All Failed Startup Stories


Social Media

General Information

Industry Social Media Country United States Started in 2003


Outcome Active, but not popular Cause Bad Management


Founders 4 Employees 100-250


Funding Rounds 1 Funding Raised $580 Million

What is Myspace?

Myspace is a social networking website where users can create their own web pages and interact with other members of the website. People used this to create personalized blogs where they could post pictures, videos, wallpapers of their choice.

Myspace also had chatrooms, forums, newsgroups, etc, for people to connect and talk about their shared interests. It was also popularly used by bands and musicians to build a following and interact with their fans.

Myspace was founded by Tom Anderson, Chris DeWolfe, Josh Berman, and Brad Greenspan, who were all employees of a company called eUniverse. eUniverse was a marketing company in the e-commerce space.

They sold all sorts of products through various junk and spamming adverts. In 2003, when a website called Friendster (which was later shut down!) became popular among the employees of eUniverse, the idea for Myspace was born.

When did Myspace Come out?

The founders decided to create their version of a social network. They wanted to replicate the concept of Friendster but remove the unnecessary features. They also wanted to center it around the latest trends and music. Headquartered in Los Angeles, the Myspace website was officially launched in January 2004.

Within a month, Myspace registered 1 million users. It grew incredibly popular among young adults and teenagers. The young population particularly liked Myspace due to its focus on pop culture. Not more than 9 months later, Myspace crossed the 5 million users mark.

In July 2005, News Corporation (a.k.a Fox Corporation) decided to buy Myspace for $580 million. It beat other prospective buyers, namely Viacom. At that time, many media companies were looking to retool their arsenal, to prepare for the internet age.

However, this sale was the most notable attempt by any company so far. Overnight, News Corporation was viewed in a new light. It was enshrined as a company for the future. Social media became a real and serious opportunity.

Acquisition and Peak era

Even after its acquisition, the website had exponential growth. Its valuation tripled that year, and its 22 million user base expanded even futher.

Myspace began establishing a global presence by releasing local versions across countries in other continents. By July 2006, Myspace had exploded and was reported to have surpassed Yahoo and Google as the most visited website in the United States.

By October of that year, Myspace’s revenue had grown to $30 million per month. By 2007, Myspace was valued at USD 12 billion and became the leading social networking website in the world.

Decline: Why did Myspace Fail?

At its peak, Myspace was envisioned as the future of the internet. NewsCorp was optimistic about its prospects with Rupert Murdoch unabashedly announcing Myspace would make $1 billion in revenue in the fiscal year of 2008.

Although their numbers were strong, Myspace did not reach this goal. It started facing a descent. The decline was slow and negligible at first, but it was slipping. There were a few factors which were making it unpopular among its user base.


News Corporation viewed Myspace as another potential avenue to market its products and to direct traffic to other legs of its business. This was reflected in its UI. Myspace was very aggressive with its placement of adverts. This made the website look messy and chaotic.

In 2006, Myspace also entered a $900 million 3 year advertising contract with Google. With this deal, Google was given exclusive rights to advertise and provide sponsored search results on the platform. This arguably worsened the advertisement problem.

More ads were shoved down the user’s throat, on top of an existing ad-heavy UI. This cluttered platform and made it very overwhelming for the user.

Bad Website Design

Myspace’s overall user experience was not a memorable one. There were thousands of pages with minimal or no content. Their platform was very buggy. There was no defined website roadmap, making navigation hard for the average user.

Myspace did introduce multiple redesigns to ease the disarray and fix the bugs. However, each new update confused the user even further. The bombardment of advertisements did not help either.

Unhelpful User Interface

One of the primary reasons why Myspace became so alluring in the first place was its customizations. Young people spent hours designing their favourite wallpaper and adding memorable photos to their pages.

However, to get your desired design, the average user required a preexisting knowledge of HTML. They did try to remedy this with a cleaner and easier UI later. However, by then, it was too late.

Bad Public Image

Over the years, Myspace’s public image began deteriorating with the public. It began facing bad PR due to cases of age-inappropriate content being exposed to underage minors. It also had an onslaught of legal battles due to cases of cyberbullying and harassment taking place over the platform.

When more people exist together on a platform, there is a need to set a code of conduct for regulation. This ensures a safe environment for everyone. Myspace was growing incredibly popular among the masses. However, the website did not take adequate measures to ensure that it was properly governed.

Emerging competition

As is true for any industry, if a valid market exists, competitors will enter the free market jungle. Myspace’s first competition was Orkut. It was created by Google as their version of a social network. However, barring Brazil and India, it wasn't much of a match for Myspace.

Myspace’s real competition was Facebook. Founded in 2004, Facebook’s initial target demographic was college students. It wasn’t a real threat to Myspace till a few years later. Back in 2005, Mark Zuckerberg even offered to sell Facebook to Myspace for $75 million, however, Chris Dewolf rejected the offer.

By 2008-09 Facebook overtook Myspace as the biggest social network in the United States and overseas. By 2011, News Corp put Myspace up for sale for $100 million but eventually settled on $35 million to an advertising firm Specific Media.

Revival Attempts

Over the next few months post the sale, Myspace’s new owner worked towards a complete redesign of the website. They switched gears and worked on rebranding the website. The new website would be catering to music, and its artists, and would be a platform to support their work.

The new website was relaunched in January 2013 with pop star Justin Timberlake as the ambassador. This effort was relatively successful. By 2014, Myspace announces that over 50 million songs have been released by 14 million artists on their platform.

By 2015, even though the platform had descended, its user base was still 50 million strong. By 2016, Myspace, and its owner Specific Media was bought by Time Inc. In 2018, Myspace changed hands again and was sold to the Meridith Corporation.

In that period, Myspace surfaced in the news cycle a couple of times as it became a victim of data breaches. In 2016, 360 million Myspace accounts were compromised due to a hacking attack. Reportedly, the hacker tried to sell that information for $2800 on the internet.

In 2019, Myspace again did not have a very favourable press round, when it admitted to having lost around 12 years' worth of music in botched server migration. A few records were salvaged by the Internet Archive, but most data was gone for good.

Is Myspace still around?

So as of 2022, what happened to Myspace? Myspace, surprisingly, is still very much alive. It has, however, transitioned from its social network roots to a curated lifestyle website for media and entertainment.

It is not entirely a ghost town, but it has stayed under the radar and has lost all of its relevance in popular culture. Myspace is currently owned by Viant Technology LLC, which bought it from Meridith Corporation in 2019.

Facebook Vs Myspace

When Facebook first came under Myspace’s radar, it did not consider Facebook to be a worthy rival. However, Facebook did end up beating Myspace to become the billion-dollar company it is today. Where did Myspace go wrong? Why did Facebook beat Myspace?

For all its faults, Myspace was still a popular destination on the internet. A social network was not a novel concept, so Facebook did not disrupt the market in any way. What Facebook did do, was simply make its platform better.

Prioritized advertisers over users

NewsCorp’s Myspace purchase was essentially a purchase of another marketing channel. As a result, all of Myspace’s operations and business decisions were governed by this foundational philosophy.

Myspace’s primary source of revenue was from advertisements. Its webpage was heavily crowded with adverts despite being a deterrent to its users. The $900 million google deal- lucrative in the short term, detrimental in the long run, was taken up because of this principle.

In 2008-09, Myspace built a book feature on its platform simply because Harper Collins paid them to. There wasn’t any prominent data indicating Myspace to be an online rendezvous for book lovers. It did not consider if people would actually use it, and still went ahead with it. Naturally, as a result, this venture tanked.

Website Navigation and Usage

One of the cornerstones of any successful product is its ease of use. Myspace, with its bad design, had relatively stubborn navigation. Every subsequent change confused the user more, making it harder to move around the website.

Facebook, on the other hand, had a cleaner flow on its website, making it a much more pleasant experience. It also had a simpler UI, and users did not have to know HTML to customize their profile. This ease of utility did not help Myspace’s case.

Bad Management

Myspace at its core was never a real company. It was simply an extension of a much larger media conglomerate. As time went on, the corporate guidelines crept in. Each decision had to be run through a series of lawyers, accountants, etc, with a long term goal to meet target traffic and revenue.

In contrast, Facebook was its own company with all resources, rules, and regulations, dedicated to making the website better. It was a new company with a singular focus. Its functioning was governed by an emphasis on innovation and product management. This enabled it to make better decisions, faster.

Slow Innovation

Myspace was created and run by individuals from the e-commerce and entertainment industry. Whereas Facebook was created and run by tech experts who understood their product well.

This gave Facebook an edge in terms of dynamism and could introduce innovations at a faster rate. Two of the biggest game-changers were the newsfeed feature and the third party integration feature.

The newsfeed element was controversial at first but became very addictive. People kept returning to check their friend’s updates. The third-party integration feature was also a turning point. It allowed games to be played on the platform. This made Facebook a 1 stop shop of sorts, for entertainment as well as connecting with friends.

Prioritized website over core service

In any social network website, the primary service being offered is the ability to socialize and build your network. The website is simply a tool or a means that allows you to provide the service. The socializing service is what the people really want.

Facebook did not lose sight of this objective. As a result, all of its website enhancements were very optimal and user centric. Myspace on the other hand, failed to understand this.

It failed to recognize what the consumer needs. Instead, it began assuming what the consumer wants and began developing its site accordingly. With this flawed business foundation, Myspace lost out favour among its users and got beaten by Facebook.


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