Think Customers: The 1to1 Blog

There's no denying that the biggest winner in this story is Facebook, which is poised to become the only big player in the social network game. It's seen faster growth than MySpace recently, has users that are more active, and created a flourishing app developer community. Personally, I think MySpace has the reputation of a pre-teen hangout that's just about movies and music. Facebook, despite its lack of a customizable profile page, is much more user-friendly and offers more tools for a wider target audience. The problem has always been monetizing the audience, which MySpace has been unable to do with advertising.

The question is, if MySpace is unsustainable today with more than 100 million users, was it ever sustainable? I'd argue the defining moment for the company was its sale to Rupert Murdoch's News Corp. for $580 million in 2005. Like housing, gas, and just about everything during that era, the price of social communities was inflated. There was no valid business case to value the site that high. Now that the market has cooled, it's clear News Corp. bit off more than it could chew (and invested more than it can swallow).

I predict over the coming months, either Facebook or some new social network (since these things are very fickle, anyone remember Friendster?) will edge MySpace out of the conversation completely. It may not cease to exist, but the fall from grace will certainly be painful. Translation for marketers: if you're unfamiliar with social networks and say "My kids used MySpace a few years ago, maybe it can help my brand," don't waste your time.