The saga of Rupert Murdoch and MySpace is a lesson for any bricks and mortar business embracing technology. Retailers should be worried.
Murdoch has put MySpace on the market and as I point out in my blog entry here, he will have to sell it at a bargain basement price. Murdoch will take a bath.
Reuters provides some fascinating insights and sheds some light on the cultural divide between News Corp and the Internet start up.
Murdoch made two big mistakes. The first was in 2007. "Murdoch brazenly predicted that Myspace would generate up to a $1 billion in revenue in the next fiscal year. The forecast caused panic at Myspace, according to the two former executives. "It was a big blunder to say that to the Street," said the first executive. 'When you looked at how Myspace's numbers had been trending it was possible-but it was a stretch.' 'After that moment it was basically like all the tentacles of News Corp. got involved in a bid to make that target, so getting anything done became near impossible.'
The second was to under-estimate Facebook. Though he dismissed Facebook at one point as a "communications utility," Facebook's news feed and its ability to open itself up first to third-party developed applications such as Farmville in May 2007 was essentially what killed Myspace. Murdoch just didn't understand how the Internet works.
MySpace is a parable about the big cultural divide between two sectors. They will never fit well together.
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