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The numbers tell the tale of MySpace. Visitors? Down 20 percent in the last two years. Profits? None: It loses "below $100 million a year," according to the company. Value? Just over half the $580 million News Corp. (NWS) paid to acquire the social-networking site in 2005, says Alan Gould, an analyst at Evercore Partners (EVR).
On Oct. 27, MySpace unveiled a "dramatic remake," as News Corp.'s chief digital officer, Jon Miller, puts it. After years of cluttering its pages with distracting ads and features, MySpace is reversing course and slimming down. It hopes to lure back the lucrative under-35 demographic that has abandoned MySpace for Facebook, the top social network in the U.S. In September, Facebook drew 148 million visitors; MySpace had 58 million.
The redesign is also a last-ditch effort to keep News Corp. Chairman Rupert Murdoch from cutting the cord and selling MySpace, which he's likely to do barring a major turnaround, says RBC Capital Markets analyst David Bank. News Corp. declined to comment. Dana Settle, a partner with venture capital firm Greycroft Partners, says "people have been very skeptical" that MySpace can do it. "It's a pretty Herculean task for any sort of entrenched company to really restart itself," she says. MySpace Chief Executive Officer Mike Jones responds that "the feedback we're getting so far is very strong."
The site's best shot at a successful reboot may be a design overhaul. Before the revamp, it had drawn unfavorable comparisons to GeoCities, the early Web company that let people build their own, often tacky websites. MySpace's customizable profile pages became littered with flashing pictures, auto-starting music players, and garish background images that sometimes rendered text nearly unreadable. A $300 million-a-year advertising deal with Google (GOOG) (now being renegotiated) rewarded MySpace for page views, so the company added complexity to the site to boost the number of clicks. Until recently, for example, it took three steps to add a friend. "The experience degraded" over time, says Miller in an interview. Jason Hirschorn, a top MySpace executive who left the company in June, is harsher. "MySpace had no respect for user experience," he says.
Jones, a former AOL (AOL) executive who joined MySpace in April 2009 and oversaw the redesign, decided to streamline the site. He and his team junked little-used features like weather and horoscope pages. Instead, visitors will be greeted by a mosaic of tiles featuring the most popular videos, music, and news on the site. Entertainment content, not friends, is meant to be the focus. "We're offering social entertainment, not a social network," says Jones. The new look is sleeker, though not necessarily quieter. Miller acknowledges that the changes will probably send some MySpace users fleeing but says they'll help attract new members over time. The redesigned site, says Jones, is meant to appeal most to the core demographic of 13- to 35-year-olds, frequent Web users who are prized by advertisers.
The redesign complements other changes Jones has made. Over the summer, MySpace started letting users sync their account with other social-media sites, including Twitter, YouTube, and yes, even Facebook. (That way, any comments people make on Facebook or Twitter would also appear on their MySpace pages, and vice versa.) MySpace was originally built with five different programming languages, which caused glitches and slow load times; Jones has replaced them with one. "It sounds simple," he says, "but you wouldn't believe how complicated that was."
He also is trying to get his team thinking about mobile—another party MySpace was late to. Facebook more than doubled its mobile users in 2009, to 25.1 million, while the figure for MySpace shrank 7 percent, to 11.4 million. To boost traffic, MySpace will soon roll out a revamped mobile site. Jones and his staff recently developed MySpace Music Romeo, an application for Apple's (AAPL) iPad that plays mood-appropriate music videos when users tell it how they're feeling. "Mobile is the future," Jones says. "I need my people thinking how MySpace fits in that future."
Even if the redesign can stanch the financial bleeding, MySpace still needs to bring back that most ephemeral of assets: cool. The online masses move on quickly, and no one has yet managed to turn around an Internet business in free fall. (See: Yahoo! (YHOO), AOL, MSN, and Digg, the last of which announced on Oct. 26 that it would lay off 37 percent of its staff.) "It's not that News Corp. was naive to buy MySpace," says Bank, the RBC analyst. "They were naive not to sell it sooner."
The bottom line: MySpace unveiled a sleeker new look on Oct. 27 that puts the emphasis on entertainment and celebrities rather than friends.