The INSANE Reason That MySpace Lost Everything

Myspace was once the most visited website on the internet even outranking Google but in 2004 the Myspace Founders had a meeting with a young guy named Mark Zuckerberg who was offering to sell them his website which was then called the Facebook the price he wanted was 75 million dollars but Myspace turned him down and why wouldn't they at the time Myspace was thriving and was by far the most popular social media platform so how did Myspace go from being worth billions of dollars on one of the most love sites on the internet to being nothing but a nostalgic memory with its quirky interface and customizable profiles Myspace represents the road untaken the path social media could have gone before Facebook crossed the competition but the reasons Myspace failed are not what you might think and the rise and fall of Myspace is certainly not your typical business story this video is the truth about what happened to Myspace how an internet Empire was both built and destroyed foreign [Music] named myspace.com was initially bought for an internet storage business essentially an early version of cloud hosting like Dropbox or Google Drives in fact you can see here a version of Myspace from the year 2000 but like many early internet businesses the file storage company never made it especially after the.com Bubble Burst and investors stopped pouring money into internet companies however a guy called Crystal wolf bought the Myspace domain thinking it might be useful in the future of course he was right but for a while he did nothing with it instead him and a friend called Tom Anderson founded a direct email marketing firm called response base which created email newsletters for other companies now if you ever had a MySpace account yourself you may well recognize Tom as he's the one who later became the face of Myspace but like a lot of early internet Pioneers Tom Anderson had started out as a Teenage hacker spending time on internet message boards and hacking into companies websites just for the sheer thrill of it and so between Tom and Chris they had plenty of Internet experience and they made a good team and of course in the early 2000s lots of businesses were testing out the internet for the first time so Tom and Chris's company response base was perfectly positioned to sign up clients who didn't know what they were doing and needed help advertising their business online thus response basically quickly and within just a year Tom and Chris managed to sell their business to an even bigger marketing company called the universe in the year 2000 for 3.3 million dollars now this company e-universe would later become most well known for being myspace's parent company but in 2002 before Myspace was created euniverse owned a bunch of different websites some of which were a little dodgy in fact euniverse was once dubbed the trailer park of the internet the thing you have to remember is back then internet users were a lot more naive people were more likely to click on flashing banner ads open spam emails and buy products that seem too good to be true and usually were and euniverse capitalized on this for example euniverse sold heavily marked up items like wrinkle creams along with books such as how to grow taller but universe's most controversial site was the one that offered free downloads of mouse cursors such as a cursor that looked like the American flag except when users downloaded the cursor they unknowingly downloaded spyware that would track their activity across other websites when the story eventually broke about this e-univers inevitably suffered from Bad publicity they later renamed their entire business to intimix media and try to create a more professional persona but the fact was their company was in trouble users were gradually becoming less likely to click on unfamiliar advertising and their newsletters were becoming less effective as spam filters were growing more sophisticated as a result the universe or into mixed media as they were now calling themselves considered shutting down several of their sites including response base the original founders of response base Chris and Tom had still been working on it even after selling the business and they realized they needed a new plan now around the same time early versions of social media sites had started to grow in popularity for example blog type platforms such as live Journal however the biggest inspiration for Myspace was a site called Friendster was founded in 2002 Tom Anderson had seen what Friendster was doing allowing people to connect online and share things with their friends I thought the concept was really promising but that it had a lot of issues for example Friendster had a closed system that made it difficult to connect with people you didn't already know offline plus friends that had other problems like very long page load times Tom Anderson felt if the concept was done better it had huge potential so he approached his boss at intermix media with an idea creating an improved Friendster without the restrictions a successful social media Venture could help move the company away from spam emails and banner ads so into makes media agreed to the project and Chris said he already had the perfect domain name they could use myspace.com foreign [Music] Myspace officially launched to the public and they offered a cash prize to whichever employee could sign up the most users Myspace had a big Advantage because of its parent company into mixed media since they were a marketing company and had a very long list of email accounts they could advertise their new site to plus unlike Friendster Myspace allowed users much greater Freedom like people could view the profile of any other user however one of myspace's most unique and popular features came about by accident while running an update the programmers forgot to block web markup which meant Myspace users had the ability to edit their own page using HTML code this meant users could fully customize their pages and use whatever backgrounds colors layouts or fonts they wanted countless teenagers would eventually learn to code in HTML in order to customize their Myspace homepage and thus people's profiles became very creative like you could even choose what song you wanted to play when someone visited your page this meant every person's page was very different and tailored to them although there was one thing everyone on MySpace had in common everyone started off with one friend already added co-founder Tom Henderson so Myspace was up and running and this time it was really the dawn of Web 2.0 whereas the early internet was experienced mostly passively like just reading text on web pages Web 2.0 saw the rise of user-generated content Myspace immediately started to gain a lot of traction especially amongst teenagers and of course they all told their friends about the site so would spread quickly and thus within just one month of launching Myspace was registering 6 000 new members every day myspace's momentum started to go even faster when they decided to advertise their site as a great way for musicians to build a following since file sharing sites like Napster and mp3.com had recently shut down there was a vacuum for artists looking to promote themselves online so several nights a week co-founders Chris and Tom went out to LA clubs like The Viper Room to convince bands to sign up for Myspace before long they were traveling to nightclubs all across the country throwing parties and sponsoring events to help promote Myspace and this paid off not only did a lot of musicians join Myspace many of them started to gain popularity thanks to the sides including artists like Arctic Monkeys Calvin Harris Lily Allen Panic at the Disco and countless more who utilize Myspace to grow their fan base and get their music heard by February of 2004 Myspace had registered its 1 millionth user and by November that number would grow to 5 million and growth continued to Skyrocket from there this led to some of the very first influences such as Tila Tequila who grew a very big following on MySpace Myspace was also instrumental in the early days of YouTube users were able to embed videos from YouTube directly onto their Myspace page and myspace's Vibe fit perfectly with the kind of offbeat homemade videos that were popular on early YouTube however whilst myspace's ability to connect with anyone in the world and completely customize your page for features that attracted many users to the site instead of competitors like friends there these same features also began to create some very serious problems foreign [Music] five piece by MSNBC highlighted the amount of teenagers using sites like Myspace without their parents knowledge and shows like to catch a predator stoked fears of online Predators plus there were headlines about some adults using Myspace to pursue relationships with underage users Myspace sought the advice of the Online safety group wired safety which recommended that Myspace actually lower its minimum age requirement with the logic that this would encourage teens to be more truthful when registering and make it easier for Myspace to keep an eye on its most vulnerable users however it was too late there was one particularly tragic incident where a 13 year old girl named Megan Meyer was relentlessly cyberbullied through Myspace leading to her taking her own life and this wasn't an isolated incident Myspace began to get a bad reputation for its lack of moderation and the amount of young impressionable users receiving abuse additionally there were reports of miners being exposed to adult content now officially this wasn't allowed and Myspace did employ moderators but a handful of employees responsible for sifting through the count address thousands of images uploaded daily at an impossible task this not only sparked concerns from parents but also from advertisers the lack of sufficient moderation made advertisers nervous and despite the site's rapid growth Myspace struggled to sell advertising at least not for very good prices it's reported around this time advertisers paid Myspace only 20 cents per thousand viewers much lower than other similar sites the media also started to question whether the site was safe for its young user base and it was the Myspace team were focusing on trying to address these issues and completely neglected everything else for example in October 2005 a 19 year old hacker named Sami kamkar used Myspace to release the fastest spreading computer virus the world had ever seen you see it because Myspace had given users so much freedom to edit the code of their Pages it meant malicious code could also be inserted especially since Myspace had almost no security team in just a few days Sami created what would become known as the Sami worm thankfully the worm Sammy created was harmless all it was designed to do was when someone visited his Pro profile it automatically added Sammy as a friend and added words on their profile saying most of all Sammy is my hero but the worm was also programmed to copy itself on their profile as well so anyone who visited their profile would also get infected and thus it became a self-propagating worm and spread very rapidly even Sammy had no clue it would spread so fast within less than 24 hours over 1 million users had been infected and had unknowingly sent Sammy a friend request and added text on their profile saying Sammy was their hero the Myspace team had to temporarily shut down the entire site to fix the problem and if Sammy had been someone with more malicious intentions he could have caused catastrophic damage meanwhile myspace's Founders were growing frustrated with their parent company it took into mixed media too long to buy badly needed equipment and all of myspace's servers were stored in rented space at a data center crammed together because the data center charged by the square foot myspace's servers were literally melting and because the data center was local to the company in Los Angeles a power outage in La meant the entire website went offline but the reason intimix weren't investing enough into Myspace was because indemix had financial problems of its own anti-spyware legislation was popping up across the country and private emails were leaked showing intimix media's use of spyware planned the CEO referred to as operation super Trojan intimix eventually agreed to pay fines of 7.5 million dollars the Myspace Founders actually tried to disassociate themselves from their parent company into mixed media since it had such an increasingly bad reputation there's reports that Myspace Founders got angry when Myspace t-shirts were produced that also had the intermix logo on and yet despite all of these problems the cyber bullying the lack of moderation the security holes the poor infrastructure the negative media attention despite all of it Myspace continued to grow quickly it was simply fun to use and people kept referring their friends to the site but at this moment in 2005 a turning point in Myspace history occurs Myspace co-founder Krista wolf met with Mark Zuckerberg about the possibility of acquiring Facebook Zuckerberg wanted 75 million dollars for his company which Crystal was too expensive and so the deal never went ahead of course now that we know Facebook later became worth literally hundreds of billions of dollars this looks like a pretty terrible choice but to be fair back then 75 billion dollars was a huge prize for a fairly new unproven internet company so was it easy for us to look back with hindsight and say it's foolish Myspace didn't buy Facebook when they had the chance remember that even Myspace who are much bigger than Facebook at the time weren't actually making much profit at that point but still this decision not to buy Facebook meant that two companies would soon be in a direct battle however before that it's time to introduce an unexpected character in The Myspace story [Music] before we get to the next chapter of the Myspace story let's talk about you because we've seen how back when Myspace started building things online was hard you had to code the website yourself manage server space and countless other technical challenges but thanks to today's video sponsor Shopify now anyone can easily start grow and manage a business even if you have no technical experience I love that within minutes you can design your website exactly how you want it and start accepting payments for your products or services so the only question is what is your business idea because if you watch my channel and like these business stories there is a high chance you've thought about starting a business of your own and that's why I think Shopify is great for entrepreneurs they make the whole process of getting started so much simpler and help you bring your idea to life and the best part is that if you use my link in the description below you can get a completely free trial to test out Shopify for yourself so just hit the link below to get started now for free [Music] foreign [Music] despite its problems Myspace had finally reached profitability it was a small profit but it was proof that there was money to be made here and what was even more clear is that there was a lot of attention on MySpace as a result several Legacy Media Giants saw Myspace it was an attractive Prospect and became interested in acquiring it a bidding war was sparked between Viacom and News Corp which was eventually won by News Corp owner of the fox networks and much much more News Corp bought into mixed media for 580 million dollars although everyone knew that out of all the sites internets owned it was Myspace that had really caught their interest now this seemed like a large amount to pay for the site at the time since back then many people were skeptical of whether advertisers would ever pay much to advertise on social media but it reported that Myspace Founders were able to convince Rupert Murdoch news Corps founder to buy the company in just one meeting as they told him Myspace was actually the perfect Media Company because users generate content themselves so there's no content cost and users invite their own friends so there's no distribution or acquisition costs Murdoch loved this and thus the deal was agreed and for a little while after News Corp bought the business things were going great by July 2006 Myspace was receiving 54 million monthly visitors and 75 year old Rupert Murdoch appeared on the cover of wired with the headline Rupert Murdoch Teen Idol News Corp and the future of Myspace however 's money would save my space and help them fix their issues this acquisition by News Corp had the opposite effect Myspace became more corporate and bureaucratic after being bought by News Corp and this slowed them down they also now had strict advertising Revenue targets the heads and so monetization was prioritized above the product and since ad rates were low this meant News Corp just pushed more and more ads including very low quality spammy ads that annoyed users ultimately Murdoch viewed the site as a money machine not a long-term business investment he'd envisioned Myspace more as a way to distribute new Squad media rather than building a community platform Facebook on the other hand had initially only allowed people with verified College email addresses to join their platform which would help give the site a feeling of exclusivity and height it wasn't until 2005 that Facebook had dropped its requirement of a college email address and opened Facebook to the whole world Plus in contrast to Myspace Facebook had Venture Capital funding and was thinking more long term they operated more like a fast-moving startup as they didn't have the same kind of bureaucracy and corporate bosses demanding advertising targets beheads as Facebook started to gain more momentum it was soon clear that Facebook and Myspace were in very direct competition and that there was only going to be one winner in this war for attention [Music] despite both being social media sites Facebook and Myspace were always different for example Facebook's design was minimalist with little ability to customize everyone's page had the same format unless the site looked the same for everyone meanwhile Myspace was extremely customizable but essentially created a lot of issues like users cluttered profiles with custom codes slowed down browsers or some profiles would even play songs or videos automatically which a lot of people found very annoying it was messy and chaotic because the fact is most people are not good designers and so letting people do whatever they wanted meant people's profiles were often unreadable had horrible color clashes and it were filled with animations and flashing images while some people like this a device that had to take shape Myspace was more for teenagers and Facebook was more for college students and adults as it seemed to have a wider Mass Appeal Facebook maintained a very clean consistent and user-friendly experience across the whole site so was Myspace was great for kids who'd grown up on the Internet Facebook seemed more organized and easy to use for everyone else myspace's more customized approach also made introducing new features much harder and slower since everyone's Pages were completely different Facebook on the other hand with its sleeker more uniform approach could move faster they also let external developers create apps for Facebook whereas Myspace mostly tried to do everything themselves which meant they were slower to develop new features Facebook's introduction of the newsfeed feature also made Facebook feel more like a community and it began to grow a lot faster but for now Myspace was still the world's leading social media service and its user base was still growing quickly in June 2006 versions were released in the UK Australia and Germany followed by versions for a dozen other countries research Company E marketer announced that in 2006 Myspace generated 180 million dollars in Revenue in the us alone which at the time was twice the combined revenue of Facebook Friendster and AOL Instant Messenger at its peak in January 2007 Myspace was registering 320 000 new members a day so Myspace still had the advantage despite Facebook's recent growth in June 2007 came the launch of Myspace TV including a TMZ celebrity gossip Channel and Myspace first original program roommates the thing is MySpace were missing where the real money was in social media that same year 2007 Facebook launched its Facebook ads platform leveraging user data to create an ad system that let advertisers Target users very specifically using all the personal data Facebook had on its users this was extremely useful for advertisers and that's very profitable for Facebook they move faster than Myspace and attracted more advertisers Myspace on the other hand continued to have internal issues and disagreements they tried several new CEOs but the first one left after a year and the next one after just four months Myspace began to lose both money and traffic each year it didn't help that myspace's website had initially been built using a software called cold fusion this had been good at the time as it allowed them to build the Myspace website extremely quickly and get to Market fast but it now meant myspace's infrastructure was not a scalable and created a bunch of technical challenges ultimately with its buggy applications the annoying ads plastered everywhere and its CD reputation in the media myspace's popularity was starting to fall hey guys before we get to the next part of the story I just want to say that if you find these videos interesting please consider turning on notifications for magnates media I'm working on some even bigger projects right now so if you want to make sure you see them when they're ready just hit the notification Bell now also I just want to say a massive thank you for watching this channel these videos do take a long while to make so honestly I really appreciate all your comments and supports So yeah thank you for everything and now let's get back to the story foreign [Music] Facebook had overtaken Myspace and number of users it's hard to imagine today but back then Facebook was seen as the cool new popular thing the momentum had shifted and because social platforms rely on network effects once more users start switching to a different platform many others follow if that's where the action now is this began a steep decline for Myspace their monthly users dropped by 44 and constrained by its users busy customized profiles it just wasn't enough space for Innovative new features plus the custom profiles created long load times one of the same problems that had helped Myspace beat Friendster in the first place in 2009 both Chris DeWolf and Tom Anderson left their roles with intimix media overall staff was reduced by 47 in this period And by this point Rupert Murdoch himself had also lost interest in Myspace thus in June 2011 news Corps sold into mixed media for an estimated 35 million dollars a tiny fraction of what they paid for it over the next few years Myspace was sold several more times at lower and lower prices to various different companies who wrongly believes they could save the site Myspace became mentioned less and less and became a dimly remembered artifact of social media before the dominance of Facebook however to just say Facebook killed Myspace is a bit of an oversimplification as really Myspace could and should have won it's just they made so many bad decisions themselves in fact Sean Parker the first president of Facebook described it like this and Myspace is another case where a company just blew it Facebook had no chance to win you should not have won the market the network effects in Myspace were so powerful the only reason we won is because of the gross competence of Myspace systematically over a period of many years whilst that's perhaps a little harsh it's hard to deny that Myspace had a huge lead on Facebook and that with some better decisions they could have perhaps remained the king of social media and it would be interesting how different the world might be if they had but technically speaking Myspace is still alive today except it's now completely focused on music and in 2019 Myspace did generate some headlines for the first time in a while just not for the reasons they wanted as Myspace announced that due to a mistake while migrating servers the company had lost nearly 50 million songs in an instant the company had accidentally deleted nearly two decades worth of music that had been uploaded to Myspace much of it by unsigned artists and without official releases meaning there might not have been another copy this was just yet another example of poor management and mistakes in myspace's troubled history of course for lots of people Myspace still brings back many fond memories and as for everyone's old friend Tom the whole Myspace experience wasn't really a failure for him at all he made millions of dollars from selling his sights and is now happily retired traveling the world enjoying his level of Photography although as he shares his photos on platforms like Twitter and Instagram he must surely think about what could have been if Myspace had made some better decisions now speaking of internet companies that were once very successful but then lost their dominance after turning down the chance to buy Facebook have you heard about the story of Yahoo you're not going to want to miss this one just click the thumbnail on screen now and I'll see you there cheers [Music]

Channel: MagnatesMedia

Views: 873,341

Keywords: Myspace, why did myspace die, what happened to myspace, why did myspace fail, myspace fail, myspace, myspace vs facebook, why facebook beat myspace, myspace business, business movie, business story, business, businesses, companies, company, facebook

Id: jb1gWuzczSQ

Length: 23min 13sec (1393 seconds)

Published: Fri Dec 23 2022