It happened to Yahoo. It happened to AOL. It's happened to so many other "leaders" in the internet business.
Get on top. Get fat. Get arrogant. Get lazy. Get behind. Get squashed.
Once they get behind and somebody else passes them up, there is no hope that "re-invention" will save them. This business is based on perception and fads, not on technical abilities or cost-competitiveness. Once a company has lost their edge in people's minds, they will never get it back. It's a cautionary tale for the likes of Twitter, Google, and even Facebook. There will always be somebody in the wings that can come in and eat your lunch in a flash.
MySpace - once the site that was synonymous with online social networking - is expected to shed more than half of its staff tomorrow, another sign that the end is near.
Liz Gannes over at All Things D cites several sources who tell her that the company will lay off 550-600 of the 1,000 remaining staffers as early as tomorrow. Around the water cooler, however, this isn’t coming as much of a surprise.
Back in November, parent company News Corp. talked about a a new look and a relaunch for the site but cautiously said that the company would be judged on a quarterly basis as the parent company searched for short-term results.
News Corp. is a big company and manages many online properties, including All Things D. MySpace falls into the “other” category, one that delivered an operating loss of $156 million on revenue of $298 million in its fiscal first quarter. A year earlier, MySpace had a loss of $126 million on revenue of $400 million.
At the time, News Corp.’s Chase Carey said:
We have been clear that MySpace is a problem. We recognize that we had to redefine and largely rebuild this business. We believe the foundation was there to warrant this effort and it has been our focus this year… We equally know we need to make real head way in the coming quarters to get this business to a sustainable level. Overall, when you have as many businesses and as many regions as we, do it is unlikely that they will all be operating at an optimum level on a short-term basis although we strive to make sure most are.
Gannes also suggested that MySpace will start looking for a buyer after the layoffs. While the company is primarily being shopped to private-equity buyers, she wrote, one possibility being floated around is that Yahoo is being eyed as a possible buyer.
Yahoo may also need some help these days, too, but swooping up MySpace - which has seen its social networking crown shifted to Facebook - probably isn’t the best chess move.
