A bad day for Myspace


May’s Comscore data, reported yesterday on Techcrunch, has two pieces of bad news for Myspace:

  1. After passing Myspace on a worldwide basis last year Facebook is now also larger than it’s main rival in the US
  2. Perhaps more worrying for Myspace owners News International the site is also now going backwards, losing 700k unique users in the US in May

I would be a lot happier if Myspace was still moving forward.  The criticism that social media businesses are fashion based and are all ‘here today, gone tomorrow’ is getting harder to argue against.

  • I think the writing has been on the wall a long time for MySpace.

    In my view that sort of criticism usually comes from people that are not immersed in the sector. I think this is a classic case of network effects meaning that winner takes all. Facebook built the most useful and effective product, is iterating the product well (I like Jason Calcanis' view that Mark Z is like Bill Gates – he sees strong competitors and copies good products well) and I think they will be very hard to budge.

  • Two thoughts Henry:
    1) it is undeniably the case that no social media company has maintained a dominant position for any length of time – I agree that FB may be the ones to do so, but I could argue that more convincingly if I had a good historical precedent. This will matter when we come to exit the next wave of social media businesses.
    2) one of the features of the web is that the winner takes all dynamics are stronger than in areas like software and semiconductors – if second place isn't worth much then investing becomes more difficult

  • Hi Nick – re your second thought – I agree that it is easier to become the default service on the internet. I liked Fred Wilson's post on default services here http://www.avc.com/a_vc/2009/05/default-behavio

    He summarises by saying:
    “So what does this mean for entrepreneurs and VCs? Well for one, don't make a frontal assault on a default service. Build or finance a service that can become a new default function in the Internet operating system. And if you have a shot at becoming one of these default functions, invest all of your time and energy attaining and solidifying that default position before working on monetizing it. Because its a very tough position to secure and once you get there it's pretty hard to knock you out.”

  • some good comment on the same story by Josh March


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