Bye-Bye MySpace ; Why its demise is a cautionary tale for social networking business plans.

Internet time seems to move a lot faster than time in any otherindustry. In 2005, Rupert Murdoch's NewsCorp acquired MySpace for$580 million, beating rival Viacom to the deal. In fact, Viacom'sChief Executive at the time, Tom Freston, lost his job over thebotched takeover bid. And in 2006, MySpace signed a $900-milliondeal that allowed Google to display contextual advertising on itssocial networking site.

At its peak, MySpace had around a 100 million users and became ahub for independent ('indie') musicians and filmmakers, a place toshowcase their performances. Yet, MySpace did not expand overseasfor several years despite its strong presence in the US. At the sametime, it fatally underestimated a growing online network of collegestudents of the time - Facebook. And as 2011 started, news came thatMySpace had let go of 500 employees, or 47 per cent of itsworkforce. This was probably a direct result of MySpace's smallerdeal with Google as well as the consequence of its active userbaseshrinking.

The story of and its Chief Executive Officer Mark Zuckerberg'srise to the top has now been immortalised by Hollywood. Yet, thatdoes not answer the crucial questions. What on earth went wrong forMySpace? And what went wrong with tens of other social networksacross the world?

Take the example of Second Life. In 2007, American techjournalists were raving about the service and it even inspiredGodrej to start something similar. Today, Second Life is a shell ofwhat it was three years ago. In India, there is the example ofGoogle's Orkut. Today, while Orkut still has a considerable numberof users, Facebook beat it several months ago, both on the number ofusers as well as on user connectivity.

The problem is that there are far too many business plansinvolving social networks. Sorry for being a cynic although a partof me would love to see an Indian social network emerge successful.A few of them do have viable plans for now, but these do not involvespending copious amounts of money on advertising.

They will tell you how they are pioneering various technologiesto help rural users, such as voice updates. But then suddenly yousee a huge campaign featuring Mahendra Singh Dhoni showcasingFacebook voice updates on Aircel. I'm sorry but how on earth is asmall start-up with an active user base of a few tens of thousandssupposed to compete with the likes of a campaign featuring India'scricket captain?

The social network battle took place five years ago. Facebook wonand MySpace lost. And Murdoch's battle - to win the minds of youngconsumers - will need to change its strategy. Facebook has also wonthe battle in India (see Millions on the Wall). There is space forIndian entrepreneurs in the digital space, and as the country adoptsdata-rich mobile networks, they can easily take advantage of them.But it will need one heck of a social network to beat Facebook inIndia. So it would be nice if they concentrated on other things.Like better games, for example.