MySpace, Bigger Than You Think

MySpace.com, a site that generates more hits than Google, may seem like a simple site run by "Tom" but in actuality is a lot bigger than most people think. Reason: simple design and super user-friendly. It doesn't look like most corporate-run websites with fancy graphics and front-end technology and it gives its over 100 million users the feeling that they control the site, which they do. MySpace users have full freedom to do as they please which is exactly what founders Tom Anderson and Chris DeWolfe intended when they launched the site back in 2004. You may picture Tom running MySpace from a small office with a handful of employees but maintaining the fastest growing website with over 100 millions members needs a bit more than a few employees; over 300 to be exact and growing.

But MySpace did have a humble start. Tom Anderson, 30, and Chris DeWolfe, 40, started MySpace back in 2003, while working for Intermix Media, inviting local LA bands, promoters, and club owners to post pages and allowing fans to become their "friends." They got their idea from other social-networking sites like BlackPlanet and Friendster but planned to have a much broader vision. Friendster at the time was the largest site of its kind but when they began implementing certain restrictions its users migrated over to MySpace. In early 2005 Redpoint Ventures invested $15 million in MySpace's parent company, Intermix Media, but that was nothing compared to what Rupert Murdoch's News Corp. paid for it in six months later. How does $580 million sound? What the heck is News Corp. you ask? Well they only 20th Century Fox, Fox Television, FX, DirecTV, TV Guide, and the New York Post just to name a few. Now part of News Corp's Fox Interactive Media division does MySpace seem small to you now?

Hardly, and $580 million is a lot to pay for a website, but for a site with over 100 million members--and signing up 230,000 members a day--and 1 billion hits a day it could turn out to be a bargain price. Just because Murdoch is the 32nd richest person in America, worth over $6 billion, doesn't mean he just throws money away at any little venture without worrying about those three little letters: ROI, Return on Investment. How does a free site like MySpace return on Murdoch's investment? Advertisers! I did say 100 million members, right? While MySpace is boosting up its ad sales force it's also jacking up its ad rates (in comparison Yahoo charges $600,000 a day for an ad on the Yahoo.com homepage) and even selling MySpace pages to advertisers for a whopping $100,000 (P&G, Honda, and Wendy's have MySpace pages). Sierra Mist and Aquafina, two Pepsi brands, sponsor MySpace Comedy and MySpace Film, respectively, two of MySpace many features.

Speaking of features, MySpace is currently working on 20 new features. Tom and Chris are have already teamed up with Interscope Records to launch MySpace Records, and cell company Helio launching MySpace Mobile. Let’s not forget MySpace Film which was launched at the Sundance Film Festival earlier this year, MySpace comedy which boasts 8,000 comedians, MySpace Music home to 2.2 million bands, and plans on launching MySpace Fashion, MySpace News and MySpace Sports. That's not all, the dynamic duo are also developing VoIP, 11 new international sites of which the UK and Australia have already been launched, and e-commerce partnerships with either eBay or Amazon. With each added features comes with more users, which equals more dollars, greenbacks, Benjamins, cheddar, whatever you want to call it.

With all this money floating around how did Tom and Chris make out? Well, Chris DeWolfe reportedly made $2.9 million from the deal, not to mention the duo received millions more from their stake in MySpace Ventures--a minority owner of the site--and pretty hefty employment contracts when they joined News Corp. (which expires in 2007). So how does being owned by multi-billion dollar conglomerate affect MySpace? Well now they have sales goals to meet and budgets to review and maintain. But Tom and Chris as well as Mr. Murdoch have promised that the site will not lose its simple feel. You can't help but wonder whether MySpace will become another fad, like Blackplanet or MiGente. Doubtfully, because unlike other these other sites MySpace has deep pockets behind it and the site doesn't dictate what's cool, the users do. And as long as the users are free do so as they please MySpace isn't going anywhere.

And with that said, check out my MySpace page at www.myspace.com/nellynandes.

Source: Sellers, Patricia. "MySpace Cowboys." Fortune, September 4, 2006: 66-74.