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How Rupert Murdoch’s One Big Mistake Killed MySpace

He says demands for profits made it less competitive


Tom -- MySpaceOnce upon a time, MySpace ruled the social media universe. But after the platform was acquired by News Corp. (NWSA) in 2005, it began to lose ground as Facebook (FB) began its rise.

Now, the formed CEO of MySpace, Chris DeWolfe is laying the blame for the social website’s decline squarely at the feet of News Corp. head Rupert Murdoch. DeWolfe tells Britain’s Telegraph that Murdoch’s focus on profits instead of investing in the network’s infrastructure hurt it as Facebook began its rise. They were building user experience while we were forced to muck up ours,” he observed.

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News Corp. spent $580 million to purchase MySpace, but six years later the company sold the website to a consortium of investors including singer Justin Timberlake for a fraction of its original investment.

DeWolfe said that News Corp. spent a considerable amount of money on MySpace, which in 2009 still has more traffic than Facebook. By contrast, he notes that Google (GOOG) allowed YouTube to generate losses for years while it built a dedicated following among users. Though MySpace was the second largest video website after YouTube, News Corp. insisted on inserting ads, DeWolfe said.

Earlier this month, MySpace confirmed that it had laid off an unspecified number of workers from its Los Angeles office.

Article printed from InvestorPlace Media,

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