Nothing will ever be bigger than Myspace.
Have you seen the meme that says, “At some point in your life you and your friends went outside to play for the last time, but you just didn’t know it.”
Well, at some point in your life you logged onto Myspace for the last time, but you just didn’t know it.
Below are four reasons why.
The year was 2006, and I can remember browsing the aisles of a record store in an urban setting, somewhere in middle America. Reading the backs of the albums, I recognized a common theme. Bands had stopped putting their websites on their packaging, opting to supplant their Myspace page URL instead. It was at this moment that I audibly uttered the words, “nothing will ever be bigger than Myspace.”
“What’s your Myspace,” became the millennial’s version of “do you have a business card?” Myspace solved a problem that many didn’t even know existed. It connected us in a way that we didn’t even know that we could connect. It let us set up our own little version of ourselves on a little street corner on the Internet, for free. We could use flash and prioritize our top eight, blast our favorite songs when others came to our page, and as a band, watch our play counts rise by the minute. It was spectacular and it was never going to be topped. Until it wasn’t. Then it was.
I remember how tirelessly I edited my page by learning to inject code, coordinating the fonts, changing the background, arranging my friends, curating my feed, blogging for the very first time and using it as a place to store my photos.
And then, even though I didn’t know it, I logged off of Myspace for the last time.
After years of being absent, I logged onto Myspace to see what it was like. Surprisingly my credentials still worked. Here is what I found.
A blank framework, no photos, no bio, no friends. But surprisingly, the Pearl Jam song I had welcoming new viewers to my page was still rocking away. Bravo.
So what happened? Here are four lessons we can learn from the demise of the company that went from being the number one site on the Internet (let that sink in for a minute), to losing over one million customers a month for more than two years straight.
- Overhead will kill you.
- You can have too many bad products.
- You have to reinvest in yourself.
- You must understand where your real value is.
Overhead will kill you. While the sale of Myspace worked out very well for Tom, it was the first nail in the coffin for the company itself. Myspace was growing and generating very good revenue, but when it was acquired, it had a whole new set of goals. It’s first goal was to connect people. Now, its goal was to make money. A lot of money. On a conference call, Rupert Murdoch, out of nowhere, said Myspace had a goal of 1 Billion dollars of revenue that year. Former VP of Marketing Sean Percival said:
At the time we were doing $50m to $100m, so we were at a tenth of where we needed to be,” said Percival. He made that statement, but as far as I was aware, no executives knew that was the directive. So everyone scurries around … The boss said we have to make a billion dollars, so I guess we need to make a billion dollars.
The company went from a lean startup to having to generate lots of revenue very quickly. This forced the company to put profits over value, which led to a terrible user experience for its customers.
Takeaway - Keep overhead low at all costs. A better product is more valuable than a fancy office. Long-term growth is always better than short-term profits. Avoid being cash poor at all costs.
You can have too many bad products. Myspace tried to cater to too many customers with too many niches. Myspace books, for example, was a product that no one needed, but in an effort to keep the growth curve in the right direction, Myspace introduced products their customers didn’t want. Percival continues:
...We had things like MySpace Books. It’s not because our users wanted to talk about books… But someone wanted to sponsor that. Someone was willing to pay us to build MySpace Books.
Takeaway - Focus on the thing that your customers want, and do that really well.
You have to reinvest in yourself. At its peak, you couldn’t even discuss advertising on Myspace without a minimum budget of $25,000 per campaign. However, Myspace wasn’t taking the proper steps to reinvest that capital back into its UX and platform. Myspace was built using a language called ColdFusion, which couldn't scale:
MySpace was difficult to use for new users. Profiles could be customized to make them more attractive and personalized. But that meant there was lack of familiarity while navigating the site — every page looked different, and cluttered, even tacky.
Takeaway - Myspace should have taken one step back to take two steps forward. Switching to a scalable framework and reinvesting its resources into the company to make its user experience great should have been the priority. Use your resources to invest in yourself and make your products great.
You must understand where your real value is. Myspace was years ahead of its competition in creating on-demand music streaming. However, to generate revenue, they focused on ads and new products such as Myspace books among other things. Their former VP of Marketing said:
We paid about $10m a year to get that deal, just to have the deal, and then we paid for all of the usage as well. That was something we had that nobody else had. We brokered that deal early on with the labels, and nobody else could get even close. We should have gone all-in on music and cut ship on everything else.
Myspace didn’t understand, or at least didn’t focus on, why people chose to use their site. Myspace became a massive platform for music streaming, discovery and exposure. Instead of focusing on what people loved, they tried to create other products that people didn’t even want.
Takeaway - As a creative who is selling something, you have to know what it is that people are actually purchasing. For a musician, is the consumer buying a song — or an experience? Maybe they are buying a feeling, nostalgia — or maybe they’re purchasing you. To fully take advantage of building a lasting relationship with your customer, you must know exactly what it is that you are really selling.
Myspace could still be on top. And you don’t have to let your career end up like Myspace did. Keep your overhead low, focus on a limited number of great products, reinvest your capital in your brand and make certain that you understand exactly what people are actually buying from you.