MySpace, RIP

June 30, 2011

MySpace, the site that arguably invented social media, was sold yesterday for a paltry $35 million. Since News Corp bought it in 2005, the site has lost a whopping 94% of its value.

From a business point of view, this was the equivalent of pulling the plug. RIP, MySpace.

MySpace speaks to the transience of online users and the power of a defining Web brand. So what as branders can we learn? It’s a simple lesson, really: Keep innovating or go home. Leading today isn’t good enough. To be a leading brand, the challenge is to continually re-define yourself to define your market.

Once Facebook overtook MySpace, it was game over. That’s the way the Web works. Ask Yahoo. Or Or friendfeed. Or UBid. All online brands — some of whom have better technology — that are struggling to gain or hold traction against a clear category leader.

Darwin figured this out in 1859. The Web has just accelerated it, providing compelling case studies of evolution in the equivalent of an eye blink. As a category matures, the market picks the winner. And pity the brand that comes in number two.

A fascinating battle is being waged in real time between LivingSocial and Groupon. These two deal-of-the-day sites are fighting for mindshare, marketshare and dominance in their nascent category. Groupon has the louder voice and sexy business history, but LivingSocial is on the offensive with a TV ad campaign.

The market hasn’t decided Groupon vs. LivingSocial yet. (You wonder if Groupon missed its payday by turning down $6 billion to be acquired.) And maybe they’ll break the paradigm and both succeed. But I’m not betting on it. The Web’s just not big enough for both. Ask MySpace.

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