News Corp. Calls MySpace's Losses 'Not Acceptable or Sustainable' -- Can This Portal Be Saved?
I never would've anticipated that I'd write about MySpace two weeks in a row. But I'm not writing about it so often because there's good news to share. Or because I've started going there. That light at the end of the tunnel, which some may have wanted to see with last week's redesign, is actually looking more like a freight train that may finally run over what once was the preeminent social networking site.
Today, on its third-quarter earnings call (fiscal Q1 for News Corp.), News Corp. said the site's revenue was down $70 million more this quarter than the same time last year. No wonder it turned the screws on Cablevision in its recent, epic retransmission war - it's got to make up for that somewhere! (Nah, News Corp. would've done that anyway.)
President and COO Chase Carey (Rupert was in dispose and not on the call) was blunt about it, stating that, "current losses are not acceptable or sustainable." And, per the earnings release, News Corp.'s "Other" revenue category, which includes MySpace, "reported a first quarter operating loss of $156 million, $30 million greater than the prior year." The primary villain? I don't have to tell you, but let's put it this way -- Carey told one analyst who pushed further on MySpace's situation that "This is something we judge in quarters, not in years."
Uh, did someone just say the patient is critical? Listening to the call, it's crystal clear that despite News Corp.'s boffo results -- its profit is up 36% -- it is no longer willing to let MySpace languish forever. Think of the redesign as News Corp.'s Hail Mary. Either News Corp. saves it, another company intercepts the ball (to News Corp.'s great relief), or it bounces into the stands, out of play forever.
Despite all of the problems that MySpace has had over the last few years, it's hard to conceive of it going away. On the other hand, if I had to bet, I'd put money on this being (almost) the end of its road. True, there always seems to be some optimist with deep pockets willing to buy a struggling Web property.
But the decline of MySpace has been going on for a long time; the patient's cancer has been metastasizing since way before most people noticed. It actually came clear to me when I first started writing this column in February 2008. I immediately realized that, at least among the people who read this column, MySpace was already over. As I've said time and time again, the visibility I gained by writing the column gave me several hundred of new friends on Facebook, while two people have friended me on MySpace since. Closing in on three years later, that number still stands.
I'm reminded at times like this that death spirals seem nigh-impossible to pull out of in the online business for reasons that are, frankly, hard to grasp. In the case of MySpace, you could attribute it to the old, lousy interface, the traction of Facebook and Twitter, the slowness with which News Corp. got serious about the redesign. However, at the end of the day, something bigger, and more ephemeral, almost always seems to take hold - it's just that once popular sites fall out of fashion, they can't recover. Look at Friendster, or AOL (which showed a 27% decline in ad revenue in the third quarter). We all know the drill.
So, can this social network be saved? I doubt it.
(To end this column on a lighter note, Jimmy Kimmel -- with the help of William Shatner -- has declared Nov. 17 National Unfriend Day. Go watch.)