The Myspace redesign is inspired, but how will they make money?

Brace yourself: Myspace may not be a punchline much longer.

Myspace is in the process of a radical relaunch of their site focused on interaction around music and music videos and it’s pretty phenomenal.  Rather than positioning itself as an alternative to Facebook, Myspace is all about music.  And compared to Spotify, Pandora, Vevo and Deezer, it’s a much more realized product.  It’s got a slick, unique layout that’s a little unorthodox (the pages scroll left-right), and appears to have all of the commercial music that its competitors do.   Though c|net aptly points out that many of the features are disjointed, its social features borrow some of the best aspects from Facebook and Pinterest, making it a very fun platform for people who love music.

Myspace’s stated target audience is 21 year old male and females.  If you believe Kathy Savitt’s insights into Gen Z behavior, they have three screens open at any time: one social network, one entertainment channel and one “consumptive” channel.  Myspace might qualify as two of those three, positioning it well against its competition.  But the problems of their competition are also Myspace’s problems.

Myspace and monetization

One of the huge issues that Spotify, Pandora and Deezer share is that they are all losing money.  Their freemium models don’t support the royalties that they pay to the music labels, despite the advertising that they run in-between their songs and on their site.  Myspace says that they pay the “lower Radio rate” comparable to other on-demand music services, and says that 50% of their plays are royalty free.  The likelihood that either of those assertions is 100% true is low, and with increasing scale the 50% number will inevitably increase.  The chasm between dollars in and dollars out is bound to grow, unless Myspace intervenes with an advertising product.

Myspace is anticipating profitability by 2014, which means that they will have to increase their revenue by $85 million dollars in two years.  It’s not clear how they intend to do this.  An advertising model similar to Spotify probably won’t suffice for Myspace (because Spotify isn’t profitable).   It’s an interesting dilemma.  Reading through the Myspace terms of service and privacy policy, they identify multiple ways that they could monetize the site.  In fact it kind of reads like Facebook’s TOS: every way you could think to make money seems to be covered.

The social Achilles heel

Myspace has the name recognition and the concept to be a hot social network again, but it appears that like Facebook, Twitter and its music sharing predecessors, Myspace is a cool product without a clear plan to monetize the site.  Not that it’s easy to monetize a site, but after Facebook’s IPO debacle it’s a bit cliche not to implement some method to make money.

In any case – Myspace is pretty cool right now.  I don’t buy the argument that Myspace has a huge disadvantage because of its past reputation, especially given the age of their target demographic.   (And despite the humor of Gizmodo’s Sam Biddle, I don’t think that necrophilia is a prerequisite for using the network).  Myspace is a well-constructed elaboration of the current music sharing services.  If people give it a chance, I expect that they’ll enjoy it quite a bit….. and then the user experience will go the way of Facebook and they may fall out of love all over again.

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Jim Dougherty

Jim Dougherty

Writer and chief of miscellany at
I'm the guy that wrote the article you just read. Sorry for the typos.