News Corp. wants its popular social networking site to be a gateway to the Internet—and go head-to-head with Yahoo and Google
Just as Yahoo! (YHOO) gets one competitor off its back by quitting merger discussions with Microsoft (MSFT), the Web portal may soon find itself going head-to-head with a new rival. Starting June 18, News Corp.'s (NWS) social network MySpace is introducing design changes it hopes will make it look and feel a lot more like Yahoo.
If all goes to plan, MySpace would go beyond being a site where people build personalized profile pages and hang out online with friends, and become more of a gateway to the Web, where users can read news headlines, listen to music, watch videos, and more easily communicate with pals. "What we want to do is make MySpace the start page of the Internet," says MySpace co-founder and President Tom Anderson. "When we talk about competition…I think about Yahoo and Google."
Threat to Yahoo
MySpace embarks on this makeover with five new features. On June 18, the company will relaunch its homepage. Instead of seeing a few boxes for "cool new videos" and "cool new people," users will see items such as news stories, ways to call up local weather, links to entertainment portions of the site, and images of top MySpace bloggers. There will also be a cleaner navigation toolbar, a new MySpace TV player with full-screen viewing, and an improved search function that makes it easier to find people, music, and media. "It is more the portal-like model," Anderson says.
The site isn't planning to neglect the profile-building tools that made it famous. It's adding features it hopes will make user pages even more full-featured. Initially, MySpace will add ways to let users change page background colors and add images with one click. In the future, the site will make it easier for users to display other information, from stock quotes to news headlines.
MySpace's move into portal territory could prove a threat to Yahoo, analysts say. Already, portals such as Yahoo and Time Warner's AOL (TWX) have lost audiences to social media sites. Instead of communicating with friends chiefly through e-mail, many people now digitally tack messages to friends' profile page "walls" and message boards. "Yahoo's bread and butter are at risk," says Forrester (FORR) analyst Shar VanBoskirk. "Yahoo has been trying to come up with a way to participate in social media for several years, but consumer behavior is shifting people to social networks."
Contact Me Via My Message Board
Transforming MySpace into a portal had always been the plan, Anderson says. But MySpace couldn't truly compete with Yahoo until it had two key elements central to Yahoo's success: massive traffic and a commonly used communication tool, similar to e-mail.
MySpace nailed the traffic element. Since its debut in 2003, MySpace has grown to 117 million users worldwide, 73 million of whom are in the U.S. (Yahoo has about 500 million users, 141 million of whom are in the U.S., according to April figures from research firm comScore (SCOR). Google has slightly more traffic with 141.1 million monthly users.)
It's the communication part that MySpace has found more challenging. Yahoo's e-mail client is the most popular on the Web. MySpace's version of e-mail, on the other hand, often resembled a spam-filled bulletin board, populated with photos from unknown MySpace members looking to add friends to promote their own blog, causes, or products. In the past year, however, MySpace has aggressively cut the clutter. The result is an e-mail/message-board hybrid MySpace hopes can compete with Yahoo's inbox. "Using your MySpace page is a much better way to be contacted than [by] e-mail," Anderson says.
MySpace's biggest challenge in proving itself a worthy competitor in the portal space may be getting over its own past. Although more than half of MySpace users are age 35 or older, according to comScore, the site still is seen by many users and advertisers as an online hangout for young adults (BusinessWeek, 12/12/05). As long as it has that image, people who don't consider themselves part of the social networking demographic may be loath to trade their Yahoo or Google (GOOG) homepage for MySpace.com.
Anderson believes the new personalization features and homepage will draw a wider audience, and with it, a larger swath of advertisers.
Yahoo is well aware of the potential threat from MySpace and other social networks such as Facebook. In recent years, Yahoo has taken steps to make itself more like those upstarts, adding social networking features and making it easier for outside software developers to create tools that Yahoo users can append to personalized pages (BusinessWeek.com, 9/11/07). Until now, personalized pages on Yahoo haven't been nearly as popular as the more general welcome pages.
The company can only hope MySpace's efforts to become more like Yahoo are similarly fruitless.