Julia Angwin: MySpace Could Become the Next AOL
The Wall Street Journal tech editor and author of a new book on MySpace warns that Rupert Murdoch's social network is in danger of becoming "the next AOL" — a once-dominant Internet company in decline.

By Patrick Phillips
I Want Media, 3/09/09

Julia Angwin, a technology editor and columnist for the Wall Street Journal, is the author of "Stealing MySpace," a new book out next week that serves up juicy details on the creation, development and tumultuous sale of the leading online social network.

Among other tidbits, Angwin reveals that MySpace and rival social network Facebook once held merger talks, and that co-founder Tom Anderson was at one time involved in an Asian porn site.

"Stealing MySpace" delves deep into how News Corp. beat out Viacom in acquiring MySpace, a move widely reported to have cost Viacom CEO Tom Freston his job.

I Want Media: How important is MySpace to Rupert Murdoch?

Julia Angwin: MySpace is still a tiny portion of News Corp.'s revenues and profits, but it gives Murdoch important bragging rights to Web 2.0, and informs his other Internet ventures. MySpace is a successful Hollywood Internet company, proving that the Internet industry is not just for geeks.

IWM: Your book reportedly received "zero participation, zero access and zero fact-checking" from MySpace. How come?

Angwin: In the beginning, I hoped that MySpace would participate in my book. I repeatedly asked the founders Chris DeWolfe and Tom Anderson to share their points of view. They never said no, but an interview never happened.

In the end, I concluded that their lack of cooperation was a gift. It made me work harder, check my facts more closely and allowed me to uncover more than I probably would have otherwise.

IWM: As a Wall Street Journal journalist, was it difficult to write about a News Corp. sibling property?

Angwin: When I took a leave from the Wall Street Journal to write this book, we were still majority owned by the Bancroft family. While I was out on book leave, the Journal was purchased by News Corp. I had mostly completed my reporting and writing by the time the deal closed, so I did not feel the purchase interfered with my objectivity while on book leave.

Eventually I had to come back to work. I admit that I felt a bit nervous returning to the Journal after writing an unauthorized book about my employer, but so far everyone has treated me very well. The Journal plans to run an excerpt of the book later this month.

IWM: Fortune magazine's David Kirkpatrick is working on a book about MySpace rival Facebook. What do you hear about it?

Angwin: The Facebook story is in many ways the archetypical Silicon Valley story: an incredibly smart computer nerd drops out of an elite college to start a company based around technological prowess. I don't know much about David's book, and I have great respect for him as a journalist, but I grew up in Silicon Valley and I know that story pretty well.

MySpace's story is completely different. The founders were not computer experts; they didn't have high-powered venture capital backers. MySpace's parent company was heavily reliant on online sales of wrinkle cream for sales and profits, which funded the money-losing MySpace division. The founders figured out how to find cool people to join MySpace by holding parties at nightclubs long before they got the technical stuff nailed down. That is why I was so interested in the MySpace saga. It was unique.

IWM: MySpace COO Amit Kapur and two other senior execs are leaving. What will their departure mean to MySpace?

Angwin: MySpace is in a difficult space right now. It is still dominant in the United States, but its domestic audience has been stagnant for six months. Meanwhile, Facebook has been growing like a weed and has already surpassed MySpace overseas.

MySpace's biggest problem is lack of innovation. They have not kept pace with Facebook in terms of features like the news feed and customizable privacy settings.

IWM: News Corp. president Peter Chernin, who oversees MySpace parent Fox Interactive, is leaving the company. How will his exit impact MySpace?

Angwin: Peter Chernin is one of the chief architects of MySpace's success. He led the negotiations with Google, obtaining a deal that guaranteed MySpace $900 million in advertising revenue over three years. That advertising deal transformed MySpace into the only social network with significant revenues and profits. His departure is a huge loss to MySpace, and to News Corp.

IWM: Chris DeWolfe's and Tom Anderson's contracts expire in October. Are they likely to leave?

Angwin: It's hard to imagine MySpace without Chris and Tom. But it's also hard to imagine their contracts getting renewed at the current rate of $15 million each, given MySpace's market stagnation.

IWM: Would MySpace be different if Viacom had succeeded in buying it?

Angwin: Murdoch has a very hands-off management style that has both benefited and hurt MySpace. On the plus side, News Corp. has retained the MySpace founders and has been very respectful of the MySpace culture. However, News Corp. probably should have forced MySpace to move faster to keep up with Facebook.

Life would have been very different for MySpace at Viacom. The wild and wooly entrepreneurial spirit at MySpace would not have lasted as long under more hands-on managers.

IWM: Would MySpace be different if it had remained independent, without big-media ownership?

Angwin: MySpace was in a tough spot when it was acquired. It needed a huge infusion of capital to keep up with its rapid growth. But it probably wouldn't have been able to attract much more venture capital because it was a subsidiary of Intermix with limited upside for investors.

So the News Corp. acquisition was a blessing for MySpace. News Corp. poured tens of millions of dollars into MySpace's infrastructure and kept it from falling apart during a crucial period of growth.

IWM: What's Tom Freston doing nowadays?

Angwin: He seems to be consulting a lot for Oprah Winfrey, and of course he's always a top candidate for every big media job that opens up, including Chernin's spot.

Sumner Redstone tried to make Freston the fall guy for Viacom losing MySpace. But readers of my book will learn exactly how Viacom lost MySpace — it's a very different story than Redstone has spread.

IWM: MySpace is big in music, entertainment and youth culture. Is it the new MTV?

Angwin: MySpace consciously modeled itself after MTV, and they've done a great job of capturing MTV's music audience. But there can't really be a "new MTV" because MTV was broadcast, and everything today is interactive.

MySpace has lost a bit of its cutting-edge quality. It remains to be seen if they can remain relevant to the post-MTV generation. The new generation isn't just about music; it's also about texting and Twittering. MySpace seems bulky and slow in comparison to some of the new methods of interaction.

IWM: What's the major difference between MySpace and Facebook?

Angwin: The most important difference is philosophical. MySpace is committed to freedom and self-expression. On MySpace, people can be whoever they want to be, and they can decorate their pages however they like. People can be anonymous, and I think that's good. I think it's important for our democracy to have places where people can congregate online without revealing their true identity.

Facebook is a much different environment. It encourages its members to use their real names and to fit into Facebook's template. That makes Facebook a powerful networking tool, but it also forces people to have a single identity for all of their Facebook contacts -- whether personal or professional. I hope that Facebook will find a way to allow people more freedom to express different parts of their personality to different audiences.

IWM: Ultimately, which will be the social networking champion — MySpace or Facebook?

Angwin: I think there is room for both social networks online. They are very different in philosophy, look-and-feel, everything. But if Facebook continues its current growth rates, it will overtake MySpace in the near future.

IWM: What's MySpace's biggest challenge?

Angwin: MySpace needs to update its outdated features, such as its clunky blog software, and to match the functionality of Facebook's news feed, which is the new gold standard for social networks. In a word, MySpace needs to catch up to Facebook technically. Users today won't tolerate bulky old-fashioned interfaces for much longer.

But that won't be enough. MySpace also needs to blaze new trails. It headed in the right direction when it partnered with Google to build a platform for widget makers. Another good move was when MySpace joined the OpenID movement. MySpace needs to keep seizing the lead and staying on the cutting edge.

IWM: MySpace is only 5 years old. Where do you see it at age 10?

Angwin: It could be the next AOL — a once-dominant company that declines because it rested on its laurels. On the Internet, if you're not moving forward, you're falling behind. On the other hand, they could turn themselves around if they begin innovating again.

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