Welcome to watchmojo.com. I am your host Ashken and in today’s business school bid, we continue our series on successful startups and successful companies and we will take a look at one of the most successful of all time, MySpace.
Now, myspace.com, its origins actually go back to 1999 when company founders Chris DeWolfe and Tom Anderson essentially launched an online file sharing service. Now, of course, everybody knows what happened in the year 2000, the NASDAQ collapsed and the hopes of many startups faded along with it. What ended up happening is that they had sold one of their companies to a company eUniverse. eUniverse of course went on to become Intermix and what the two founders decided to do was launch a new startup within Intermix. The startup took the name myspace.com.
MySpace was one of the companies that basically sought to capitalize on the search in social networking sites. Essentially, you create a profile for yourself. You upload images, videos, music, and whatnot and you create your own space in cyberspace. MySpace was not the first one in the market. There was a company called Friendster that got a lot of investors excited. But the difference between Friendster and MySpace really; there were two differences in fact. The first one was that Friendster really controlled the environment. It was essentially the equivalent of a prep school, whereas, MySpace was a social networking site that let anything goes. So, if somebody wanted to say something derogatory, they could. If somebody wanted to post more risky material, they could. That was the equivalent of a back alley essentially. You can imagine which one kids preferred, indeed, MySpace.
But MySpace became very successful especially vis-à-vis Friendster because of a second reason. A lot of local up and coming bands that did not exactly have record labels signing them right away started to use MySpace as a promotional tool. Slowly but surely what would happen would be band XYZ from Alabama would upload their songs, their lyrics, their images and their tour dates on MySpace. Slowly but surely, their fans would send those pages to one another creating a very big viral effect.
In 2005, News Corporation and Viacom got very interested in acquiring MySpace. And in the subsequent bidding, News Corp eventually acquired MySpace’s parent company, Intermix, for a whapping $580 million. That was a lot of money but a lot of people thought that News Corp had overpaid. Not really because since the acquisition, MySpace has grown over 300% and is today a Top 5 Media Property and almost will soon overtake Yahoo as the website with the most amount of page used. This year of course, MySpace has injured a lot of criticism because, yes it is true that essentially some sexual predators have used the site to lure young children, but MySpace give credit to News Corporation has hired the right people to start to implement some security measures. Everything being said, MySpace goes down as another example of a website that recapitalized on some of the most successful trends of the late ‘90s. Many people say that MySpace is really no different than Geocities who itself got bought by Yahoo for over $2 billion.
So, when it comes to the social networking space, for sure, there will be many more players who will challenge MySpace’s place atop the mountain. But no one can take away from the founders that they went on to build one of the most successful startups of all time and they are now part of one of the most successful media companies of all time, the News Corporation.