A social network’s value depends on its crowd
When News Corp bought MySpace, it was buying more than a website: it was buying a place where millions of people already gathered. That audience made the company valuable to advertisers and suggested that MySpace could become a major gateway to online entertainment and social life. The $580 million price reflected expectations about what that large, fast-growing network might earn—not a guarantee that users would stay.
Why users moved
Social networks benefit from a powerful loop: people join because their friends are there, and their friends join because they are there. But that advantage can reverse. If enough people begin posting and checking in somewhere else, the new network becomes more useful, prompting still more people to switch.
MySpace also gave users broad freedom to customize their profile pages. That could make the site feel personal, but it could also make the experience cluttered and inconsistent. Facebook offered a more uniform layout, making it easier to scan updates and find people. As Facebook drew users away, MySpace had a harder time offering the same reason to return.
The cost of turning attention into revenue
A large audience is not automatically a healthy business. The company has to earn money from that attention without making the service less appealing. MySpace faced pressure to generate advertising revenue, while users were encountering more ads and a crowded experience. Those pressures could reinforce one another: a weakening audience made the business less attractive, while attempts to monetize the remaining audience risked making the site less inviting.
By the time MySpace was sold in 2011 for $35 million, the central asset—the active community—had lost much of its force. The gap between the two sale prices captures how quickly a platform’s commercial value can shrink when its users decide that the next place is where their friends are.
