"We Have Replaced MTV"
The New Economy is back again -- and the virtual playground MySpace paved the way. More than 140 million people across the globe are members of the virtual community. In an interview, MySpace's founders explain how the Web site killed television and changed the world.
Website MySpace.com co-founders Tom Anderson, left, and Chris DeWolfe: "The growth is phenomenal."
Anderson: I think there are about 140 million right now on my MySpace profile.
SPIEGEL: And in the real world?
Anderson: In person I don't have that many friends. I'm a pretty tight-knit guy with the people that I know. Offline, I have no more than four or five friends.
SPIEGEL: That doesn't seem to bother your online acquaintances. They comment on your private pictures and leave public messages like "maybe we can hook up later" on your profile. How has becoming an online celebrity as the founder of such a successful company changed your life?
Anderson: When I'm on the net, someone always wants to chat with me. But outside of MySpace, it's a completely different world. I don't get recognized that much on the street.
SPIEGEL: How did you guys meet?
Anderson: I had a temporary job in a product testing company right after college. I only planned to be there for 3 weeks. I wanted to earn some money and then do some traveling. I met Chris, who was a manager there, and he moved me into a position right away that I really didn't deserve. We started our first company nine months later. So I went from not working or doing little side jobs here and there to helping to run a company and own a part of it. I don't think that a normal business guy would have given me this kind of chance.
SPIEGEL: How did you start MySpace?
DeWolfe: It began as a community of creative people we knew in Los Angeles. Tom designed the site originally to cater to creative folks whether it was actors, artists or musicians. The community here for that is so vibrant. It wasn't set up to appeal to tech geeks somewhere. It was set up for everyday people to express themselves creatively.
SPIEGEL: So you never intended to create something bigger than just a local Web site for Los Angeles?
DeWolfe: No, we wanted to make sure we had a huge US community right from the beginning. And it was always in our first business plans to expand it internationally.
SPIEGEL: Was it easy to find investors for a site that gave users almost total control over its content?
DeWolfe: For the most part everyone doubted we were a real company and a real site because we weren't in the Silicon Valley. And we didn't do things like everyone else. We had ten different features on our site. They considered that to be unfocused. The user interface wasn't pretty. We weren't using Linux operating system but off-the-shelf Microsoft products, which was unheard of.
SPIEGEL: So how does the MySpace generation tick?Anderson: If you are 23 now, you probably started using the AOL Instant Messenger ten years ago. It's totally natural for you to talk to your friends that way. A few years after that you started text messaging. I think the MySpace generation is these people who just have this experience. It's perfectly natural. It's like a cell phone in that it is just another way you talk to people. I remember trying to get my dad to use one when I was a kid because I thought it was cool. My dad just said, Why would I do that?
SPIEGEL: Do you think we are undergoing a fundamental shift in the way people communicate with each other?
Anderson: Definitely. What's culturally significant about MySpace is that it has become so pervasive that people of all ages are now using it. Even people who didn't grow up with it are getting used to it. People just get sucked in. A 35-year old person doesn't find it strange anymore to be on MySpace. Just two years ago, we would have had no chance attracting that person.
DeWolfe: It's like a platform to quickly show the whole world who you are. That didn't exist before. It's like snapshot, not just your picture, but everything you're interested in -- the look of your site, the sound file in the background. You get a visual and acoustic feeling of what a person is like by looking at it. This generation wants to be more expressive. It's probably a renaissance in wanting to be creative. It's pretty hard to show creativity in other ways, but it's easy on MySpace.
SPIEGEL: MySpace first found success with youth culture. So let's say I'm a kid and I know that my parents and my teachers might be reading the stuff I post on MySpace. Will I still want to hang around here?
Anderson: We worried about that a year ago. We talked about it: What's going to happen when the parents arrive? But it hasn't hurt things. The kids can still make their private profiles if they want to be underground. They don't have to share with anyone if they don't want to.
SPIEGEL: How does MySpace change social behavior?
DeWolfe: It makes it more efficient. If I want to have my 50 friends meet up with me at at a particular place, I can send a bulletin out and meet them there at a certain time.
Anderson: It expands people's world in a lot of ways, it changes their social reality. If I meet you here and you leave the room, I might get your profile or I might know you are a friend of Chris. And I might go there later and check your profile and see that you're interested in things I'm interested in. And then we start talking. There has never been anything like this before.
SPIEGEL: In the past, your would just give someone your phone number, but now we share and reveal far more.
Anderson: Giving someone your MySpace URL is so much less threatening. When somebody asks for that, it doesn't mean a lot. It means I want to look at it, it means I can write you. But it doesn't mean you have to answer. While a phone call is ringing in your face and you'd say: I didn't want to give that guy my number. Think about this constant thing with women trying to decide whether or not to give their number out. They can give their MySpace profile out, and they don't have to worry.
SPIEGEL: MySpace also appears to have changed popular culture.
Anderson: I think we have replaced MTV. MySpace is more convenient. You can search for things, while MTV is just delivering things to you. On MySpace you can pick your own channel and go where you want. That's why TV viewership is dropping among the MySpace generation. I started using the Internet in 1999. That was pretty late. But as soon as I did I just stopped watching TV. The idea of sitting down and waiting for a TV show at a certain time, I couldn't do this anymore. The Internet is a better form of entertainment to me.
DeWolfe: As a TV manager, the best thing to happen is your show gets really hot. But you always know that it's going to lose popularity and become uncool at some point when you run out of ideas or people just get tired. We don't have to deal with that because we are not creating the program -- our users are. They can continually reinvent what's new and what's cool, based on changing their profiles, or new bands coming in. So we are not tasked with that difficult challenge like somebody like MTV. There are 140 million different channels to watch on our site.
SPIEGEL: MySpace is famous for more than pop culture: It's known as a huge hook-up place.
Anderson: MySpace is a social Web site. It's not a dating Web site, but you can use it that way. That's an important part of it. But it's a lot more casual here.
SPIEGEL: Do people behave differently online and offline?
DeWolfe: It's definitely less daunting to socialize on MySpace than it may be in the offline world. In the real world people often don't say what they want to say.
SPIEGEL: Child safety is a big issue. Parents fear predators might pose as teenage boys and eventually molest their kids.
DeWolfe: We have a whole team devoted to this, to make the site safer. We provide safety tips and we are talking directly to law enforcement officials and legislators. We hired a chief safety officer who is a former prosecutor and worked for Microsoft for 10 years. We are leading the industry on the safety front.
SPIEGEL: How does MySpace make money?
DeWolfe: It's not only the banner ads. We allow advertisers to set up their own profiles and build a community around their brand. You can become a friend of Toyota or a new movie exactly the same way you become a friend of a real person on MySpace. That's incredibly successful. We work with all the top brands in the world. In addition to that we closed a huge search deal with Google. They paid us $900 million for being on our site. We will be introducing an e-commerce section. And our mobile business will create a worldwide revenue stream.
SPIEGEL: You think 140 million people will use their mobile phones for social networking?
DeWolfe: It's going to be a big trend. People know each other online, and then they are getting ported to mobile communities. We just announced a huge deal with Cingular, America's largest wireless provider. We will announce a deal with a major carrier in Europe soon. You can get messages, send messages, take a picture and upload it to your site, send a bulletin to your friends. It's maybe hard to internalize, but in the US MySpace has become a way of life. People use it to plan their social lives, to put their lives online. It's a huge value proposition to be able to carry MySpace with you wherever you go.
SPIEGEL: Despite all these efforts, you have so far failed to become the big cash cow that Google and Yahoo have proven to be.
DeWolfe: Not yet. But we have only been in business for three years. And we are profitable. We are going to earn a couple of hundred million dollars next year. The growth is phenomenal.
SPIEGEL: Be it Google or AOL, everybody is offering some type of social networking today; everybody is running a video section and a photo site. What makes you think yours will prevail?
DeWolfe: The big portals tried to come after us after they saw our success: Google, Yahoo, MSN, AOL. We don't believe they will get a lot of traction in our business. Smaller social networks like Facebook for college students will provide value in their niches, but they will never be what MySpace is. Someone will watch a video on YouTube, but chances are that they have a profile on MySpace, and that's where they are socializing. By the way, we have one of the largest video sites of the world.
SPIEGEL: Your new owner Rupert Murdoch is 75 and runs a conservative media empire. MySpace had its beginnings as a site for teenagers and subcultures. Many felt you had sold out their values.
Anderson: It sounded strange on the surface. A lot of people predicted that this would be the demise of MySpace. How could this possibly work? But here's the reality: There are a lot of stereotypes out there about who Rupert is and what NewsCorp is. We both like Rupert a lot, he likes us, and it's a great partnership. We've also become friends.
SPIEGEL: Why then are there so many fake profiles mocking Rupert Murdoch on MySpace? Teenagers are protesting against you and the commercialization of MySpace.
Anderson: I know, you're talking about these "Tom is not my friend" t-shirts. But that's not because of NewsCorp or Rupert. Any time you get as big as we have become, there are going to be detractors. But I have never seen a serious outcry from users about it. The real answer is to look where we are a year later after the sale -- bigger than ever.
DeWolfe: It's also a misrepresentation to say Murdoch's TV channels are all about conservative content. They do have very diverse programming in the US. It's more about finding market segments and making money.
SPIEGEL: How is your German business doing?
DeWolfe: It's great. We just started two and half months ago, and we already have 2.5 million unique users. The number of registrations has tripled since we have translated the site. The advertising market is exploding. The creative scene in Berlin is unbelievable. We are positioned in the right place at the right time. Germany is going to be big part of our future.
SPIEGEL: You have a long way to go in Germany. So far, you are only ranked No. 16 of the top-visited Web sites here.DeWolfe: Usually in new markets, our staff is figuring out what the local popular culture is. From there they figure out where they can do secret shows with great bands in great venues and start sending the word out. It's been extremely successful here in Los Angeles and the US. We do exclusive album releases, work with local comedians, artists. All of this helps building the site. But the primary growth comes from getting scale. Once you get 4,000 members a day, as is the case right now in Germany, things will start growing faster and faster. It's growing by word of mouth.
SPIEGEL: Your contracts with Rupert Murdoch expire next October. Will you leave the company you founded?
Anderson: As long as it's still fun to be here we are going to continue our work. For me it feels like the opportunity has just begun, it's definitely not ending.
SPIEGEL: Google recently bought YouTube for $1.65 billion. Do you think you sold too early?
DeWolfe: We try to look forward and not back.
SPIEGEL: Mr. Anderson, Mr. DeWolfe, thank you for this interview.
MySpace's Fuzzy Future
January 16, 2007
News Corp.'s (NYSE: NWS) MySpace has become the dominant superstar in the world of Web-based social networking -- but has its time already come and gone? Ideas are already percolating online about the future of MySpace and similar sites.
MySpace is wildly popular, especially with younger Internet users; if you skew the numbers right, you can even argue that it's surpassed veteran Internet giant Yahoo! (Nasdaq: YHOO) in traffic and visitors. In a recent interview with Germany's der Spiegel, MySpace co-founders Tom Anderson and Chris DeWolfe confidently declared that their site has replaced Viacom's (NYSE: VIA) MTV as pop culture's top tastemaker. (Me? I'd remind them that social networking sites rely on fickle audiences, always ready to jump ship to the next cool site.)
Meanwhile, according to Ireland's Silicon Republic site, consulting firm Deloitte Global is predicting a change in the business model for social networking sites, believing that social networking sites will begin charging a premium for privacy. Such a move could be more than just a response to demands that MySpace better protect young members from disguised sexual predators. Deloitte also proposes that older users might not want their employers, friends, and relatives to know how they let their hair down online. The group also predicted other subscription-based revenue drivers in social networking, including voice chat, online storage, and Web page design.
Social networking is wildly popular, but it hasn't been easily monetized. Too much blatant advertising on a site like MySpace could alienate media-savvy users. And while many companies are trying to use social networking to their advantage, their efforts remain very much in the experimental phase. (I recently wrote aboutProcter & Gamble's (NYSE: PG) Capessa site at Yahoo! Health, which is pointedly steering clear of too much commercialization.)
While online privacy is an increasingly prized commodity, I'm not sure people will be willing to pay for it, considering how many formerly fee-based sites -- most notably Time Warner's (NYSE: TWX) America Online -- are shifting to free, ad-supported business models. And who's to say users won't consider privacy a right, not a priviliege, and avoid any site that demands a fee to protect their confidentiality?
I personally never enjoyed MySpace; I felt too exposed, especially to emails from complete strangers. I opted to make my profile private -- and then stopped using the site altogether. It always made me feel like I was hanging out on the seedy side of town.
Fool contributor Stephen Ellis recently wondered whether MySpace's 15 minutes of fame were drawing to an end. It's proved difficult to monetize the service by attracting a solid advertising base, despite MySpace's popularity; the site's anything-goes mentality makes it a little risky for many advertisers. (In the Spiegel interview, Anderson and DeWolfe defended the site's track record, noting that it's only been around a couple of years, and stating it's going to make "a couple of hundred million dollars" through advertising next year. They also mentioned Google's (Nasdaq: GOOG) big payment to provide search on the site.)
Nonetheless, MySpace is definitely a force to contend with in the social networking space. The evolution of such services is certainly far from over, and companies won't stop seeking ways to make money off such sites any time soon. But when it comes to today's young Web junkies, those firms may find that furnishing the fun -- and profiting in the process -- is easier said than done.