(Originally published on the ABC news site, The Drum 08/07/11)
MySpace’s diminished return.
By Aaron Flanagan
This week Rupert Murdoch’s News Corporation sold the original social media phenomenon MySpace for less than 7 per cent of what they bought it for in 2005.
It represents not only a spectacular failure by News Corp to manage new media business, but also is an indication of establishment media’s unwillingness to engage innovatively with anything outside their pre-internet comfort zone.
Under News Corp, MySpace’s subscribers fell from a peak of 300 million and a valuation of $US12 billion to 91 million and a valuation of $US35 million.
Internet sage Clay Shirky characterises the reluctance of media companies in adapting to the shift suddenly forced on them by the rapid growth in popularity of the internet as them having to deal with ‘an unthinkable reality’.
News Corp, blinkered as such, was reluctant to embrace the innovation necessary because their corporate agenda was still coming to terms with the unwelcome suddenness of the internet appearing like stink at a linen table-clothed soiree.
Success in the digital age defies established business profitability logic.
Twitter, recently valued at $US7.7 billion, hasn’t yet found a way to fully monetise their popular social media offering due to nervousness about irritating the delicate relationship with the millions that regularly use it.
The internet’s popularity as an alternative to TV, magazines, movies and newspapers has cleaved a new media publishing philosophy that has split old media business habits in two and dragged the whole shebang, reluctantly, into a new light.
Creativity and alacrity of thought within the old media paradigm, says Shirky, “are herded into Innovation Departments, where they can be ignored en masse”.
A notion of a polarity in how digital content should be produced and distributed as a contemporary Australian issue was ignited by the 2009 MacTaggart speech, The absence of trust, made by News Corporation senior executive, James Murdoch, and a subsequent rebuttal by Mark Scott, managing director of the Australian Broadcasting Corporation during his lecture, The Fall of Rome: Media after Empire.
The future of media publishing according to Murdoch, and by proxy News Corp, rests with maintaining the profitability of existing media via the collusion of established media ventures to enable a user-pays subscription model.
This seems the over-riding concern for News Corp-style establishment media.
Well-known and respected brands must conform to a standard that sees their hard-earned pedigree translated to the digital medium without being tarnished by the threat of free and unregulated content no matter what.
MySpace died rapidly from 2005, eaten up by rival businesses free to explore digital opportunities that MySpace couldn’t pursue due to being lumbered with reluctance by News Corp to innovate beyond what already worked for them.
One wonders what News Corp thought it was doing when it coughed up more than $500 million to buy the most radical and unorthodox expressions of new media at the time, without considering innovative new directions in managing emergent digital business.
Innovation, such as the seemingly unmanageable and chaotic social networking buzz enshrined within Twitter and Facebook, has added a new dimension to the way the world communicates and helped define a whole new industry – Social Media – worth billions.
Shirky argues that all forms of media production have been indelibly affected by this mass, chaotic adoption of the internet as the inevitable future in how people will continue to communicate.
News Corp failed to consider the media dynamic being altered to this extent, where in just one of many departures from pre-digital orthodoxy, it is no longer a one-way flow of information – media platform to reader, but now one with a capacity for interactivity with a previously static and largely unresponsive audience.
These adjustments were not determined by the industry itself but rather forced on it by the unexpected glee people feel using digital technology. Suddenly people can’t get enough of it.
It is this perceived suddenness that took the reluctant establishment practitioners by surprise.
Establishment media haven’t taken kindly to two-way dialogue, as it’s difficult to corral interactivity into schemes that proved lucrative in the past.
MySpace encouraged interactive conversation and file sharing among subscribers, which won it unprecedented popularity. News Corp alienated their users by remaining static and unresponsive towards the pressing need to continue innovating. MySpace users grew bored and went elsewhere.
Shirky suggests the hesitation of establishment media to embrace the potential of new media is because of a reluctance to let go and take up with an unknown and, likely, less profitable digital media reality.
Significantly altering successful principles that are deeply entrenched and profitable is counter-intuitive to established business practice.
News Corp owns a full spectrum of successful media companies – cinema, print and television. Likely News Corp reckoned it could crowbar MySpace’s multi-million weekly hit metric into their media landscape and leverage this off their established media behemoth.
It didn’t work out. People, says Shirky, have an innate desire to socialise without the spectre of crass commercial exploitation. This is what sets social media apart.
It wouldn’t be at all surprising if the new management team of MySpace, including gen-Y wunderkind Justin Timberlake, free from heritage media constraints, make a better fist of it.