The last chance for MySpace to prove its worth to News Corp.

With news that the News Corp. division that houses the social media Web site MySpace has suffered increased losses, the pressure on the service to turn things around has clearly intensified. This was evident in the comments made by the News Corp. president and COO Chase Carey at the results announcement when he said that MySpace now has quarters to turn things around rather than years.

We’ve all read plenty about the Web site’s redesign and the moves by News Corp. to close the ever expanding gap between MySpace and the social network leader Facebook. But is this really possible? When News Corp. bought MySpace they underestimated just how fast the social media business could (and subsequently did) change. MySpace was dominant at the time and it would seem that they thought they could maintain the dominance in the same way they have done so brilliantly with pay TV. Although the pay TV business continues to do well, so many other social media sites have quickly grown and have overtaken MySpace.

Sites like Facebook have benefited from being more focused and MySpace still seems to be a site that offers a lot but nothing targeted at any one type of Internet user. Is it something for the average teen or is it for bands? The problem News Corp. has now is that once a social media site such as MySpace loses popularity it never seems to be able to get it back. Most analysts said earlier this year that its change to being more music-focused was a good one. But since then, Spotify has exploded in Europe and Apple has entered the market with Ping. MySpace seems to follow fashion rather than create fashion and that seems to be the case with the latest move to make the site cleaner and less cluttered.

In the latest issue of Music & Copyright we looked at how social media has become inexorably linked with the music industry. We came across a Web site called Famecount that lists the number of Facebook fans, Twitter followers and YouTube subscribers the leading artists have. This may mean nothing but there’s no mention of how many MySpace friends they have.

Some have suggested that MySpace is now an embarrassment to News Corp. This isn’t the case as most artists still use it (despite its omission by Famecount). The problem is it hasn’t become what News Corp. wanted it to become. News Corp. is the world leader in pay TV and at the time it bought MySpace it was the world leader in social media. But anything that is tied to fashion, particularly with youngsters and teens, can go out of fashion as quickly as coming in. That has happened with MySpace.

There are a number of similarities between MySpace’s situation and the demise of the Sony Walkman. The Walkman was the winner for years but try as it might, Sony just couldn’t compete with the iPod. No matter how much money Sony threw at its portable music players and Connect service it couldn’t make up any ground on the iPod and iTunes. Subsequently, it just conceded defeat and gave up.

The big problem now is what to do with MySpace if the latest revamp doesn’t work. If News Corp. sells it, they won’t get anything like what they paid for it. Friends Reunited was massively in favour for a short while – then went out of fashion and never got it back – leading ITV to make a £150 million loss on its sale. A similar outcome wouldn’t be the end of the world for News Corp. but it wouldn’t look good for a renowned company such as News Corp. to have failed in such a big way.

Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.