is that its annual revenue will be approximately $109 million and its expenses at $247 million. Do the math, and that means the failing social network is operating on a $165 million loss for the year. Unfortunately, that figure is about as good as it gets. News Corp wisely chooses not to touch on much of MySpace’s past numbers, user falloff, or general slump into oblivion. Instead, the document largely seems to conclude that there is hope since the sites revenues are growing (it should be mentioned that so are its expenses, even in the face of massive layoffs this year).

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So, to the future News Corp ethusiastically points! According to the report, the firm thinks it’s possible for MySpace to stage some sort of comeback of unforeseen proportions, hinging on the forecast of seeing expenses drop to $69 million and revenue to $84. Sure that means revenue would take a dip, but the drastic (incredibly, some might say impossibly drastic) fall in expenses would make MySpace profitable. The pitch goes on to cast revenue expectations for the next few years, saying the site will bring in $101 million in 2013, $119 million in 2014, and $139 million in 2015.

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It all sounds like a desperate bout of wishful thinking on News Corp’s part. But you can’t blame the company for doing its utmost to unload the site and, fingers crossed, get some money for it (we have to point out that News Corp acquired MySpace for $580 million in 2005). But here are a few other crucial numbers that you’d think would make most of New Corp’s predictions for MySpace impossible:

  • This year, MySpace lost 10 million users between January and February and is currently losing 14 percent of its users every month. How that will attribute to rising profits between 2013 and 2015, we’re unsure.
  • MySpace’s advertisers are running for the hills. A visitor’s average time on the site has plummeted to 59 percent over the last year.
  • Since 2009, MySpace has had to layoff more than 1,500 international and national employees.
  • Sharing via MySpace decreased 20 percent in 2010. For some perspective, sharing via Facebook increased 394 percent. Sharing via Orkut even jumped 212 percent.

Further complicating any sort of sale is the fact that MySpace is again being sued [Bloomberg] for giving third parties user data. Selling the troubled site is getting more and more difficult for News Corp.

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Molly McHugh
Molly McHugh
Former Digital Trends Contributor
Before coming to Digital Trends, Molly worked as a freelance writer, occasional photographer, and general technical lackey…
MySpace’s Tom warns Google+ about excessive feed filtering
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Google would be remiss to use its vaunted talent in algorithms in Google+, MySpace founder Tom Anderson has cautioned in a TechCrunch editorial. Anderson argues that Facebook's over-reliance on algorithmic filtering of the vast output of information in the network is hurting the company by limiting the amount of control users have over their feeds. As such, Anderson warns, Google should be cautious of trying to find an algorithmic solution to increasing the "signal-to-noise ratio" of Google+.
Anderson suggests that as Google+ gets larger (and more noisy) the company is going to fall back to its bread-and-butter, referring to PageRank as the "founding algorithm" of company and calling it "Google's most important work." But this gives rise to his biggest question: "Can a company so enamored with the power of algorithms and machine learning, let the user take control?"
User control is at the heart of Anderson's argument, and not without merit. A major lasting complaint users have about Facebook is a lack of transparency and command over their own profiles. While this has been most apparent in Facebook's regular modifications of their privacy policy and the various options associated with it, Anderson says the biggest factor in both networks is control of their streams. Right now, Facebook users' streams are run by a Facebook algorithm, rather than allowing users to decide from who and what they want to hear. Twitter aside, there hasn't been a competing social network with an all-encompassing stream until Google+, and with the amount of control Google+ users have over what updates they see, Facebook's stream can be both misguiding and frustrating.
Even so, Anderson staunchly writes that he indeed loves both networks, but Facebook's feed algorithm is limiting his contact with friends: "Anyway, I love using G+ and Facebook. On Facebook, nearly all of my “distant” friends and former co-workers are there. It’s the best way to keep in touch with them. But recently I’ve noticed that I get less and less response from my Facebook friends. I post something that used to generate some interaction, and now I receive almost nothing."
Anderson's point is that by not giving him (and other users) more ability to discern who's information comes up in their feeds, the value of it all is lost, largely because the worth of a social network isn't in maintaining relationships with our closest friends but with our distant ones. As he writes, "Social networks may be more valuable to us in that they allow us to maintain more “weak ties” than we ever could before. Our “strong ties,” after all, are already “strong,” and don’t benefit as much from the technology boost. If you question the value of “weak ties,” how about job networking, dating (a shocking, to some, percentage of new relationships start online), advice/recommendations, or opportunity of any kind?"
Thus, Google has an opportunity to really differentiate Google+ from Facebook despite their love for algorithmic solutions. While Facebook, in Anderson's eyes, seems to have picked its course, Google+ still offers users a better way to broadcast to and interact with the more distant areas of their network, which helps users maintain larger social circles than they ever could without it. The real question is, with 10 million users and counting, how Google will help users cut through all the fluff.

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Justin Timberlake might bring talent competition to MySpace

It was recently announced that Justin Timberlake, who played Napster co-founder and former Facebook President Sean Parker in The Social Network, has purchased an ownership in MySpace and now has an office at the flailing company’s headquarters.
While Timberlake’s music industry prestige and apparent interest in social networking will obviously lend some hype to the site, that’s usually not enough to halt a downward spiral of MySpace’s proportions. But according to his manager, Timberlake has some very concrete plans for MySpace beyond lending his name to the cause.
Timberlake’s longtime manager Johnny Wright told the AP that his client is considering turning MySpace into a talent competition or show. “Whether it becomes a talent competition or something like that, those are things that we will still flesh out,” he said. “We definitely want to bring the industry back to MySpace to really look at the talented people that have put their faces there.” And the celebrity is ready to work: Wright says he received an email from Timberlake the night the deal closed reading, “Are you up? My mind is going dizzy with ideas. I need to talk.”
Promising words for what’s been one of the most beleaguered tech companies in recent history. While a veteran of social marketing and a pioneer for the scion that is Facebook, MySpace managed to lose its user base and was forced to undergo a significant makeover, refocusing on music and entertainment. Worse yet, it’s been forced to make sweeping staff cuts and has been something of a black sheep for parent company News Corp. So it’s hard to imagine that anything can bring it back to life.
But MySpace has pulled out all the stops to claw its way out of oblivion, and attaching some star power and the hit niche that is talent and voice competitions is as good a try as any. Reports say that MySpace would return to focusing on new and emerging talent, so we could see it become a platform for an RT crowd-sourced competition – something more stripped down than American Idol but hopefully more visually interesting than the scores of undiscovered artists on YouTube.
More about the next phase for MySpace will be announced at an August 17 press conference.

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Myspace founder Tom Anderson weighs in on Facebook video, Google+
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In a Google+ post yesterday, Myspace founder Tom Anderson weighed on the new social media rivalry. On a day overshadowed by Facebook's new video calling feature, he suggested that the most valuable asset isn't technology, but each company's user bases: how large, and whether their products reflect an understanding of users' behavior.
Anderson points to Facebook's 750 million existing users as the biggest advantage over Google's latest offering. This head start enables Facebook to implement new applications that are immediately usable by millions of users, right away.
"Some are complaining that the technology is not new, but that's besides the point," Anderson wrote. "MySpace also had one-on-one video chat back in 2004, [but] people weren't really ready for it back then -- now is the time, and Facebook has the userbase."
Another key factor is whether Google and Facebook can parlay useful technology into something people would want to use. The difference may seem trivial, but Anderson points to Facebook's old Friend List feature as a prime example: Though users wanted fine-grain control over privacy, few actually cared to comb through and divide friends into separate lists. With its next try, Facebook succeeded by putting the workload on users with the most incentive to do so.
"The Groups feature is designed in a way so that users who do care to do the work, can. Someone invites you, and you're in the group without you having to take any action," Anderson wrote. "They've grown quickly, even if 95% of the userbase can't be bothered to make their own groups."
Google+ offers a very similar feature in Circles, though the two have subtle advantages over each other. For Anderson, the "winner" will depend on which advantages users value most.

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