Has MySpace Lost the War?
Nielsen figures indicate that Facebook has 110 million global users whereas MySpace only has 83 million users across the world. In terms of popularity, there can be little doubt that Facebook is the new king of cool. However, that is not to say that MySpace is dead, MySpace has recently launched myspace layouts 2.0 in response to the competition. What is interesting are the Comscore figures which indicate that the average MySpace user spends 266 minutes on the site each month whereas the average Facebook user only spends 166 minutes per month. This figure can be attributed to various factors. One of the key factors is that MySpace is very blog oriented whereas Facebook is more focused on applications which are not time consuming. Furthermore, Facebook is focused upon networking with people you already know, whereas on MySpace more time is spent on meeting new people. Regardless of what one thinks of these figures, it cannot be disputed that in terms of overall popularity, Facebook has trumped MySpace. However, if we consider the revenue raised by MySpace compared to the revenue raised by Facebook, it cannot be disputed that MySpace is the reigning king. Mr. de Wolfe, the creator of MySpace revealed in a BBC interview1 that the key difference between MySpace and Facebook is that MySpace makes money. In fact, MySpace depends almost entirely on advertising for its revenue. The CEO of MySpace, Mr de Wolfe, goes so far to claim that MySpace is the only social networking site that makes money. The BBC reports despite the money-making capabilities of MySpace, News Corp reported a recent drop in its revenues, which included a decrease in the revenue generated by MySpace. News Corp partly attributes this loss to the money it spent launching a new music feature which allows users to download music for free. Such a feature is unparalleled by any offering on the part of Facebook. The other factor is the global recession. The BBC notes that even advertising is “not recession-proof”. Similarly, Mr de Wolfe describes the market as having “certainly gotten softer”. There is no doubt therefore these factors are decreasing the profitability of MySpace. However, what News Corp does not tell us is the true reason behind the drop in revenue. I would argue that the true reason behind the drop in revenue is the decreased popularity of MySpace. The Nielsen figures are indicative of this decrease in popularity. Social networking sites are very faddy in the sense that users tend to embrace the next cool thing. MySpace is considered to be yesterday’s news compared to Facebook. That is why Facebook is more popular than MySpace even if one concedes that the two sites are essentially the same. Despite the decreased popularity of MySpace it still generates more revenue than Facebook. Which is why Chris de Wolfe says that “Time will tell whether they [Facebook] can figure out how to make money – we have”.
