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Is Myspace Destined to Fail (Again)?

Is Myspace Destined to Fail (Again)?

Few things conjure as much nostalgia for 20- and 30-somethings as MySpace. For many younger Gen X-ers and older Gen Y-ers, it was their first social network, and they decorated their profiles with garish fonts, neon colors and ear-piercing music. Everyone's first friend, of course, was MySpace co-founder Tom, with his grinning mug, white T-shirt and Beverly Hills, 90210 sideburns.

In 2005, the L.A.-based company was acquired by News Corp. for $580 million, and in October 2008 it peaked with 76 million U.S. unique users. But users fled the site, annoyed by a clunky experience (which only felt slower and more annoying as other sites innovated), spambots and the rise of Facebook. By the end of 2010, MySpace was a laughingstock.

In 2011, online ad company Specific Media — founded by three brothers from Orange County — partnered with Justin Timberlake and others to buy MySpace for a paltry $35 million. They made the "s" lowercase and completely revamped the site. With a focus on music (an area where Facebook had failed) and a sleek, horizontal-scrolling interface, they bet on Myspace's name recognition, large remaining user database, and Timberlake's ability to bring sexy back.

Their task upon their debut early last year? To somehow convince everyone that the uncoolest website on the planet was now cool again.

It wasn't enough to have an awesome site, company strategists decided; they needed to win hearts and minds. That meant venturing into the real world. So they hosted a giant launch party in June — but the idea proved fraught from the get-go. With only a short time to organize it, they approached the ornate El Rey Theatre in Miracle Mile. The venue had already been booked, according to an El Rey representative, but money tends to make these types of problems disappear.

The party featured an open bar and performers including rapper Tyler, the Creator, who jumped on the soundboard and messed it up. Pharrell Williams and Robin Thicke were joined onstage by Miley Cyrus for "Blurred Lines" — months before her scandalous performance at the MTV Video Music Awards.

But too many people had been invited, leading to lines around the block. Before long, the fire marshal interceded, and no one else was allowed in.

The party was close to being a failure, and it did nothing to boost the site's web traffic, but it did draw media coverage. The U.K.'s Daily Mail breathlessly reported on the event, focusing on Timberlake's departure from the festivities with a "mystery brunette" in tow.

Myspace had buzz again, and its new ownership, fronted by the Vanderhooks, the brotherly trio of uber-successful Internet ad wizards, seemingly was willing to spend as much cash as necessary. But they had a lot of work to do.

"When we bought the company, it was not socially acceptable to say you visited Myspace," CEO Tim Vanderhook told Fast Company magazine. "That's shocking, from a brand perspective."

Enter a $20 million television ad campaign, which featured a bevy of trendy musicians, well paid for their time. Airing all over cable, including during the NBA Finals, and filmed by It-boy photographer Ryan McGinley, the ads featured musicians, models and other beautiful people performing BMX and skateboard tricks, tossing vinyl records, making out, shooting Silly String and smashing a guitar.

Though Timberlake's exact involvement remained vague, the creative team kept pushing bold ideas, and the money kept flowing, thanks to the Vanderhooks' successful ad network, Specific Media. (Tim Vanderhook is credited with creating those "pop under" ads you find waiting for you when you close down your browser.) Myspace brass were treated to box seats for NBA games at Staples Center and rooms at top hotels. Over the summer, Myspace sponsored a series of free twilight concerts on the Santa Monica Pier, featuring backstage beer gardens, free food for press and a vendor giving away high-end sunglasses.

But in an era of hyper-targeted digital marketing, analysts weren't sure how these tactics would generate web traffic. And if it seemed that the site's owners were flying by the seat of their pants, well, that wasn't far off. While interviewing a job applicant last year, a Myspace staffer compared the company to an unfinished house: "We don't really know what it's going to be, and right now we only have our rafters up, but eventually it's gonna be a place with really cool parties."

Yet more than a year after the relaunch, no one's showing up. Traffic to the site is abysmal, falling to 5.4 million unique U.S. desktop visitors in March, according to ComScore. (That's more than 125 million less than Facebook, and fewer visitors than the site had before its relaunch. Myspace.com's traffic chart over the last decade looks like an upside-down soup bowl.) In November, the company laid off some 5 percent of its staff. Another round of layoffs followed in late March.

Committed users can find a plethora of smart functions on the site: social networking; Spotify-like streaming music, a realm to find new music (similar to Pandora), and original music writing and videos. But figuring it all out seems to require a master's degree, and the site changes its focus frequently.

The new Myspace has nothing to do with the old MySpace — new people, new design, new everything. And against the odds, it has remade itself as cool. But it suffers from an existential question: What is it? If its brain trust can't answer that question — and soon — it's hard to imagine the site is long for this world.

"Welcome back to Myspace," Tim Vanderhook's Myspace profile says. "Get comfy, throw on a track, connect with your friends, and chill."

When he's not being all, you know, down with the millennials, Vanderhook tends to favor corporate tech buzzwords. Based in Newport Beach, he's 33, balding and intensely focused. His older brother, Chris, the chief operating officer, is based in Yorba Linda; the brothers have the same titles for Irvine Internet ad company Specific Media, which they founded along with a third brother, Russell, who also is based in Newport Beach and isn't as involved with Myspace. Russell Vanderhook's profile pictures show him at raves, on the ski slopes and surrounded by babes at the Playboy Mansion.

Through the company's spokeswoman, the Vanderhook brothers declined an interview request, as did the spokeswoman herself.

All three brothers are married, and nowadays tend to work out of their Irvine offices. The origin of their empire is online advertising, which the three began to sell in 1999 while still living with their parents in Yorba Linda and operating on a dial-up modem.

Even as Specific Media — now folded into the Vanderhooks' parent company, Interactive Media Holdings — has flown largely under the radar, it has grown to be one of the 10 biggest online ad companies in the United States. In 2007, The Wall Street Journal reported that it had been infused with $100 million in private equity. Today it has more than 500 employees and hundreds of millions of dollars in revenue.

Thanks to that background, many people assumed that the Vanderhooks were interested in MySpace for its wealth of proprietary data; even at the time of the sale, the site was still being visited by tens of millions of people every month, each freely sharing information about their hobbies and favorite artists.

In an interview with Ad Age at the time, however, Tim Vanderhook swore this was not the case, saying the brothers were focused instead on building a "digital media company" à la Yahoo or Google — an ambitious attempt to get into the content business, and certainly more glamorous than selling "pop-under" ads. It was the siren call that has seduced many a mogul: They wanted to be publishers.

Myspace had content to spare, including a digital music collection that now contains more than 50 million songs. But the Vanderhooks didn't want to simply be a jukebox — they wanted famous artists and musicians to use the site themselves, just like in the old days.

That's where Timberlake, as a minority investor and partner, came in. Though "the closest he's got to being in the social media business was playing early Facebook backer Sean Parker in the movie The Social Network," as one analyst put it, Timberlake was tasked with driving the site's creative direction and bringing celebrities aboard. The idea was that, as in MySpace's original incarnation, the plebes would follow.

Joining Timberlake on the creative side were Eric and Keith Tilford, advertising wunderkind brothers and music video directors, who worked on branding. (Said to clash with the Vanderhooks about a number of issues, the Tilfords are no longer with the company.) Timberlake also brought on relatively unknown singer Kenna, whom no less an authority than Malcolm Gladwell determined in Blink would be more famous if his music, a mixture of rock and hip-hop influences, was easier to categorize. Nonetheless, Kenna was hired as Myspace's "chief vision officer," and he brought in Vice magazine's Joseph Patel, working out of Myspace's spacious New York office, to oversee the site's original content.

"For me, the goal was to change the conversation. People had a perception of what Myspace was," says Patel, who spearheaded the site's move into original music writing and videos. "We started from scratch. We didn't even have a camera."

The Vanderhooks have been watchful owners. Patel says, "They read and watch everything we put out."

He adds, "They don't understand it all, because they're not plugged in like that. Once they put the right people in place, they've been pretty hands-off. They come in sometimes with crazy ideas; some are good and some are bad. I'm blunt: I let them know."

The site itself has received glowing reviews: the left-to-right-scrolling, tablet-friendly layout features big, bold images and sharp-looking video and music players.

When you sign up, you're asked to pick what you're "about" — curator, dancer, DJ/producer, entrepreneur, etc. (There are no options for pop-up ad salesman, much less waiter or math teacher.) As with the old MySpace, you can still pick your "top 8 friends." Musicians' pages feature not only their music but their videos as well, and you can also listen to streaming music "radio stations," or to the vast quantities of playlists prepared by other users. Then there is a plethora of original videos and articles.

Sound like a lot? It is. The folks running Myspace came up with so many brilliant, can't-miss ideas that they decided to implement all of them simultaneously.

To understand the new Myspace, it helps to understand the old MySpace. And to understand the old MySpace, it helps to understand Friendster, the first widely popular social media site, after which it was patterned.

If you're too young to remember Friendster, you didn't miss much. It was slow, and functionality was limited; you could post pictures and write "testimonials" about your friends, and meet prospective hookups via old-school "six degrees" algorithms showing what friends you had in common.

But it didn't allow for much creativity — you couldn't, say, put a picture of your dog as your avatar, notes Chris DeWolfe, MySpace's co-founder. Speaking today from the sparkling Beverly Hills offices of Social Gaming Network, his new company specializing in mobile and social network games, DeWolfe explains how, using Friendster's template, he and his partner, Tom Anderson — the Tom — set about trying to improve on it.

Even in those early days, Anderson, a former film student, spent much of his time online. "When I first met him, he didn't have a cellphone, but he IM'ed all day," says DeWolfe, now 48. "He was using dating sites and different social sites, like Craigslist, before a lot of people."

Back then the pair dabbled in spam email and other dark corners of the Internet, selling their e-commerce business to Los Angeles–based Internet marketers eUniverse, which helped them launch MySpace in 2004. [Editor's note: This paragraph was changed after publication. See clarification at story's end.]

MySpace separated itself from Friendster by letting users go crazy, customizing their own pages with wild designs and colors, showing off their taste in music and promoting their art or businesses. Bands, in particular, took to the site, which let them upload their music; it helped drive the careers of everyone from Lady Gaga and Arctic Monkeys to Adele. (At one point MySpace spun off its own record label.)

DeWolfe has a strong chin and salt-and-pepper hair. While he once dated Paris Hilton, he nowadays serves as something of a tech elder statesman, regularly doing interviews with journalists not just about Social Gaming Network but also about the industry at large. He loves to reminisce about MySpace, and while he's as prone to spin as anyone, he's absolutely correct that MySpace permanently changed the music industry, allowing artists to "coalesce all of their fans into one place and communicate to them."

Before MySpace, bands had websites, which tended to be infrequently updated and drew very low activity. The collapse of the music industry meant that hardly anyone could make money selling albums anymore, but MySpace helped groups pay the bills in other ways. "The band could say, 'We're in Austin tomorrow night, Chicago the night after, get all your friends out there.' People were actually able to make a living on their craft rather than waiting tables at night," DeWolfe says.

Before Instagram and Twitter, it wasn't easy to persuade musicians' handlers that they should go on MySpace, says Roslynn Cobarrubias, who handled artist relations for both of the site's incarnations. After all, in the old days, the rock star simply sat on top of a mountain, sending down guitar thunderbolts now and then. Fans might find about their lives through Rolling Stone interviews or fan clubs.

But musicians loved the site, and made themselves surprisingly accessible on it. Taylor Swift and Diddy blogged. Drake uploaded his mixtapes. Many others simply hung out there. Music journalists who found themselves stymied trying to reach rappers through official channels quickly learned that Ludacris himself might return their direct MySpace message.

Based briefly in El Segundo and then in Santa Monica, MySpace grew exponentially, and was bought by News Corp. in 2005, which moved it into the Fox Interactive Media building in Beverly Hills. (The oddly designed building likely was intended originally to be a medical center before being reimagined as an open–plan tech space.) The $580 million selling price didn't initially seem that crazy, as users continued to increase. The site began to expand its mission, adding a classified service à la Craigslist, a video player à la YouTube, sections devoted to politics and travel, even an email system.

"MySpace tried to be far too many things, instead of trying to be the best social network," says Isac Walter, MySpace's former music editor in chief and marketing director. "Facebook dominated; they didn't try to reach beyond their means."

"Just focusing on three or four aspects and being the best at those is something that we should have been laser-focused on," DeWolfe agrees. "There was an expectation that we were supposed to do a billion dollars in revenue, when neither Facebook nor YouTube had any expectations to make one penny."

Facebook, then still a private company, had a clean design that loaded quickly, while MySpace hosted zillions of ads and couldn't perform basic functions. Landing on a friend's MySpace page often meant encountering a cacophony — not only would their chosen song play but also the songs left in the comments section by their friends. The site also became increasingly risqué, dominated not just by social media celebrities like the barely clad Tila Tequila but also countless spambots infiltrating inboxes. DeWolfe and Anderson both left the company in 2009.

Of course, it's easy to criticize MySpace's direction in hindsight, but at the time this was all uncharted territory. "There was no social networking company who was that big before that," Walter says. "You're just trying to wing it."

Oddly, the new Myspace seems to be winging it as well.

With great fanfare in 2012, the Vanderhooks and Timberlake talked up plans for something called Myspace TV, a real-time television provider that would feature everything from sports to reality shows. (The advantage over, say, Time Warner? You could chat with your homies on Myspace while watching.) Though they trumpeted a partnership with Panasonic, the feature appears to have been abandoned, though the company insists it's still in development.

The focus then shifted toward streaming music, at least according to a leaked document laying out the company's quest to raise $50 million in additional investor funding. Besides revealing somewhat embarrassing financial information — revenue estimates were only $15 million in 2012, on losses of $40 million — the pitch laid out plans to utilize the site's huge cache of songs to compete with services such as Spotify and Pandora.

Its cost advantage, Myspace claimed, was that it paid lower rates to musicians — or, in the case of the vast amounts of music from lesser-known artists, nothing at all. While this may sound nefarious, for the dedicated music fan it represented a truly staggering resource. Myspace's digital music library, which it says is the world's largest, has an inspiring democratic component: Unlike, say, Spotify, any independent artist can upload music.

But the company is no longer focused on streaming music, either; and that's probably a good thing. With the introduction of Dr. Dre's Beats Music streaming service, the field has become even more crowded — though still unprofitable.

Myspace's focus, sources within the company say, isn't on traditional social networking capabilities, either, but rather creating content. Social media users are less obsessed with their peers' status updates, Patel notes, than with what they're reading and watching. Which presumably is why Myspace has made a serious run at another business mired in unprofitability: music journalism.

To the credit of Patel and the Vanderhooks, the site has enlisted — and paid well — some of the game's top writers (many of whom also write for L.A. Weekly), and they have profiled some of the most compelling music artists working. Cutting-edge urban artists in particular rarely break through to the mainstream without being written about by Myspace first.

But the site has failed to break through as a serious critical voice, in part thanks to the fact that it's rarely critical. Unlike those at successful music sites such as Pitchfork, Myspace writers focus overwhelmingly on artists they're interested in praising. (Patel agrees that the site focuses on artists it wants users to discover, but adds: "They're not fluff pieces.")

Tech and licensing issues have been an even bigger problem. In the early going, many scribes complained that their published work was extremely difficult to access. Even after a log-in requirement was lifted, a lack of search engine optimization made the content nearly invisible on Google.

Last year, a group representing independent labels complained that Myspace was using without permission many songs by their artists; the site's spokeswoman said any such tracks were removed upon request. Meanwhile, one particularly grand project — an assessment of every Lil Wayne song in existence, which critic Andrew Nosnitsky spent three months preparing — was taken down entirely not long after it was published last June. Patel says the piece was pulled because it included user-uploaded content that hadn't been cleared. (Nosnitsky declined comment.)

The site now is largely focused on creating original videos, from interviews with high-profile musicians such as R. Kelly and Rick Ross to short films introducing obscure bands, mixing live performances with staged elements. Dominic Franceschi, Myspace executive director of customer experience and product marketing, recently justified the strategy by saying advertisers are finding a dearth of "premium" videos to sell content against online. (One wonders how this could be true: Who has trouble finding something to watch on the web?)

While the works are often compelling and fronted by ads, they're extremely expensive and time-intensive to create.

And the timing isn't great. There's a glut of new players in the streaming video market, and ad rates on sites such as YouTube have been plummeting. Often, the high-quality videos seem to serve — like so much else on the site — as loss leaders intended to sell the Myspace brand.

"I'm not trying to be BuzzFeed — we're not trying to do traffic driving or clickbait," Patel says. Instead, as he tells it, the idea is, "Let's do quality work, that people respect, that creates a foundation for us, and we can build off of that." He adds, "That's why I left Vice. [The Vanderhooks] said, 'We're going to give you a lot of money to make what you want to make.' "

Myspace also recently hired a new sales team, which is focused in part on "native advertising," which seeks to blend content and ads in ways that are not always immediately obvious to the reader. A previous example was a partnership with Bud Light last year promoting a series of concerts all over the country; some of the promotional content was developed with the editorial team and ran alongside their nonbranded content.

All of these separate initiatives are enough to make your head spin. Like the old MySpace, the new one has gone off in a million different directions, attempting to compete with Facebook, Spotify, Pandora, YouTube, Pitchfork, Yahoo, Google and Revolt TV all at once.

Patel agrees that the site has been too complicated, and simplification is the goal: "You can have one innovative thing, and two innovative things, but you can't have 15 innovative things all at once."

But it may be too late.

"This is a brand who has lost its audience, and it's getting embarrassing. At this point it's like seeing an advertisement for 'the new Kmart' or something — we just don't care," says Anthony Rotolo, a social media professor at Syracuse University. Long after Facebook came onto the scene, he notes, MySpace was still very popular among kids interested in customizing their pages. (The "Goth" kids rather than the "popular" kids, for instance.)

But in June 2013 the new company alienated a huge swath of its old users by eliminating the "classic Myspace" interface, and with it much of the old users' content. The site lost 3 million unique users that month. Many migrated to the customizable blogging platform Tumblr. Says Rotolo: "Any remaining sense of community on Myspace is now gone."

It's not that it has a bad product, he reiterates, it's just that it has a bad brand: "They would do themselves a huge favor to call the site something else."

One thing is clear: Traffic is way down. At the time of the Specific purchase about three years ago, MySpace was drawing more than 33 million unique U.S. desktop visitors per month, according to ComScore. That's down to 5.4 million desktop visitors now. (Under a different ComScore metric, which incorporates desktop, mobile and online videos, monthly traffic was about 13 million in March, but that is still significantly less than a year ago.)

The company's size also is greatly reduced. Upon the site's sale three years ago, half the staff was laid off, bringing its number then to just over 200 employees — down from a peak of 1,400 in the glory days. After the November round of layoffs, one former employee describes the Beverly Hills offices as a "ghost town."

Early on, Tim Vanderhook said that if Specific and Myspace successfully integrated, he would consider taking the company public, but that now seems unlikely.

Justin Timberlake is not spending much time at all there, and his input does not appear to have had its desired effect. Though the partners took great pains to play up his hands-on involvement in the early going, that seems to have been overstated. This year he's mostly disappeared from stories about the site, which is not surprising, considering there are few busier people on the planet.

Although a busy schedule shouldn't stop him from using his brand to benefit Myspace's, that hasn't often been the case. Though the site's relaunch at the beginning of 2013 was cross-promoted with the debut of Timberlake's hit song "Suit & Tie," it has not generally benefited from the types of premieres and exclusive songs and videos that drive big traffic. (Patel blames pre-existing record-company relationships for the lack of premieres.)

Timberlake also was supposed to drive big artists to the site, but, according to one well-connected artist manager, Myspace isn't really on too many celebrities' radar: "I don't know if they're a super big factor anymore."

For many, the reason for Myspace's fall is obvious: The brand was doomed. "You can reinvent yourself," Walter says, "but nobody's going to go back to an AOL or Hotmail account."

"Will Myspace ever be the primary social media platform like it was back in the day?" Patel asks. "Probably not. But nobody will. Will Myspace be healthy and survive? That's the hope. It's never going to be the monolith it was back in the day."

Nowadays Tom Anderson, the Tom, travels the globe practicing his photography; on his recent trip to Southeast Asia, he shot Thai Buddhist temples and Shanghai skyscrapers. He also has invested in apartment buildings and commercial real estate, as well as a gambling app.

In 2012, when a Twitter commenter critiqued Anderson's defense of Instagram, calling him "a guy that was not able to keep a social network alive," he tweeted back, calling himself "the guy who sold MySpace in 2005 for $580 million while you slave away hoping for a half-day off."

In fact, almost all of MySpace's original members have gone on to start new tech companies, some to great success; former COO Amit Kapur is co-founder of Gravity, a software startup that helps users personalize their web experience; it recently was purchased by AOL for more than $80 million.

The thing that often drives tech startup employees to work long hours is the promise of a giant payday. But even when you're set for life, life goes on. And that's when some tech millionaires find out they're not so set after all. Their search for purpose, for fulfillment — or just the rock star lifestyle — continues.

For the wealthy Vanderhook brothers, Myspace offered the chance to make them cool. For Justin Timberlake and the rest of his creative team, the site offered an enormous canvas to create art.

Watching Miley Cyrus gyrate at their 2013 launch party, they might have thought they'd fulfilled their dreams. Tens of millions of dollars later, it must be hard not to have second thoughts.

Editor's note: A previous version of this story referred imprecisely to the online businesses that MySpace founder Chris DeWolfe dabbled in before launching the site with Tom Anderson. We regret the error.

Is Myspace Destined to Fail (Again)?