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June 23, 2009
Can Jon Miller and Owen Van Natta Save My Space or Is It Toast?
Can Jon Miller and Owen Van Natta save MySpace by cutting 30 percent of its workforce? Probably not; MySpace is toast.
How do I know? Well, I don’t know, but I can guess based on the reaction to a question I posed about MySpace to my Media Management and Leadership graduate class last week. All of the students in the class but one are in their 20s and all are savvy Internet users. Half of the students had cancelled their MySpace accounts and all that had used MySpace said it “wasn’t cool anymore.” One male student defended MySpace as still “good for music.”
I’ve been around enough to know how unreliable small convenience samples are, but for the sake of discussion, let’s say MySpace isn’t cool anymore and its growth has peaked.
We know Facebook shot ahead of MySpace in unique visitors this spring and now has over 300 million users, that Twitter is catching up to MySpace, and MySpace’s growth line on the charts has flattened out. It’s traffic might well be in decline now.
Once a mature business starts going over the hump of the S-curve of the business cycle, virtually nothing can be done to reverse the aging process. In the new media economy the life of a business is often as short as the life of a gecko (7-9 years). For an insight into the new media economy, see Judy Sims’ brilliant New Media Economy presentation – it will also shed some light into why MySpace is doomed unless it changes dramatically.
Another reason MySpace’s will probably slide down the decline slope of the business cycle is because it doesn’t have the fire power to innovate technologically after letting go 30 percent of its head-count.
Google and Apple grow because they innovate – new products, new technologies, and new software. Apple’s strategy was not merely to try to sell more computers; it started a new business – a disruptive technology – the iPod. It didn’t merely try to sell more iPods, it started an new business – a disruptive technology – the iPhone.
What can MySpace do to grow? It has to start a new business, not merely tweak its tired old business. Or it can buy a disruptive technology. News Corp. has the money. If Rupert Murdoch can find $600 million to buy MySpace and $5 billion to buy a frigging newspaper, it can certainly invest $1.5 to 2 billion to buy Twitter.
And Murdoch, Miller, and Van Natta better get off their collective behinds, do it quick, and figure out how to integrate the social networking and communication power of the two platforms into a new killer app, or the soon-to-be announced, awesome Google Wave will put MySpace,, as it’s currently configured, deep into a grave – haunted by the ghosts of once-hip but departed friends who are now on thousands of long-tail, niche social networking sites.
Posted by Charles Warner at June 23, 2009 11:20 AM
Comments
Bruce Braun ![[TypeKey Profile Page]](http://www.mediacurmudgeon.com/nav-commenters.gif)
at June 24, 2009 11:52 AM writes:
Charlie, you are assuming Miller and Van Natta have the collective chops to pull this sort of change off. I believe this game is over before it begins with this dynamic duo.
Miller is a bafflement to me. He is a classic case of the corporate animal that continually fails upward. He claims credit for AOL's growth between 2002 and 2006 when he was the CEO "due to his restructuring of the company's core business lines focused the company on online advertising, including completing the highly successful 2004 acquisition of Advertising.com"
Sorry, but the Online ad business exploded between 2002 and 2006 (a rising tide floats all boats) and it was Linda Clarizio who did the Advertising.com deal. It was also well known internally that Miller never lead the charge to restructure. His staff fought with him to change.
Miller was asleep during the Google rise to dominance. He abandoned the "AOL Keyword" approach that was generating huge revenues for AOL and what was driving the response rates for AOL advertisers. What do you call it when you enter a word into the search box on Google...a "Keyword" perhaps? Duh!
No mention in Miller's bio about all the heads of sales AOL went through on his watch. A couple only lasted a year! And by the way, Advertisng.com has cratered in the past two years, while dragging down the value proposition and pricing of the display side of AOL. So if he wants the credit, he should take the responsibility as well for the failures.
Van Natta's major claim to fame is negotiating the Facebook-MSFT ad deal with Steve Ballmer. NIce! However, a billion to Ballmer is like $100 to us. Ballmer has been running around doing deals for years, acting like a drunk sailor on shore leave. Hell, he was willing to pay $40B for Yahoo. If Owen is so great, let's see how he pulls of the MS-Google ad deal renewal. The first deal was worth $900M. The talk is now Google is thinking $50M on a renewal! Good luck, Owen.
Firing hundreds of people is sometimes necessary to save a business. Miller could demonstrate he has real balls if he were to announce to his troops he is cutting his own pay and bonus plan by 50% (as well as Van Natta's) until such time as FIM and MS achieve a full year of profitability.
Leadership by example is what really motivates a company's employees, not the stock platitudes in Miller and Van Natta's recent press releases. Where is their commitment to the company other than collecting huge paychecks?
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