Social Media
MySpace
The world's biggest social network let its product stagnate under News Corp while chasing ad revenue — and a cleaner, faster Facebook took everything, turning a $580 million purchase into a $35 million sale.
- Company
- MySpace
- Started
- 2005
- Ended
- 2011
- Value — 2005 purchase → 2011 sale
- $580M → ~$35M
- Collapse speed
- Gradual
- Preventability
- High
- Lesson transfer
- Industry-wide
- Last reviewed
- 2026-07-22
Narrative
The story
The ambition
MySpace invented the mainstream social network — customizable profiles, music, and friends — and by the mid-2000s it was the center of online culture. After News Corporation bought it, the ambition was to turn that vast audience into a media and advertising powerhouse.
The rise
Around 2006 MySpace was the most-visited website in the United States, and News Corporation had bought it in 2005 for $580 million, a deal that looked like a triumph.
The cracks
Then the product stopped improving. Pushed to maximize advertising revenue, MySpace grew cluttered and slow, and its innovation stalled just as a cleaner, faster Facebook opened to everyone. Users began to leave.
The collapse
Facebook overtook MySpace around 2008, and MySpace shed users by the millions over the next years. In 2011 News Corporation sold it to Specific Media for about $35 million — a fraction of what it had paid.
The aftermath
MySpace survived in a diminished, music-focused form, and Rupert Murdoch called the deal a "huge mistake." It became the standard example of squandering an insurmountable-looking lead.
The lessons
A dominant network is only as strong as the product experience holding it together. Milking an audience for near-term revenue instead of investing in the product opens the door for a better competitor — and in a social network, once people start leaving, the network itself unravels.
Causal timeline
Failure Anatomy
- 2006
The biggest site on the web
MySpace became the most-visited US website around 2006, and News Corporation bought it in 2005 for $580 million. [1]
- 2008
Product neglect
Prioritizing advertising revenue, MySpace grew cluttered and slow as its innovation stalled. [2]
Poor execution - 2009
- 2011
Sold for a fraction
In 2011 News Corporation sold MySpace to Specific Media for about $35 million, far below the $580 million it paid. [5]
Structured analysis
What Went Wrong
Root causes
The product stagnated. Pushed to maximize advertising revenue, MySpace grew cluttered and slow and its innovation stalled. [2]
A better product next door. Facebook offered a cleaner, faster experience and overtook MySpace around 2008. [3]
Immediate trigger
Facebook overtakes MySpace. Facebook passed MySpace around 2008 and users began leaving in large numbers. [3] [4]
Visible symptoms
Users leaving in the millions. MySpace lost users heavily from 2008 onward as Facebook pulled ahead. [4]
Warning signs
A cluttered, slowing site. The site's growing clutter and slowness signalled a product falling behind its rival. [2]
Affected groups
Evidence
Claims & sources
Every numbered marker in the analysis links to the claim it rests on, and each claim to its sources.
- [1]
MySpace was the most-visited website in the United States around 2006, and News Corporation had bought it in 2005 for $580 million.
- [2]
Under News Corp, MySpace prioritized advertising revenue over the product; the site grew cluttered and slow and its innovation stalled.
- [3]
Facebook offered a cleaner, faster product and overtook MySpace around 2008.
- [4]
MySpace lost users heavily from 2008 onward as Facebook pulled ahead.
- [5]
In 2011 News Corporation sold MySpace to Specific Media for about $35 million — a fraction of the $580 million it had paid.
Sources
Myspace — Wikipedia
Wikipedia