MySpace and the product life cycle

I can see the scene in a few years: Business teacher tries to look cool in the classroom by referring to a social networking medium, now long dead. I’m referring to MySpace, once a giant of the field and now entirely eclipsed by Facebook.

What’s also interesting are the attempts at a product extension strategy, now the management have come to accept that they are definitely in the decline stage of the product life cycle.

According to the BBC MySpace lost more than 10 million unique users worldwide between January and February. There were almost 63 million users of MySpace in February 2011, down from more than 73 million the month before. Year on year the site has lost almost 50 million users, down from close to 110 million in February 2010. It would be interesting to track down enough figures to present this as a graph to visualise stages in the product life cycle.

Five years ago it was booming and for many was the first place to visit to talk to friends and listen to music. It was the social network site that helped launch the careers of artists like Arctic Monkeys, Kate Nash and Lily Allen. But now MySpace has already announced plans to cut half its workforce. The arrival of Facebook has changed the face of social networking.

So what’s next? The loss of users comes despite a series of changes to the site to make it more about music. This extension strategy is all about making the site no longer a social network and instead an “entertainment destination”. But with competition from YouTube, streaming services and increased file-sharing it faces tough times.

The owners are News Corp (who own Sky, The Sun, The Times etc) who have had their fingers badly burnt with this investment: it just goes to show how hard it is to pick winners in this fast moving and evolving industry. They bought the company for £330 million back in 2005. If they were to sell today, they might get as little as £50 million for it.